Brazil. Results January 30 th, 2014

Transcription

1 Brazil Results 2013 January 30 th, 2014

2 Important information 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 an average during Dec.13 of US$ (for income statements and average balances figures) and at US$ at the end of Dec.13 (for final balance sheet figures). 2

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

4 Macroeconomic Scenario 4 GDP (real annual growth %) Interest Rate Selic (Final %) (e) 2014 (e) 2015 (e) (e) 2015 (e) Inflation (IPCA %) Exchange Rate R$/US$ End of period (e) 2015 (e) (e) 2015 (e) Source: The Central Bank of Brazil, IBGE and estimates by Santander Research (January 27 th, 2014). (*) GDP growth of 2012 was revised from 0.9% to 1.0%, according to IBGE.

5 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Macroeconomic Scenario 5 International Reserves and External Debt Current Account Balance vs. FDI US$ billion Total External debt¹ US$ billion, in 12 months Current account balance Foreign direct investment Reserves Exchange Rate Nov-11 May-12 Nov-12 May-13 Nov-13 EMBI End of Period 2.43 R$/US$ R$/EUR 3.25 Average of Period 399 Brazil Emerging Markets Source: The Central Bank of Brazil and IBGE 1. Last data from Nov/13

6 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Macroeconomic Scenario 6 Interest rate¹ and Inflation Unemployment Rate (%) - Monthly 10.90% Interest rate (Selic) Inflation - IPCA - 12 moths 9.90% 7 Unemployment remains at minimum levels since % 5.91% Target: 4.5% Source: The Central Bank of Brazil and IBGE 1. Effective annualized Selic

7 Financial System: Credit Dynamics Total Loan grows 15% YoY due to the earmarked loans, which grow 24% in the same period. 7 Total Loans Non-Earmarked Loans US$ Billion (constant FX rate) 996 1,021 1,046 1,091 1,119 1,141 US$ Billion (constant FX rate) % 16.4% 16.7% 16.4% 15.7% 14.6% 13.6% 13.6% 12.0% 9.7% 8.7% 7.8% Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Var. 12M (%) Earmarked Loans Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Var. 12M (%) Market Share (%) Total Loans US$ Billion (constant FX rate) % 20.9% 20.3% % 26.2% 24.4% Nov/13 6% 8% 34% 15% 51% 23% Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Var. 12M (%) Public Banks Private Banks Foreign Banks Growth (%) Nov.13/Nov.12 Source: The Central Bank of Brazil (*) Exchange Rate R$/US$ end of period as of Nov/13.

8 Financial System: Funding growth dynamics Total funding grows 9% in twelve months. Highlight for other funding from clients, which grew 32% in twelve months. US$ Billion (Constant FX Rate) Total Funding Other Funding from Clients 1,782 1,802 1,836 1,885 1,918 1, % 9.3% Debêntures LCI+LCA¹ Letras Financeiras Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Deposits Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Mutual Funds % 2.8% Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Time Demand + Savings ,001 1,010 1, % 6.5% Nov.12 Dec.12 Mar.13 Jun.13 Sep.13 Nov.13 Non Retail Retail Source: The Central Bank of Brazil (*) Exchange Rate R$/US$ end of period as of Nov/ Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA). Volume Y-o-Y Variation %

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

10 Strategy Universal bank focused on retail 10 Revenues¹ by Segment 2013 Commercial Bank 88% Business (US$ billion) 2013 Loan Portfolio 97.2 Total Funding² Results (US$ Million) Net Profit 2,713 Attributable Net Profit 2,094 10% 2% Global Banking and Markets Asset Management and Insurance Customer Base 2013 Current Account Holders³(thousand) 21,808 Total Customers (thousand) 29,512 Commercial Network Branches 2,313 Mini-Branches (PABs) 1,253 ATMs 16, Considers Net Interest Income + Net Fees + Gain (losses) on financial transactions + other operating income 2. Total funding: total deposits + debentures/lci/lca+ Letras Financeiras +AUM 3. Active and inactive current account during a 30-day period, according to Banco Central do Brasil.

11 Strategy 11 Strategy supported by five pillars Customer satisfaction: through efficient services, adequate segmentation and multichannel platform; Efficiency: offering the customers a simpler bank and increasing commercial productivity; Commercial model: more diversification of revenues and rigorous risk management; Capital discipline: for preserving solidity, facing regulatory changes and taking advantage of growth opportunities. Simplicity, Productivity and Efficiency: to promote an intense productivity transformation agenda, aligned with the financial industry transformation

12 Business: Portfolio Evolution 12 Expanded Credit Portfolio grows 7% in twelve months US$ Billion (Constant FX Rate) 7.4% 2.3% YoY QoQ US$ billion US$ billion Variation Variation Individuals % 2.4% - Credit Cards % 10.6% - Mortgage % 8.7% - Others % -2.8% Consumer Finance % -0.5% SMEs / Companies % 3.0% Retail % 2.2% Corporate¹ % 2.6% Total % 2.3% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Expanded Credit Portfolio Other Operations² % 2.9% Total + Acquired Loans² % 2.3% 1. Includes Corporate Activities and GB&M. 2. Includes portfolios acquired from others banks: US$ 0.3 billion in 4Q13, US$ 0.5 billion in 4Q12 and other credit risk transactions (debentures, FDIC, CRI, Floating Rate Notes and Promissory Notes).

13 Business: Deposits + Funds Evolution 13 Total Funding grows 9% in twelve months. Highlight to Demand + Savings, which grow 22% in twelve months US$ Billion (Constant FX Rate) 8.6% 2.6% YoY QoQ US$ billion US$ billion Variation Variation Demand + Savings % 7.9% Time Deposits % -0.2% Debentures / LCI / LCA¹ % 6.8% Letras Financeiras² % 5.2% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Total Funding % 4.1% Mutual Funds³ % 0.5% Total Funding + Mutual Funds % 2.6% Mutual Funds³ Total Funding 1. Repurchase Agreement backed on Debentures, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA) 2. Bonds issued by Financial Institution on the domestic market 3. Considers ANBIMA criterion.

14 Business: Market Share 14 Market Share (%) Nov/13* Var. 3M (b.p) Var. 12M (b.p) Total Banking System Loans Total Loans 8.5% Total Non-Earmarked Loans 10.7% Individuals Non-Earmarked Loans 11.9% Deposits + Funds Deposits 7.9% Mutual Funds 6.1% Source: Banco Central do Brasil and ANBIMA. (*) last data available. (**) From 2013 on, credit market share is over the Financial System, and not over the Banking System.

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

16 Results: Net Interest Income 16 Net Interest Income decreases 10% in twelve months (2013 vs. 2012) US$ Million (Constant FX Rate) Deposits Spread % -8.0% Retail 2.3% 3,589 3,438 3,401 3,228 3, Total Deposits 4Q12 1Q13 2Q13 3Q13 4Q13 Loans Spread¹ % 4Q12 1Q13 2Q13 3Q13 4Q13 Retail Q12 Interest Rate (average) Selic 1Q13 2Q13 3Q13 4Q Total Loans 7.18% 7.13% 7.53% 8.53% 9.53% 4Q12 1Q13 2Q13 3Q13 4Q13 1. Spread of total loan portfolio (production + end of balance)

17 Results: Net Fees 17 Net Fees grow 7% in twelve months (2013 vs. 2012) US$ Million (Constant FX Rate) 10.5% 13.1% Variation YoY Variation QoQ Current Account % 2.3% Mutual Funds % 0.6% ,047 Credit Cards % 21.1% Insurance % 27.6% Values¹ % 16.4% Foreign Trade (COMEX) % 16.9% 4Q12 1Q13 2Q13 3Q13 4Q13 Net Fees Cash % 4.4% Others² % 24.0% Total 3,907 3, % 13.1% 1. Securities brokerage, placement and custody services. 2. Includes guarantees, contingent liabilities and others

18 Results: Total Revenues 18 Total Revenues presents reduction of 6% in twelve months US$ Million (Constant FX Rate) -5.0% 0.3% Net Interest Income Variation YoY Variation QoQ 13,370 14, % 2.3% 4,683 4,652 4,468 4,438 4,449 Fees 3,907 3, % 13.1% Subtotal 17,277 18, % 4.7% Gain/Losses on financial transactions % -65.6% Others 13 (92) n.a % 4Q12 1Q13 2Q13 3Q13 4Q13 Total Revenues 18,007 19, % 0.3% Total Revenues

19 Results: Administrative Expenses and Amortization 19 Expenses increasing below inflation, reflection of efficiency and commercial productivity effort US$ Million (Constant FX Rate) 7.3% 8.1% 1,799 1,675 1,706 1, , Administrative Expenses Variation YoY Variation QoQ 6,326 6, % 8.5% 1,610 1,489 1,513 1,594 1,730 Amortization % 4.3% Total 7,097 6, % 8.1% 4Q12 1Q13 2Q13 3Q13 4Q13 Amortization Administrative Expenses

20 Results: Operating Income 20 Operating Income reduces 12% in twelve months (2013 vs. 2012) and 5% in the quarter US$ Million (Constant FX Rate) 2, % 2,977 2, % 2,652 2,520 Net Interest Income + Fees Gain/Losses on financial transaction Variation YoY Variation QoQ 17,277 18, % 4.7% % -65.6% Others 13 (92) n.a % 4Q12 1Q13 2Q13 3Q13 4Q13 Operating Income Adm. Expenses + Amortization. Operating Income (7,097) (6,833) 3.9% 8.1% 10,911 12, % -5.0%

21 Results: Provisions and Loan Quality 21 Provisions reduce 9% in twelve months (2013 vs. 2012) and 6% in the quarter US$ MM (Constant FX Rate) Provisions and Risk Premium¹ NPL and Coverage 7.1% 6.6% 6.2% 6.0% 5.2% 6.9% 5.6% 1,737 1,805 1,721 1,529 1, % 95.1% 4Q12 1Q13 2Q13 3Q13 4Q13 4Q12 4Q13 Provisions Risk Premium NPL Coverage 1. Risk Premium: ((Initial NPL Balance Ending NPL Balance) + Charge Offs Recoveries) / Average Loan portfolio

22 Results: Net Profit 22 Net Profit reaches US$ 2,713 million in 2013 US$ MM (Constant FX Rate) % -14.1% Variation YoY Variation QoQ Profit before Taxes 3,751 4, % -10.3% Taxes (1,038) (1,091) -4.8% -1.1% Net Profit 2,713 3, % -14.1% Attributable Profit 2,094 2, % -13.7% 4Q12 1Q13 2Q13 3Q13 4Q13 Net Profit

23 Results: Indicators 23 Efficiency* % Recurrence¹ % ROE % +390 b.p b.p b.p (*) Includes amortization 1. Recurrence (fees/ expenses).

24 Conclusion 24 Loan portfolio grows 7% in twelve months Costs control reflects the effort of efficiency and commercial productivity Loan loss provisions decreases 9% in twelve months, with improvement of risk premium Balance sheet strength

25 25 ANNEXES Results Quarterly Results Balance Sheet

26 Results Spanish GAAP 26 US$ million. Constant currency* Variation Amount % Net interest income 13,370 14,840 (1,470) (9.9) Net fees 3,907 3, Gains (losses) on financial transactions (116) (13.9) Other operating income** 13 (92) 105 Gross income 18,007 19,233 (1,226) (6.4) Operating expenses (7,097) (6,833) (264) 3.9 General administrative expenses (6,326) (6,166) (159) 2.6 Personnel (3,422) (3,430) 7 (0.2) Other general administrative expenses (2,903) (2,737) (166) 6.1 Depreciation and amortization (771) (666) (105) 15.7 Net operating income 10,911 12,401 (1,490) (12.0) Net loan-loss provisions (6,496) (7,130) 634 (8.9) Other income (663) (944) 281 (29.7) Profit before taxes 3,751 4,327 (575) (13.3) Tax on profit (1,038) (1,091) 53 (4.8) Profit from continuing operations 2,713 3,236 (523) (16.2) Net profit from discontinued operations Consolidated profit 2,713 3,236 (523) (16.2) Minority interests (69) (10.0) Attributable profit to the Group 2,094 2,548 (454) (17.8) *As of R$/US$ ** Including dividends, income from equity-accounted method and other operating income/expenses.

27 Quarterly Results Spanish GAAP 27 US$ million. Constant currency* 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Net interest income 3,639 3,860 3,752 3,589 3,438 3,401 3,228 3,303 Net fees ,047 Gains (losses) on financial transactions Other operating income** (44) (20) (21) (8) Gross income 4,692 4,969 4,889 4,683 4,652 4,468 4,438 4,449 Operating expenses (1,657) (1,651) (1,727) (1,799) (1,675) (1,706) (1,786) (1,930) General administrative expenses (1,510) (1,497) (1,549) (1,610) (1,489) (1,513) (1,594) (1,730) Personnel (842) (832) (866) (890) (831) (815) (848) (928) Other general administrative expense (668) (665) (684) (720) (658) (698) (746) (802) Depreciation and amortization (146) (154) (178) (189) (186) (193) (192) (200) Net operating income 3,036 3,319 3,162 2,885 2,977 2,762 2,652 2,520 Net loan-loss provisions (1,606) (2,010) (1,777) (1,737) (1,805) (1,721) (1,529) (1,441) Other income (240) (285) (283) (135) (96) (166) (174) (227) Profit before taxes 1,190 1,023 1,101 1,013 1, Tax on profit (305) (261) (316) (209) (274) (214) (277) (274) Profit from continuing operations Net profit from discontinued operations Consolidated profit Minority interests Attributable profit to the Group * As of R$/US$ ** Including dividends, income from equity-accounted method and other operating income/expenses.

28 Balance Sheet Spanish GAAP 28 US$ million. Constant currency¹ Variation Amount % Loans and credits* 91,636 85,283 6, Trading portfolio (w/o loans) 14,234 14,477 (243) (1.7) Available-for-sale financial assets 19,548 18, Due from credit institutions* 20,320 12,980 7, Intangible assets and property and equipment 3,852 3, Other assets 35,106 35,628 (522) (1.5) Total assets/liabilities & shareholders' equity 184, ,849 13, Customer deposits* 84,801 79,947 4, Marketable debt securities* 27,584 22,862 4, Subordinated debt 3,770 5,046 (1,276) (25.3) Due to credit institutions* 17,830 19,915 (2,085) (10.5) Other liabilities 34,793 29,539 5, Shareholders' equity** 15,917 13,541 2, Off-balance-sheet funds 51,591 39,846 11, Mutual funds 47,502 35,870 11, Managed portfolios 4,089 3, Customer funds under management 167, ,700 20, As of R$/US$ * Includes all stock of concept classified in the balance sheet ** Not including profit of the year

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