[Operator Instructions] The first question comes from José Abad from Goldman Sachs. José Abad: Well, I'm aware, obviously, that you will give us actually all the granularity about your new plans, RoTE targets and capital targets in early April. But I will try because, I mean, this is, obviously, the RoTE target is 13% to 15%. This is 200 basis points difference. This implies a high degree of uncertainty over the coming years, and obviously, we will discuss this in early April. My question is just about one of the potential sources of uncertainty, which is Brexit. [About 2] weeks, we may have some clarity, maybe not, but we maybe have, we may have some clarity over the coming next 2 months. And I think I was wondering whether maybe you could actually help us navigate the coming 2 months by maybe telling us how this range could be modified in case of a no-deal Brexit. We would end up in the lower bar, in the lower half of this, in the midpoint. So where, how do, how could a no-deal Brexit impact actually this RoTE target? And related to this is also if you could actually rephrase a bit your hedging strategy in the pound. How, what's the length of this hedging, 1 or 2 years? What's a percentage of our earnings? And at which level, if you can actually have the hedge? And the second question is on capital and maybe if you could, sorry, apologies if I missed it and you already said that, but if you could provide any guidance on the impact of IFRS 16. And I would like to know how is the management. How are you actually thinking about the tradeoff between capital generation and capital volatility? You spend every year around 30 bps of capital in hedging your capital ratio, and obviously, if you reduce that, you could actually generate more at a cost. So another way to ask this question is whether you are willing to sacrifice capital volatility for higher capital generation. Ana Patricia Botín: Okay. I'll try to complement my comments. I'd say on Brexit, I mean, definitely, I mean, the one thing which [indiscernible] not getting no-deal Brexit. A no-deal Brexit can create, obviously, a significant impact on the economy, and therefore, on our customers and on us. Sorry, sorry, I'll start that again. Yes, I'll start with Brexit. On, Brexit does make a difference, but I'd say the scenario which we hope doesn't happen, which is the no-deal Brexit, because that would obviously impact the economy, our customers, and therefore, us as banks. So that is the one that would have a negative impact. We are not counting on a no-deal Brexit. So we continue to plan for a UK economy, which is softer. Inflation is having an impact through the depreciation of the pound. We've been very prudent. We've grown our loans about 1% year-on-year. We are being prudent on our risk appetite. We have had especially higher cost this year, José Antonio mentioned, because of ring fencing. And I'd say our focus in the UK is on profitability. We set as a range, as you know, for the 3-year plan, which was to be between 9% and 10%, and we are a bit more than 9%. And so we'll continue to be aiming to be above the cost of equity with probably less growth and this will have some impact on earnings. But that is really the plan. In terms of hedging, we hedged the pound for 2 years and we still have 1 more year of hedge, if I remember correctly. José Antonio Álvarez: Yes. Ana Patricia Botín: So we are hedged for the results for the next 12 months, so that would have no impact. In terms of capital, this is a change because we said above 11%, we're above 11%, but we do anticipate some volatility from quarter-to-quarter this year because of regulatory impacts. IFRS would be around 20 basis points, but it will depend on the outcome of the headquarters, which is in the press. It's public. So that will be around 20. There's some other regulatory impacts this year, but we also have some positives. So you will see some volatility. And definitely, our aim is to be between 11% and 12% so we can have that added flexibility in terms of hedging for the future, which creates, we need some buffer there so we can manage that in a more, I'd say, in a more efficient way economically. So that is the goal, to be between 11% and 12%. José Antonio Álvarez: No, it's okay. So the reason for the range between 11% and 12% is to gain some flexibility, as you said, yes.

The next question comes from Francisco Riquel from Alantra Equities.

So follow-up on capital. You have changed the guidance today to the new range or for the medium term, looking for flexibility. But I wonder if you can comment on 2019, if we shall expect any change in the way you will allocate capital this year. You have been allocating it today to roughly on equal parts in between business growth, dividends and capital buffers. So if we shall expect any change this year. In particular, for the dividend, if we need to be in the upper range of the new guidance before you considering an increase in the dividend payout or if we can see that earlier. And also if you can also update on the regulatory headwind, sorry, beyond IFRS 16, if we shall expect any other impact from any other issue there this year. Ana Patricia Botín: So in terms of, we'll give you more detail. We still have a few months to Investor Day. As a reminder, we said, last year, we said we'd go to 2 dividends per year. We said that we would not do a scrip in 2019. These things, we will be updating the market in April, as I said. We are, we still have plenty of profitable growth opportunities, so we will be allocating some capital to growth, and we will accumulate some capital for the next year. Again, this is something which will give us added flexibility. In terms of the headwinds, we have IFRS 16. I forgot the numbers now. And we have a couple more things. There's a TRIM model and some other things that, as you know, are going on. We don't know exactly the timing of that. We expect it will be this year. It's, more than that is that we do get affected somehow by exchange rates. These are the things that would create some volatility, and that's why over time, we are aiming to be in a range and then have some flexibility in terms of some of our strategies, for example, the FX hedging on the results, which, obviously, is costing us, I think this year, it's costing us 20 basis points in 2019? Sorry, 2018? José Antonio Álvarez: No, less, less, a little bit less, Ana. so if I may, in allocating capital, the main change we have, probably you have seen, and I mentioned in the case of Spain, when we reduced the size of the loan book in CIB and corporates is we are aiming a lighter capital model, particularly in the corporate world. So we want to strengthen, we are strengthening our capabilities in CIB, in capital markets, in order to do so. So that's clear, and you continue to see that our business model is going to be lighter in capital, particularly in the large corporation CIB.

The next question comes from Vanessa Guy from JPMorgan.

I have 2 questions. The first one on Mexico. Given the political uncertainty, how should we think about this division in 2019? And also, what's the government's stance on the banking fees? And what potential impacts could we expect? Should they be capped at some level? Then my second question is on Brazil. There's been some headlines that the government intends to reduce corporate taxes, and they plan to end the interest on capital tax deductibility. I was wondering how that could benefit Santander in Brazil. Ana Patricia Botín: I visited Mexico and it was quite public. I had a long meeting with the new President. I believe that there will be changes and governments will introduce changes, both in Brazil and Mexico. Net-net, we're very bullish on both countries. Over time, I, on the commissions, there was nothing that I remember was said, but we are in conversations with the government relating certain improvements and trying to bring innovation and more benefits to consumers. And again, I think this is something which is good for the economy over the medium term and so we eventually will benefit. I'm not seeing anything specific at this point that could make us worried about Mexico in the next 12 months at all. On the contrary, it's a country where we've committed the biggest investment and we are continuing with that investment that we announced a couple of years ago because we are confident the country will continue to progress. In the case of Brazil, I think it's too early to tell, but I did meet with the new economics minister last week. It's an excellent team that is really focused on the right things. And I'd say the most important thing in Brazil, it's not easy, but we again got quite a lot of reassurance that they have a plan and that they will be able to execute a plan, is pension reform. They are working on that for the next few months. And if that happens, Brazil, there are other reforms that they will work on, but net-net, I think this will be positive for the economy. I mean, and if pension reform happens, you can see 10 years of high growth in Brazil. Remember, Brazil has had negative growth for 3 years in a row, so 9% of GDP. So the upside and the change could be very significant. But the key is that we get pension reform implemented as soon as possible. I, on taxes in Brazil, I'm not aware that there's any... José Antonio Álvarez: It's too early to tell the answer.

The next question comes from Alvaro Serrano from Morgan Stanley.

Two questions. One on capital, a follow-up on capital. In the quarter on Q4, you built 10 basis points, which is your usual run rate, but there was a big rally in Brazilian bonds, which doesn't seem, it doesn't seem like it has the positive effect on the capital. So maybe can you clarify that? And when I look at this year, you flagged, obviously, the headwinds, but is it possible that capital goes down below 11% versus the 11.03% fully loaded, with IFRS fully loaded? Is it possible you dip back below 11%, which I think could make some people nervous? And just a follow-up from my credit colleagues on the AT1. You've put in your presentation that you plan to issue €1.5 billion, which seems to suggest you'll call at least 1 of the 2 AT1s, if you can confirm that. And the second question on your plan, 13% to 15% RoTE target. Obviously, the cycle, this uncertainty around the cycle, I'm just curious if you can expand of what kind of economic scenario beyond Brexit, which we don't know and we can only be helpful. But beyond that, what kind of cycle are you assuming, for example, in the U.S.? Because I saw the pickup in provisions. You've already flagged there was a change in accounting. But even above and beyond that €200 million, there is a pickup in provisions in Santander Consumer U.S.A. So if you can comment about the cycle, how you're seeing it and what you factor in. Ana Patricia Botín: I'm going to start with the third one on the 13% to 14% and the cycle and José Antonio will answer the more detailed ones on capital and AT1. So the cycle, obviously, at some point, the cycle is going to turn. I mean, we are working on the assumption that 2019 will see some slowdown. But actually, we see this as a positive because we have more sustained recovery. This is actually a scenario which is pretty good for banks because it could allow for a slower increase in rates but some increase in rates, which would be, should be good for margins, but should also be relatively good for the nonperforming loans, will continue to perform well, and finally, should lead to some increased demand for credit. So 2019, we see as, I'd say, relatively good even though a bit less growth overall. One of our key markets, which is Spain, continues to be incredibly resilient. You've seen the great results of Spain this year. We're now, in the plan, we have around 2% growth. But given the strength in the numbers we saw, I think it was yesterday, on employment, creating 566,000 jobs last year, we're growing at double the rate of the European Union. And so I think Spain will do very well. Brazil is supposed to be very well. So these are some of our big markets. So even though overall a bit less growth, I'd say positive for us and for banks and some of our key markets doing especially well. In the U.S., probably the U.S. might turn around in terms of, from positive to negative before Europe, before LatAm. But again, nothing major and nothing at this point for 2019 that would give us concern that the strong underlying commercial trends will continue. In terms of the 13% to 15% RoTE, we'll give you more details again in Investor Day, what are the milestones to get us to those levels of profitability. So maybe, José Antonio, you want to answer the other one? José Antonio Álvarez: Yes. You mentioned the Brazilian bonds as having an effect, the rally in Brazilian bonds as at the fourth quarter having an effect in the total capital ratio of the group. The portfolio of the Brazil bonds is relatively small. If I remember well in the last, in the fourth quarter, the positive from the AFS was like €200 million or something like that, so fairly small number. 1.5 basis points for the group is not a big impact. When you say the volatility is through, and I mentioned that we're going to have some volatility, volatility coming from FX, volatility coming from an AFS, is true. Well, until now, as you know, we've been fairly conservative in hedging to protect the capital ratio, but it's true that we have some volatility there, yes. In relation with the AT1s, our policy was stated several years ago. We made a relevant fact to the market saying that we call, were referring to all the hybrid instruments. We call or we don't call depending, basically, purely in economic terms and this policy is done.

The next question comes from Ignacio Ulargui from Deutsche Bank.

I just have one question on Brazil. We have seen a bit of a slowdown in NII in the Q-on-Q performance in local terms. Just wanted to, I mean, acknowledging that Brazil has had a great year in 2018 and 2017, how do you see the trends in terms of margins and loan growth going forward? And linked to that, what should we expect in costs in Brazil? Ana Patricia Botín: I believe the slowdown is due to some financial, i.e., noncommercial factors in Q4. So nothing that concerns us at all in terms of the underlying trends. It is true that if the economy, as we expect, takes more speed, you'll see more growth coming from volumes and from margins because, as you know, margins expanded quite a lot and now are going to more normal levels. So I'd say you've seen very good loan growth in Brazil in the year, and I think, in the quarter at double digit in most segments. And so I'd say that is where you're going to see the growth and that's what we expect. I mean, our total loans in Brazil is around €70 billion. I mean, this is a huge opportunity for growth. Mexico is around €25 billion, I believe. So still relatively low numbers compared to the size of the economy and compared to the size of the Santander loan book. So I'd say Brazil, and probably also Mexico, will see more volume expansion, volume growth and margin expansion.

The next question comes from Mario Ropero from Fidentiis.

I have 2 questions. The first one is on NII in Spain. Basically, by taking the fourth quarter level and multiplying it by 4, you already have plus 5.5% in 2019. So I wonder if you can give us any guidance or maybe to comment on how the different levers of NII could evolve in 2019. And then the second question is on Brazil. I think Ana mentioned that you're expecting double-digit loan growth in Brazil. So I was wondering if you can comment whether you expect this double digit to feed into the bottom line or not, depending on how you see the different levers moving. Ana Patricia Botín: Antonio, you want to take those? José Antonio Álvarez: So NII in Spain, we saw some expansion in the fourth quarter. We continue to see next year some growth in probably mid-single digit basically coming from the reduction in funding cost. It's expectable. We don't expect a big deal on the yield on the loans. The market remains fairly competitive. So probably to thinking around mid-single digit is something that is reasonable for next year coming basically from the funding side. In Brazil, while, when, you have in the presentation the spread on loans in Brazil, yes, so it's like a 900 basis points or north of 900 basis points. There's more changes there, can affect significantly the NII generation. While I do expect, I don't know if in 2019, but in medium term, some margin compression in some products in Brazil. The market is becoming a little bit more competitive. As you know, we've been gaining significant market share, and naturally, we have good competitors there that are reacting to our market share gains, particularly in segments like the consumer lending, auto lending and all these things may be the case, maybe not, yes, so I'm not sure, but there is a case for some margin compression there. It's also true that there is a case for margin expansion on the funding side. As you know, the reserve requirements are extremely high in Brazil and may be the case that the 2 process goes together, or at least in the medium term, I would expect the 2 process to go together: one, some margin compression on the asset side, some margin expansion on the liability side, probably due to the [reduction] and reserve requirements. But as you can imagine, this depends on the regulatory environment and the competitive environment in Brazil in coming years. It's not next quarter. It is more if I look 3 years forward, yes.

The next question comes from Carlos Peixoto from Caixabank-BPI.

My question is, first question would be a bit of a follow-up on capital and on dividend. I did, I just wanted to make clear. Are you maintaining the full cash dividend policy that was mentioned last year for 2019 and going forward? Or are there any scrip dividends or something of that nature embedded here? How should we think about payout going forward and within the context of the targets for core Tier 1 that you mentioned basically? Then a second question, with the, a bit on the outlook for 2019 in Spain. How do you expect, how do you see volumes evolving? And how do you see lower funding costs, particularly that were made on the 1, 2, 3 accounts? The renumeration, how do you see that feeding into the NII evolution in Spain in 2019? Ana Patricia Botín: On dividends, obviously, we will discuss in more detail dividends in April. We are, at the moment, not changing what we already announced, which is a full cash dividend in 2019, no scrip, 2 dividends instead of 4. And we, for the 3-year plan, and we're not going to change this for now. I mean, we have to discuss this, but I'm not thinking about anything very different, but we need to discuss this with the board. We need to work a bit more on this. But as of now, as you know, we said 30% to 40% distribution from profits. Sometimes, if there's a one-off or not, we might change that between underlying and net profit, but roughly 30% to 40% range payout. We are very comfortable with that dividend policy. And again, that's what we, again, I don't want to say in advance what we're going to say in April, but you shouldn't expect much change from that. In terms of the outlook for Spain, on margins, I think, José Antonio, you mentioned that already. José Antonio Álvarez: Yes, I already mentioned. Ana Patricia Botín: So it's more volumes and... José Antonio Álvarez: The only thing is volumes. As I said, we expect some growth in volumes in the lending side, not that much because probably we're going to keep shrinking the balance sheet in CIB and institutional lending, yes? So probably, we're going to, we are already showing growth in SMEs and consumer lending, that there are 2 engines of the activity right now. And probably, we will continue to see some growth in these 2 segments, while the other 2, institutional and CIB, continue to be flat at best or most likely reducing the size of the loan book, yes. Ana Patricia Botín: Yes. Just on the 1, 2, 3, I mean, the 1, 2, 3 is a strategy, which is a customer loyalty, a customer relationship strategy. It's been very important over the last 3 years in Spain. The loyal customers have increased by 72%. And it's been the base of our growth in terms of we're doing 3 times more mortgages, 4 times more consumer lending. So it's really helped us to increase the business and relationships with our loyal customers and that is something which will continue, we believe, over the next 3 years. So it's not just about the margins, it's about all the business that we're doing with these 1, 2, 3 customers. Sergio Martínez: Thanks, everyone. We need to leave it here. And obviously, IR team is at your entire disposal today and this after for any follow-up. Thanks, Ana, José Antonio. See you next quarter. Thank you. Ana Patricia Botín: Thank you.