Chile. 3Q09 Results. Boadilla, October 2009

Transcription

1 3Q09 Results Boadilla, October 2009

2 Important Information 2 Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the SEC ), could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever. No offering of Securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption there from. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act Note: Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, historical share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. Note: The results information contained in this presentation has been prepared according to Spanish accounting criteria and regulation in a manner applicable to all subsidiaries of the Santander Group and as a result it may differ from the one disclosed locally by Banco Santander

3 Agenda 3 Macroeconomic scenario and review of banking system Strategy and business -Results

4 Macroeconomic Scenario 4 Economy would grow 4.5% in 2010 and inflation will normalize GDP (YoY Growth, % ) Internal Demand (YoY growth, %) (f) 2010 (f) (f) 2010 (f) Inflation (Chg. CPI, %) Unemployment (Avg., % of workforce) (f) 2010 (f) (f) 2010 (f) Source: Central Bank. (f): Forecast Santander Group

5 Macroeconomic Scenario driven by better external conditions, consumers confidence and monetary & fiscal incentives 5 Copper Price (US$ / pound) Index of Economic Perceptions** Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09* Central Bank ST rate (%, end- of period) 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09* Fiscal Surplus (% GDP) Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09* * As of September, 30th or latest information available. ** Percentage of population that is optimistic about economic outlook in 12 months minus percentage that is pessimistic. Source: Adimark-GfK, Central Bank of (f) 2010 (f)

6 Macroeconomic Scenario 6 Positive growth since May 2009 * Monthly change IMACEC (GDP) Cyclical Trend: change of the economy in relation with the previous month annualized adjusted by calendar effects and seasonality. Source: Central Bank of.

7 Banking System: Customer funds growth 7 Growth of Customer and mutual funds stabilizes Customer Funds, constant US$ billion* Total Costumer Funds Mutual funds Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Sight deposits Sep.07 Mar-08 Sep-08 Mar-09 Aug-09 Time deposits Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Sep.07 Mar-08 Sep-08 Mar-09 Aug-09 Volume YoY growth, % * Using the exchange rate as of 3Q09. Source: Superintendencia de Bancos de

8 Banking System: Loan growth 8 Loan growth slows Loans, constant US$ billion* Total loans Corporate lending % 21.8% 19.4% 12.7% 2.2% 19.3% 20.0% 22.7% 13.9% 0.7% Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Consumer lending Residential mortgage** % 17.0% 13.1% 3.0% -0.5% 14.7% 15.9% 13.9% 9.6% 9.0% Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Sep-07 Mar-08 Sep-08 Mar-09 Aug-09 Volume YoY Growth, % * Using the exchange rate as of 3Q09. ** Residential mortgage change in real terms. Source: Superintendencia de Bancos de

9 Banking System: Loan growth 9 although this trend begins to reverse Source: Superintendencia de Bancos de

10 Agenda 10 Macroeconomic scenario and review of banking system Strategy and business -Results

11 Our franchise 11 Santander : the strongest banking franchise in Sept Bn US$ Market Share* Rank Loans: % 1 Deposits: % 1 Customer funds: % 2 Net income: 658 US$mn 34.6% 1 Attribut. net income 533 US$mn Clients: 3.0 millions 41.3%** 1 Branches: % 1 ATMs 1, % 1 * As of August ** Over workforce. Market share, Source: Superintendencia de Bancos de, latest available information

12 Business: Market Share 12 Market share falls slightly due to focus on profitability Loans Individuals - Consumer + Credit cards -Mortgage Loans to companies* Customer funds Santander : market share, % Mkt. Share August 09, % Change in last 12M (basic points) Focus on selective growth and liquidity over market share. As of August 2009, Santander generated a record 34.6% of profits in the an financial system. * Includes Government and lending to SMEs, Middle-market and Corporate. Source: Superintendencia de Bancos de

13 Liquidity 13 Healthy liquidity position 7.0 Balance Sheet Structure US$ billion as of Mortgage Other Loans Loans Liabilities Equity Bonds Customers Deposits Core funding* at 106.6% of loans Pension funds deposits represent 12% of core funding, with greater duration than retail deposits Additionally, the Bank has US$ 6.2 billion in liquid assets, mainly Banco Central de notes * Customers deposits, bonds and equity

14 Capital 14 High capital base Capital ratios, % Dec Sept BIS RATIO 13.8% 15.2% CORE CAPITAL 10.1% 11.2% TIER II 3.7% 4.0% Santander : best risk rating in Latin America Deposits: Senior Bonds: Sub-Bonds: S&P: A+ A+ A Moody s: A1 Aa3 A1 Fitch: A+ Local ratings (Feller & Fitch): AAA senior, AA+ subordinated Active management of RWAs

15 Capital 15 High return / High capital level BIS Ratio vs. pre tax ROE; august 2009 Return on capital (before taxes) Santander reaches the highest ROE among all an banks Source: Superintendencia de Bancos de. Santander s figures correspond to the Bank, not to the Group.

16 Our Strategy 16 Strategy centered on 4 objectives Santander : Strategic drivers 1. Active management of risk and recoveries to reduce impact of the slowing down of the economy 2. Increase in efficiency; focus on productivity gains / control of recurring costs to compensate for the lower top-line growth 3. Selective growth of business in line with better economic perspectives and normalization of spreads 4. Increase of cross-selling and product usage of the current clients base to boost fees

17 Business: Customer funds 17 As interest rates fall funds shift from time deposits to mutual funds Customer funds, constant US$ billion* Customer funds Bn US$ Annual growth rate,%* Sight % Time deposits % Mutual Funds % -1.2 Total 25.4 (1.2%) Volume YoY Growth % Bonds** % Commercial strategy and negative inflation boost sight deposits * Constant exchange rate as of 9M09. ** Senior and subordinated

18 Business: Loan growth 18 Retail loans Volume growth begins to recover Loans, constant US$ billion* Bn US$ Annual growth rate,%* Quarterly rate, %* Retail Volume YoY Growth % Individuals** % Consumer + C. Cards % Mortgage % SMEs % Total Retail % Middle-Market*** % Commercial % Corporate % Total**** 25.7 (1.6%) 2.5% 1.5% 1.6% 2.4% 2.4% 0.8% 2.1% 0.7% 1.8% * Constant exchange rate as of 9M09. ** Includes Others (past due loans and other loans to individuals). *** Includes Institutional lending. **** Includes other loans non-segment.

19 Business: Loan growth Selective loan growth 19 YoY growth by segment as of , % (in oval) and percentage over total loans* Companies Chg. Vol. 09/08 Companies: -3,3% Individuals Chg. Vol. 09/08 Individuals: 4,6% 30.2% 0.2% 31.3% 7.0 % 5.4 % -14.8% 39.7% -7.1% 34.3% 35.7% -12.7% 32.3% 2.80% 28.6% 3.70% 31.3% 32.7% 53.3% 19.5% 60.3% 1.1% Sep.08 Sep-09 Sep.08 Sep.09 Corporate Institutional Large SM Es M iddle-high M iddle-low M iddle * Relative weight of the segment over total of loans to individuals and companies

20 Conclusions: strategy and business 20 / Banking system has weathered well the current economic environment. Economy begins to recover in 3Q09 and perspectives for 2010 improve Financial System begins to show positive growth trends in line with the economic recovery Santander keeps strong liquidity position and solid capitalization levels Santander remains strategy centered on 4 objectives: Active management of the whole cycle of risk. Managing recoveries as a business Increasing efficiency: management centered on extracting value from current client base and new branches installed in the last 4 years Focus on selective growth in line with the stronger growth of the economy and increasing product usage and transactions

21 Agenda 21 Macroeconomic scenario and review of banking system Strategy and business - Results

22 Results: Net interest income Higher spreads explains 11.8% increase of client net interest income 22 Net interest income Net interest income, constant US$ million* M09 Client Net Int. Inc. 1,330 9M08 1,190 Chg., % 09/08* 11.8% Non-client NII n/a Net interest income 1,186 1, % Q08 4Q08 1Q09 2Q09 3Q09 Client NII Non-client NI Total Quarterly Inflation rate** 3.63% 2.21% -2.30% -0.13% -0.47% Non-client NII hit by deflation * Constant exchange rate as of 9M09. ** UF Quarterly change, an unit indexed to the variation of the Consumer Price Index (CPI)

23 Results: Spreads 23 Normalization of loan spreads Deposit Spread, % Loan Spread, % Commercial Banking Commercial Banking , Total deposits Total loans 3Q08 4Q08 1Q09 2Q09 3Q09 3Q08 4Q08 1Q09 2Q09 3Q09 Sharp decrease in interest rates impacts spread earned over sight deposits

24 Results: Fees + Insurance activity results 24 Moderate growth of fee income Fees, US$ million* Fees and Insurance Activities 9M09 9M08 Chg., % 09/08* Q08 4Q08 1Q09 2Q09 3Q09 Insurance** Checking accts Credit cards Asset mgmt. Foreign Trade Cash mgmt. Securities brokerage Others % -15.5% 21.6% -2.6% 66.7% 14.3% 9.1% -14.5% Total % Note: Fees % Fees Total Insurance activity Insurance Activity % * Constant exchange rate as of 9M09. ** Includes insurance brokerage fees and insurance activity results

25 Results: Gains on Financial Transactions 25 Fall in interest rates and deflation boosts Gains on Financial Transactions Gains on Financial Transactions, constant US$ million* Gains on Financial Transactions Q08 4Q08 1Q09 2Q09 3Q09 Client Financ. Trx. 149 Total Non-client Financ. Trx. 10-Years Interest Rate 3.24% 3.28% 2.55% 2.91% 2.80% Gains Financ. Transac. of which Client Financ. Transac. 9M09 9M08 Chg., % 09/08* x % Increase of Gains on Financial Transactions offsets to a large extent the fall in Nonclient Net interest income * Constant exchange rate as of 9M09

26 Results: Gross client income 26 Gross client income increases 10.2% in 2009 Gross client income Gross client income, US$* millions 9M09 9M08 Chg., % 09/08* Client net int. inc. 1,330 Fees Insurance Activity 1, % % % Client Financial Trx % Total 1,861 1, % 3Q08 4Q08 1Q09 2Q09 3Q09 Client NII Fees+Insurance Client Financial Trx. Total * Constant exchange rate as of 9M09

27 Results: Costs Aiming for zero cost growth in 2009 Costs, US$* millions 27 Costs -1.0% 9M09 9M08 Chg., % 09/08* Adm. expenses Depreciation % % Operating costs % 3Q08 4Q08 1Q09 2Q09 3Q09 Adm. Expenses Total Depreciation Efficiency improves 260 bp., reaching 33.1% * Constant exchange rate as of 9M09

28 Results: Net operating income Activities with clients boost operating income by 13.0% 28 Net operating income, constant US$ million* 1, % 1,221 9M08 9M09 * Constant exchange rate as of 9M09

29 Results: Loan loss provisions, risk premium and asset quality Positive evolution of provisions expense 29 Net operating income & Net Loan Loss Provisions, US$ million * % Provision expense 5.8% % 2.38% 2.53% 2.60% M09 9M08 Chg., % 09/08* Net op. income 1,221 1, % Credit provisions % Net op. inc. net of credit prov % Note: Coverage 94.5% 110.8% NPL ratio 3.38% 2.45% 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 Credit provisions Generic provisions Total Risk premium Sharp decrease in NPL; provisions 3Q09 fall 32% and 17% vs. 1Q09 and 2Q09 respectively * Constant exchange rate as of 9M09.

30 Results: Loan loss provisions, risk premium and asset quality 30 due to favorable evolution of risk in individuals Monthly growth of Substandard loans*, Ch$ millions 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 * Monthly grow of Substandard loans of individuals. Substandard loans: NPLs + deteriorated loans + Charge-offs - Recoveries Individuals The greater participation of commercial executives in controlling asset quality has successful results

31 Results: Net income Net income before taxes grows 1.6% Net Income, US$ million * 31 Net income 9M09 9M08 Chg., % 09/08* Net Inc. before taxes % Taxes % Net income % Tax rate,% 15.2% 12.0% +3.2 Attributable profit % 3Q08 4Q08 1Q09 2Q09 3Q09 * Constant exchange rate as of 9M09

32 Results: Ratios ROE reaches 29.5% and Efficiency 33.1% Financial indexes accumulated, % 32 ROE Efficiency* M08 9M09 9M08 9M09 Fees / Costs M08 9M09 * Cost / Income. Includes depreciation and insurance activity

33 Conclusions 33 / Banking system has weathered well the current economic environment. Economy begins to recover in 3Q09 and perspectives for 2010 improve Santander: focus on profitability drives client income: Client NII grows 11.8% in 12 months. Impact of negative inflation on Non-client NII reduces growth of Net interest income Increase of Gains on Financial Transactions due to reduction of interest rates and inflation offsets to a large extent the decrease of Non-client margins Increase of client related income and cost control boost Net operating income 13.0%. Net op. income after of credit provisions grows 0.4% in the period Provision expense declines compared to 1Q and 2Q 2009 Net income before taxes rises 1.6% vs. 9M08. ROE reaches 29.5% and Efficiency improves 260 bp., reaching 33.1% Santander maintains strategy focused on profitability. Volumes begin to recover in the quarter

34 34 ANEXXES Income Statement Quarterly Income Statement Balance sheet

35 Income Statement 35 US$ million. Constant currency* Variation 9M 09 9M 08 Amount % Net interest income 1,186 1,278 (92) (7.2) Net fees Gains (losses) on financial transactions Other operating income** Gross income 1,825 1, Operating expenses (604) (600) (4) 0.7 General administrative expenses (536) (542) 6 (1.0) Personnel (326) (334) 8 (2.5) Other general administrative expenses (210) (208) (3) 1.3 Depreciation and amortisation (68) (58) (10) 17.2 Net operating income 1,221 1, Net loan-loss provisions (466) (328) (138) 42.0 Other income Profit before taxes Tax on profit (118) (92) (26) 27.7 Profit from continuing operations (13) (2.0) Net profit from discontinued operations Consolidated profit (13) (2.0) Minority interests (10) (7.7) Attributable profit to the Group (3) (0.6) * As of 9M'09 ** Including dividends, income from equity-accounted method and other operating income/expenses

36 Quarterly Income Statement 36 US$ million. Constant currency* Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Net interest income Net fees Gains (losses) on financial transactions Other operating income** Gross income Operating expenses (188) (206) (205) (202) (196) (205) (203) General administrative expenses (169) (187) (186) (181) (175) (181) (180) Personnel (104) (117) (113) (109) (106) (111) (109) Other general administrative expenses (65) (70) (73) (71) (69) (70) (71) Depreciation and amortisation (20) (19) (19) (21) (21) (23) (23) Net operating income Net loan-loss provisions (86) (122) (120) (141) (186) (153) (127) Other income 13 3 (5) (38) Profit before taxes Tax on profit (24) (27) (42) (34) (40) (39) (39) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * As of 9M'09 ** Including dividends, income from equity-accounted method and other operating income/expenses

37 Balance Sheet 37 US$ million. Constant currency* Variation Amount % Loans and credits** 25,702 26,113 (411) (1.6) Trading portfolio (w/o loans) 4,746 3,514 1, Available-for-sale financial assets 3,808 2,467 1, Due from credit institutions** 2,775 2, Intangible assets and property and equipment (6) (1.2) Other assets 2,042 2,906 (865) (29.8) Total assets/liabilities & shareholders' equity 39,535 37,726 1, Customer deposits** 18,860 20,807 (1,947) (9.4) Marketable debt securities** 3,827 3, Subordinated debt 1,136 1, Insurance liabilities Due to credit institutions** 7,368 5,739 1, Other liabilities 5,744 4,476 1, Shareholders' equity 2,356 2, Off-balance-sheet funds 6,577 4,916 1, Mutual funds 6,536 4,904 1, Pension funds Managed portfolios Savings-insurance policies Customer funds under management 30,401 30, * As of ** Includes all stock of concept classified in the balance sheet

38 Investor Relations Bandera 140 Piso 19 Santiago, Tel: (562) Fax (562) Investor and Analyst Relations Ciudad Grupo Santander - Avda de Cantabria, s/n Boadilla del Monte (Madrid) Tel Centralita: Fax: investor@gruposantander.com