Brazil. Results 1Q10. April 29 th, 2010

Transcription

1 Brazil Results 1Q10 April 29 th, 2010

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. All figures in this presentation were converted to constant currency at na average during 1Q10 of US$ (for income statements and average balances figures) and at US$ at the end of 1Q10 (for final balance sheet figures).

3 Table of Contents 3 Macroeconomic Scenario and Financial System 1Q10 -Strategies - Business -Results

4 Macroeconomic Scenario 4 Retake of economic growth in 2010 GDP (real annual growth %) Interest rate Selic (Final %) (e) 2011(e) (e) 2011(e) Inflation (IPCA %) Exchange rate R$/US$ End of Period (e) 2011(e) (e) 2011(e) Source: The Central Bank of Brazil, IBGE and Santander Research

5 Macroeconomic Scenario 5 International reserves and foreign direct investment flow remains high International reserves and External debt US$ billion Current Account Balance vs. FDI US$ billion, in 12 months External debt Reserves Current account balance Foreign direct investment Unemployment rate (%) Exchange rate End of Period Source: The Central Bank of Brazil and IBGE

6 Financial System: Credit Evolution Credit in the private sector grows 8% in 12 months. Corporate loans shows some recovery signs 6 %12M Total Loans Total Loans %12M Private Banks %12M Public Banks US$ billion (constant FX rate) Nonearmarked Loans to Individuals US$ billion (constant FX rate) Nonearmarked Loans to Corporations US$ billion (constant FX rate) US$ billion (constant FX rate) Regulated Loans Volume Y-o- Y Variation % Source: The Central Bank of Brazil

7 Financial System: Deposits + Funds Evolution US$ Billion (Constant FX Rate) Deposits and Funds grew at 16%, driven by demand + savings and mutual funds 7 Deposits + Mutual Funds Deposits Mutual funds Var. 12M Feb.10 Demand + Savings: 17.5% Time: 0.4% Var. 12M Feb.10 Retail: 15% Non Retail: 24% Time Demand + Savings Feb. 09 May. 09 Aug. 09 Nov. 09 Feb. 10 Volume Y-o- Y Variation % Source: The Central Bank of Brazil

8 Solid macroeconomic fundamentals driven by an optimistic enviroment Lower external vulnerability Solid economic policies Elections 2010 (stability of economic policies) Favorable expectations for investment

9 Table of Contents 9 Macroeconomic Scenario and Financial System 1Q10 -Strategies - Business -Results

10 Franchise 10 Santander is the 3rd largest private bank in Brazil, with scale to compete and grow Mar/10 Share (%)* Loan¹ (US$ Bi) % Market share Number of branches February/2010 Deposits (US$ Bi) % Deposits + Funds (US$ Bi) % North: 5% of GDP Market Share: 5% Net Profit (US$ MM) 979 Attributable profit (US$MM) 833 * Data from February/2010 Northeast: 13% of GDP Market Share: 7% Solid distribution platform Bank with one of the higher numbers of point of sales in South/South East (73% of GDP) 2,091 1,496 18,102 Center-west: 9% of GDP Market Share: 5% Southeast: 57% of GDP Market Share: 15% Branches Mini branches Clients(million)² +52 thousand employees 3 ATM s South: 16% of GDP Market Share: 9% Source: The Central Bank of Brazil and IBGE GDP 1) Volume refers to total loans and market share of unrestricted loans 2) Current account holders within 30 days, according to Central Bank as of March/2010 3) Includes Isban, Produban and Universia

11 Integration 11 Integration process moves as planned.. 1 st stage 2 nd stage 3 rd stage Aug/08 Mar/09 May/10 Sep/10 I Senior Management Integrated II Centralized areas integrated Risk management, Human resources, Marketing, Auditing financial control, Compliance, etc. III III Wholesale, Private & Asset integrated GB&M, Corporate, e Middle Re-branding IV IV Credit card system VIV ATMs integrated VI V ATMs plataform Upgrade on branches infrastructure Insurance System VIII VI Complete Integration/ Unified Network/ Unified Brands VII V New comercial model Branches Big Bang Call center integration Unification of Brands

12 Integration 12 Sinergies R$ million , , We reached cost synergies of R$ 1,338 MM in 2009, R$ 338 MM above expectations 2009e 1T10e 1Q10e 1Q10 1T10 Estimates Actual

13 Santander Acquiring / Conta Integrada 13 Pioneer strategy of commercial model... Brand MASTERCARD License Integrated value offer Acquiring and Banking Business FINANCIAL SERVICES ACQUIRER SERVICES Investment in Capturing Network and Processing Platform Other POS Capturing Services Commercial Model Distribution/Pricing Communication and Media Time To Market 165 thousands POS (Capturing Terminals ) 2012 Goals 150,000 new current accounts originated by the acquiring business 300,000 new affiliated merchants ~ R$ 5 billion in loans 10% market share in terms of transaction volume of the cards market

14 Santander Acquiring / Conta Integrada Santander (Acquiring + Financial Services) & Getnet = Capillarity Synergy and corporate client base + technological knowledge 14 A Win-win Relationship: the bank recognizes the financial volume of the client in transactions made with MASTERCARD brand credit cards: Reduction of up to 100% of checking account fee for financial transaction volume over R$ 3 thousand/month in each POS 5 days without interest rate charge by using overdraft Guarateed Account or Working Capital limits based on financial transaction volume multiples directty in the POS Corporate current account with integrated bank domicile POS connection using both dial-up and/or broadband. SECONDARY BENEFITS: Competitive rates for prepayment of receivables Prepayment of receivables through POS (pioneer in the market) Call center support to merchants 24hours / 7 days Mobile Recharge SERASA / RECHEQUE* consultancy Regional cards capture * Credit Bureau

15 Table of Contents 15 Macroeconomic Scenario and Financial System 1Q10 -Strategies - Business -Results

16 Business: Portfolio Evolution 16 Fall in twelve months explained by the impact of the crisis on companies. Recovery in individuals and consumer since Sep-09 US$ Billion (Constant FX Rate) % 0.2% US$ Bi US$ Bi Y-o-Y Variation Individuals % Consumer financing % SMEs/Companies % Retail % Corporate¹ % Total % Mar.09 Jun.09 Sep.09 Dec.09 Mar.10 Total + Purchase of Portfolio % 1. Includes Corporate Activities, Corporate and GB&M 2. Includes purchase of portfolio of other banks with co-obligation

17 Business: Loans by products 17 Highlight to Payroll, Mortgage and Credit Cards Payroll Loans¹ Auto US$ Million 32.9% US$ Million 6.8% Credit Cards Mortgage ² US$ Million 22.5% US$ Million 30.4% 5,432 4, % 15.2% 1.Includes purchase of portfolio of US$ 474 million in Mar/09 and US$ 1,421 million in Mar/10. 2.Includes funding for Individuals and Corporate.

18 Business: Deposits + Funds Evolution 18 Highlight to the growth recovery Funds, that grew 22%. Demand deposit + savings grew 21% US$ Billion (Constant FX Rate) 1.6% -1.4% US$ Bi US$ Bi Y-o-Y Variation Demand+Savings % Time Deposits % Mutual Funds¹ % Total % Funds Total Deposits 1. Refer only to funds managed by Asset Management.

19 Business: Market Share 19 Market Share Share (%) Feb/10 Var. 12 months (b.p) Var. YTD (b.p) Total Unrestricted Loans¹ 12.1% Unrestricted Individuals Loans 13.7% Payroll Loans 7.2% Auto Loans¹ 14.8% Personal Loans 20.5% Credit Card 10.4% Unrestricted Corporate Loans 10.6% Deposits 9.5% Core Deposits 8.1% Mutual Funds 7.5% Source: The Central Bank of Brazil and Anbid 1. Includes leasing.

20 Table of Contents 20 Macroeconomic Scenario and Financial System 1Q10 -Strategies - Business -Results

21 Results: Net Interest Income 21 Net Interest Income rose 11% in 12 months US$ Million (Constant FX Rate) Deposits Spread, % 11.3% 0.3% ,1 0,9 1,0 1,0 0,9 0,8 0,9 0,9 Retail 0,9 0,8 Total Deposits 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 Loans Spread, % Net interest income 15,9 16,4 15,8 15,1 Retail 15,3 12,0 12,1 12,0 11,9 12,0 Interest Rate (average) Selic Total Loans 11.70% 9.54% 8.65% 8.65% 8.65% 1Q09 2Q09 3Q09 4Q09 1Q10

22 Results: Net Fees 22 Net Fees grow 3% in 12 months, highlight for credit cards and mutual funds US$ Million (Constant FX Rate) 3.5% 1Q10 1Q09 Y-o-Y Variation -6.9% Current Account % 995 Mutual Funds % Credit Cards % Insurance¹ % 896 Values² % Foreign Trade (COMEX) % 1Q09 2Q09 3Q09 4Q09 1Q10 Net Fees Cash % Others³ % Total % 1. Includes capitalization in Securities brokerage, placement and custody services. 3. Includes pensions funds.

23 Results: Gross Operating Income 23 Gross Customer Operating Income grows 5% in 12 months US$ Million (Constant FX Rate) 5.1% -4.1% 4,692 4,665 4,260 4,292 4, ,961 3,118 3,209 3,285 3,295 1Q09 2Q09 3Q09 4Q09 1Q10 Net Customers Interest Income Net Fees Gain / losses on financial transaction + Others Net Interest Income 1Q10 1Q09 Y-o-Y Variation 3,295 2, % Net Fees % Subtotal 4,222 3, % Gain/ losses on financial transaction + Others % Total 4,475 4, %

24 Results: General Administrative Expenses and Amortization Business expansion strategy having expenses under control 24 US$ Million (Constant FX Rate) 0.2% 1,741 1,625 1,616 1, ,490 1,484 1,501 1, % 1, ,479 Administrative Expenses 1Q10 1Q09 Y-o-Y Variation 1,479 1, % Amortization % Total 1,628 1, % 1Q09 2Q09 3Q09 4Q09 1Q10 Amortization Administrative Expenses

25 Results: Net Operating Income 25 Net Operating Income increase is driven by revenue growth and expenses under control US$ Million (Constant FX Rate) 8.1% -2.6% 1Q10 1Q09 Y-o-Y Variation 2,635 2,676 3, ,925 2,847 Net Interest Income + Fees² 4,229 3, % Gain/ losses on financial transaction % Adm. Expenses + Amortization. (1,628) (1,625) 0.2% 1Q09 2Q09 3Q09 4Q09 1Q10 Net Operating Income 2,847 2, % 2. Includes others revenues Operating Income 1) 3Q09: Includes the effects of Visanet (green shoe) of US$ 137 MM.

26 Results: Gross Revenue vs Expenses Sustainable growth of the jaws 26 Gross Revenue¹ and Adm. Expenses² US$ Million (Constant FX Rate) Var. 1Q10 vs. 1Q09 (%) 3,930 4,133 4,211 4,246 4, % ,490 1,484 1,501 1,612 1, % 1Q09 2Q09 3Q09 4Q09 1Q10 Gross Revenue Adm. Expenses 1. Gross Revenue = Net Interest Income (includes dividends) + Net Fees 2. Total Administrative Expenses, excluding amortization

27 Results: Provisions and Loan Quality 27 Provisions follow growth of the market US$ MM (Constant FX Rate) Provisions and Risk Premium¹ NPL and Coverage 5.3% 6.2% 6.5% 6.1% 6.3% 1,183 1,247 1,548 1,414 1, % 5.0% Q09 1Q10 Specific Generic + Country Risk Risk Premium NPL Coverage 1. Risk Premium: ((Initial NPL Balance Ending NPL Balance) + Charge Offs Recoveries) / Average Loan portfolio

28 Results: Net Profit 28 Net Income of US$ 979 MM in 1Q10, growth of 32% in 12 months US$ MM (Constant FX Rate) 32.3% 1.1% 1Q10 1Q09 Var 10/09,% Profit before Taxes 1,221 1, % -Taxes (242) (435) -44.2% Net Profit % Attributable profit % Tax Rate % 19.8% 37.0%

29 Results: Indicators 29 Cost control improves Coverage Fees Over Expenses ratio Efficiency*, % Coverage Fees Over Expenses¹, % ROE, % +260 b.p b.p b.p Q09 1Q10 1Q09 1Q10 1Q09 1Q10 (*) Includes amortization 1. Fees Coverage over Expenses (Fees/ expenses).

30 Conclusões: 30 Integration of cards platform in 1Q10 Final phase of the integration process Improvement in credit quality Expenses under control with capture of synergies Net Profit growth of 32% (1Q10 vs. 1T09)

31 31 ANNEXES Results Quartely Results Balance Sheet

32 Results Criterion Spain US$ million. Constant currency* Variation Q1 10 Q1 09 Amount % 32 Net interest income 3,295 2, Net fees Gains (losses) on financial transactions (83) (25.3) Other operating income** 6 73 (67) (91.5) Gross income 4,475 4, Operating expenses (1,628) (1,625) (3) 0.2 General administrative expenses (1,479) (1,490) 11 (0.7) Personnel (774) (761) (13) 1.6 Other general administrative expenses (706) (729) 23 (3.2) Depreciation and amortisation (149) (135) (14) 10.3 Net operating income 2,847 2, Net loan-loss provisions (1,308) (1,183) (125) 10.6 Other income (318) (278) (40) 14.5 Profit before taxes 1,221 1, Tax on profit (242) (435) 192 (44.2) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * As of Q1'10 ** Including dividends, income from equity-accounted method and other operating income/expenses

33 Quarterly Results Criterion Spain 33 US$ million. Constant currency* Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Net interest income 2,961 3,118 3,209 3,285 3,295 Net fees Gains (losses) on financial transactions Other operating income** (34) 6 Gross income 4,260 4,292 4,692 4,665 4,475 Operating expenses (1,625) (1,616) (1,638) (1,740) (1,628) General administrative expenses (1,490) (1,484) (1,501) (1,612) (1,479) Personnel (761) (771) (756) (835) (774) Other general administrative expenses (729) (713) (745) (777) (706) Depreciation and amortisation (135) (132) (137) (129) (149) Net operating income 2,635 2,676 3,054 2,925 2,847 Net loan-loss provisions (1,183) (1,247) (1,548) (1,414) (1,308) Other income (278) (345) (223) (162) (318) Profit before taxes 1,174 1,084 1,284 1,348 1,221 Tax on profit (435) (245) (330) (380) (242) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * As of Q1'10 ** Including dividends, income from equity-accounted method and other operating income/expenses

34 Balance Sheet Criterion Spain US$ million. Constant currency* Variation Amount % 34 Loans and credits** 76,313 80,708 (4,395) (5.4) Trading portfolio (w/o loans) 13,240 14,364 (1,123) (7.8) Available-for-sale financial assets 21,447 17,120 4, Due from credit institutions** 12,653 24,033 (11,380) (47.4) Intangible assets and property and equipment 4,204 3, Other assets 38,979 28,927 10, Total assets/liabilities & shareholders' equity 166, ,873 (2,037) (1.2) Customer deposits** 85,006 87,581 (2,574) (2.9) Marketable debt securities** 6,301 6,452 (151) (2.3) Subordinated debt 5,525 5, Insurance liabilities 6,331 6,922 (591) (8.5) Due to credit institutions** 18,041 29,281 (11,240) (38.4) Other liabilities 28,607 19,872 8, Shareholders' equity*** 17,025 13,486 3, Off-balance-sheet funds 55,221 45,841 9, Mutual funds 50,581 42,327 8, Pension funds Managed portfolios 4,640 3,092 1, Savings-insurance policies (100.0) Customer funds under management 152, ,153 6, * As of ** Includes all stock of concept classified in the balance sheet *** Not including profit of the year

35 Investor Relations (Brazil) 2,235 Juscelino Kubitschek Avenue - 10º floor São Paulo SP Brazil Tel Fax ri@santander.com.br Relaciones con Inversores y Analistas Ciudad Grupo Santander Edificio Pereda, 1ª planta Avda de Cantabria, s/n Boadilla del Monte, Madrid (España) Teléfonos: Fax: investor@gruposantander.com