Brazil. January September November 4 th, 2014

Transcription

1 1 Brazil January September 2014 November 4 th, 2014

2 Disclaimer 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. 2 All figures in this presentation were converted to constant currency at an average during Sep.14 of EUR (for income statements and average balances figures) and at EUR at the end of Sep.14 (for final balance sheet figures).

3 Agenda 3 Macro-economic environment and financial system Strategy and business Results Appendix

4 Macro-economic environment 4 Annual GDP Growth (%, real) Interest Rates - Selic (%, end year) (e) 2015 (e) (e) 2015 (e) Annual inflation rate (IPCA %) Exchange Rates R$ / US$ (e) 2015 (e) (e) 2015 (e) Source: The Central Bank of Brazil, IBGE and estimates by Santander Research (October 30 th, 2014) (*) According to IBGE, GDP growth of 2013 was revised from 2.3% to 2.5%.

5 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Macro-economic environment 5 International Reserves and External Debt EMBI (average of period) US$ billion Total External debt Brazil Emerging Markets Reserves Sep.14 Current Account Balance vs. FDI Unemployment Rate (%) - Monthly US$ billion, in 12 months 63.9 Current account balance Foreign direct investment % 7% 6% Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 5% 4% 3% 4.9% Source: The Central Bank of Brazil and IBGE

6 Financial system: Loan and deposit growth 6 Loans decelerate while funding shows an acceleration EUR¹ bn. YoY (%) Total loans % 14.6% 13.7% 11.8% 11.7% 4.8% 47% 53% 20.6% Non Earmarked Loans Earmarked Loans Growth (%) Sep.14/ Sep.13 Sep.13 Dec.13 Mar.14 Jun.14 Sep.14 Total Funding² 1,444 1,488 1,507 1,544 1, % 21% 28% 52% 7.8% YoY (%) 9.7% 9.7% 9.0% 8.8% 10.2% Sep.13 Dec.13 Mar.14 Jun.14 Sep % Total Deposits Other Funding Mututal Funds Growth (%) Sep.14/ Sep.13 Source: The Central Bank of Brazil 1. Exchange Rate R$/EUR end of period as of Sep/ Includes: Total Deposits + Mutual funds + Other Funding from Clients (Debentures + Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA) + Letras Financeiras + COEs (Certificate of Structured Transactions)

7 Agenda 7 Macro-economic environment and financial system Strategy and business Results Appendix

8 Our Franchise 8 Santander Brazil is the country s third largest private sector bank by assets Distribution of Santander branches by region Mid-west + North 6% 15.0% of GDP Northeast Southeast 9% 13.4% of GDP 72% EUR Sep 14 Var. YoY Business and Results Loans¹ 82 bn. 5.5% Deposits² 44 bn. 4.9% Total customer funds³ 126 bn. 15.0% Consolidated Profit 1,493 mn. 1.1% Attributable Profit 1,167 mn. 1.9% Network and Customers Clients (million) Branches 4 2, ATMs 15,179-2,339 South 13% 55.4% of GDP Market Share 5 Loans 8.1% -47 b.p. 16.2% of GDP Deposits 7.6% -18 b.p. 1. Considers the Expanded Portfolio. 2. Includes Demand Deposits, Savings, Time Deposits. 3. Includes funding from clients, other deposits and assets under management. 4. Considers local criteria. 5. Market share as of August, 2014.

9 Strategy 9 We are a universal bank with focus on Retail We seek to expand our Business through: To be the first choice and Linkage: Segmented products and services, simple and effective, multichannel platform, enhancing the maximization of customer satisfaction; Recurrence and Sustainability: business growth with a higher revenues diversification reducing the cost of risk to the industry; Productivity: an intense schedule of productive transformation in line with the evolution of financing industry Capital Discipline and Liquidity: to maintain the soundness, to address regulatory changes and to take advantage of growth opportunities

10 Commercial focus / strategy 10 Customer Base (million) Number of Clients Increasing linkage and customer base Sep.13 Jun.14 Sep.14 Better balance between loans and funding Loan / Funding Ratio 106.9% 98.8% 97.8% Sep.13 Jun.14 Sep.14 The bank has a comfortable liquidity position and a stable and adequate funding structure BIS Ratio Strong capitalisation 20.7% 17.9% 18.8% The highest among large Brazilian Banks Sep.13 Jun.14 Sep.14

11 Loans performance 11 Expanded Credit Portfolio grows 6% in twelve months Constant EUR billion Total loans Sep'14 YoY (%) QoQ (%) Individuals % 1.9% Mortgage % 8.2% Consumer Credit % -0.1% Consumer Finance % -0.5% Companies % 7.2% SMEs % 0.0% Large Corporates % 10.1% Sep.13 Dec.13 Mar.14 Jun.14 Sep.14 Subtotal % 4.4% Other Operations¹ % 2.2% Total % 4.3% 1. Includes portfolios acquired from others banks and other credit risk transactions (debentures, FDIC, CRI, Floating Rate Notes and Promissory Notes).

12 Total customer funds 12 Total Funding+ Mutual Funds grow 15% in twelve months. Highlight to Savings, which grow 17%. Constant EUR billion Sep'14 YoY (%) QoQ (%) EUR billion Total Funding Demand Deposits % -3.6% Savings % 2.4% Time Deposits % 2.0% Total Deposits % 1.5% Other Deposits¹ % 11.0% Sep.13 Dec.13 Mar.14 Jun.14 Sep.14 Total Funding % 5.5% Mutual Funds % 5.2% Total Funding + Mutual Funds % 5.4% 1. Includes Repurchase Agreement backed on Debentures, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA) and Letras Financeiras (Bonds issued by Financial Institution on the domestic market)

13 Agenda 13 Macro-economic environment and financial system Strategy and business Results Appendix

14 Net Interest Income and Spreads 14 Net interest income decreases 1% in twelve months Constant EUR million Net Interest Income Loan spreads, % Commercial Banking 11.9% 11.8% 11.8% 11.6% 11.0% 2,236 2,288 2,298 2,263 2, % 9.8% 9.9% 9.8% 9.1% Total Loans 3Q13 4Q13 1Q14 2Q14 3Q14 Deposit spreads, % 3Q13 4Q13 1Q14 2Q14 3Q14 Interest Rate (average) Selic 8.5% 9.5% 10.4% 10.9% 10.9% 0.8% 0.8% Commercial Banking 1.0% 0.9% 0.9% 1.0% 0.9% 0.9% 0.9% 0.9% Total Deposits 3Q13 4Q13 1Q14 2Q14 3Q14

15 Net Fees 15 Net Fees grow 6% YoY. Adjusting¹, it would grow 9% in the same period. Highlight for credit Cards, Cash and Comex Constant EUR million Net Fees 9M14 9M13 YoY (%) QoQ (%) Current Account % 3.2% Mutual Funds % 10.4% Credit Cards % 4.2% Insurance % -2.4% Values² % -2.1% Foreign Trade (COMEX) % 6.4% Cash % -1.5% Others³ n.a. n.a. 3Q13 4Q13 1Q14 2Q14 3Q14 Total 2,055 1, % 6.7% 1. A normalization due to the new regulation which altered the rule for recognizing insurance policies renewals. 2. Securities brokerage, placement and custody services. 3. Includes guarantees, contingent liabilities and others

16 Gross income 16 Gross Income increases 5% in the quarter Constant EUR million Gross income 9M14 9M13 YoY (%) QoQ (%) 3,064 3,072 2,980 2,946 3,103 Net Interest Income 6,771 6, % -2.4% Net Fees 2,055 1, % 6.7% Subtotal 8,826 8, % -0.3% Other¹ % n.a. Gross Income 9,029 9, % 5.3% 3Q13 4Q13 1Q14 2Q14 3Q14 1. Other includes Gains (losses) on financial transactions and Other operating income

17 Operating expenses 17 Operating expenses, increase 1% YoY, below half of the annual inflation Constant EUR million Operating expenses General and admin. expenses 9M14 9M13 YoY (%) QoQ (%) 3,234 3, % 5.9% 1,233 1,332 1,184 1,180 1,256 Depreciation and amortization % 11.5% Total 3,620 3, % 6.5% Efficiency ratio (with amortisations) 40.1% 38.1% +2.0 pp +0.2 pp 3Q13 4Q13 1Q14 2Q14 3Q14

18 Net operating income after loan-loss provisions (LLPs) 18 Net operating income after LLPs grows 14% YoY Constant EUR million Cost of credit¹ Net loan-loss provisions 6.7% 6.3% 5.8% 5.4% 5.1% 1,060 LLPs and Cost of credit Net Operating Income Loan Losses Provisions Net op. income after LLPs 9M14 9M13 YoY (%) QoQ (%) 5,410 5, % 4.5% (2,795) (3,504) -20.2% 1.1% 2,614 2, % 8.3% NPL Coverage ratio 91.4% 92.0% -0.6 pp -3.4 pp NPL ratio 5.64% 6.12% -0.5 pp -0.1 pp 3Q13 4Q13 1Q14 2Q14 3Q14 (*) Cost of credit = Last 12 month loan-loss provisions / average lending.

19 Attributable profit 19 Attributable profit of EUR 1,167 MM in 9M14, a growth of 2% in YoY Constant EUR million Attributable profit 9M14 9M13 YoY (%) QoQ (%) Profit before Taxes 2,053 1, % -2.1% Tax on Profit (560) (518) 8.1% -11.4% Net Profit 1,493 1, % 1.4% Attributable Profit 1,167 1, % 1.9% Effective Tax Rate 27.3% 26.0% 1.3 p.p. 2.6 p.p. 3Q13 4Q13 1Q14 2Q14 3Q14

20 Conclusions 20 Market Environment & Financial System Solid macroeconomic fundamentals: a positive perspective for the medium and longterm potential of the Brazilian economy. Financial System: - Loans grows 11%, mostly influenced by Earmarked Loans - Total Funding grows 10%, driven by Other Funding, which grow 30% Strategy & Business Loans grow, focus on products with lower risk, prioritizing credit quality Funding: growth in double digit is explained by the increase of customer base (linkage) and market evolution Gross Revenues: affected by product mix change, sluggish economic growth. In the quarter show a good evolution (+5%) Results Costs under control: growth below half of the annual inflation Loan Losses Provisions: Positive evolution with a decrease of 20% in YoY Attributable profit grows 2% in the quarter and in YoY (*) All comparisons are in twelve months

21 Agenda 21 Macro-economic environment and financial system Strategy and business Results Appendix

22 Balance sheet EUR million* Variation Amount % Loans and credits** 72,918 69,395 3, Trading portfolio (w/o loans) 18,130 11,663 6, Available-for-sale financial assets 15,290 12,273 3, Due from credit institutions** 14,982 11,681 3, Intangible assets and property and equipment 2,742 2,863 (121) (4.2) Other assets 30,763 31,265 (502) (1.6) Total assets/liabilities & shareholders' equity 154, ,140 15, Customer deposits** 70,892 65,801 5, Marketable debt securities** 22,999 20,000 2, Subordinated debt 4,372 2,858 1, Insurance liabilities Due to credit institutions** 16,651 14,601 2, Other liabilities 28,368 23,286 5, Shareholders' equity*** 11,542 12,595 (1,053) (8.4) Off-balance-sheet funds 50,864 45,571 5, Mutual funds 47,513 42,445 5, Pension funds Managed portfolios 3,351 3, Customer funds under management 149, ,230 14, (*) As of R$/EUR (**) Includes all stock of concept classified in the balance sheet (***) Not including profit of the year

23 Income Statement 23 EUR million. Constant currency* Variation 9M 14 9M 13 Amount % Net interest income 6,771 6,975 (204) (2.9) Net fees 2,055 1, Gains (losses) on financial transactions (304) (70.4) Other operating income** Gross income 9,029 9,367 (338) (3.6) Operating expenses (3,620) (3,566) (53) 1.5 General administrative expenses (3,234) (3,171) (63) 2.0 Personnel (1,761) (1,719) (42) 2.4 Other general administrative expenses (1,472) (1,451) (21) 1.4 Depreciation and amortisation (386) (396) 10 (2.5) Net operating income 5,410 5,801 (391) (6.7) Net loan-loss provisions (2,795) (3,504) 709 (20.2) Other income (561) (302) (259) 86.0 Profit before taxes 2,053 1, Tax on profit (560) (518) (42) 8.1 Profit from continuing operations 1,493 1, Net profit from discontinued operations Consolidated profit 1,493 1, Minority interests (5) (1.7) Attributable profit to the Group 1,167 1, (*) As of R$/EUR (**) Including dividends, income from equity-accounted method and other operating income/expenses

24 Quarterly statements of income 24 EUR million. Constant currency* 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 Net interest income 2,382 2,357 2,236 2,288 2,298 2,263 2,209 Net fees Gains (losses) on financial transactions (38) 148 Other operating income** Gross income 3,215 3,088 3,064 3,072 2,980 2,946 3,103 Operating expenses (1,156) (1,178) (1,233) (1,332) (1,184) (1,180) (1,256) General administrative expenses (1,027) (1,044) (1,100) (1,194) (1,051) (1,060) (1,122) Personnel (573) (563) (584) (639) (574) (583) (603) Other general administrative expenses (454) (482) (516) (555) (477) (477) (519) Depreciation and amortisation (129) (134) (133) (139) (133) (120) (134) Net operating income 2,060 1,910 1,831 1,739 1,796 1,767 1,847 Net loan-loss provisions (1,251) (1,193) (1,060) (999) (946) (920) (930) Other income (66) (115) (121) (157) (149) (164) (248) Profit before taxes Tax on profit (188) (144) (187) (184) (211) (185) (164) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group (*) As of R$/EUR (**) Including dividends, income from equity-accounted method and other operating income/expenses

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