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  • 1. 1Retail Banking gField Trip Barclays, 16th NFi ld T i – B l November 2010 b
  • 2. 2This presentation was prepared by Santander (Brazil) SA and does not constitutea solicitation or an offer to purchase securities.It may contain information about future events and these projections / estimates y p jare subject to risks and uncertainties related to factors outside the Companysability to control or estimate precisely, such as market conditions, competitiveenvironment, currency fluctuations and inflation, changes in governmental andregulatory policies and other factors relating to the Companys operations, and g yp g p y p ,the Companys future results may differ materially from those projected.Those projections and estimates should not be understood as a guarantee offuture performance.The Company undertakes no obligation to publicly review or update these p y g p y pprojections and forward the events or circumstances that may occur.© 2010 by Banco Santander (Brazil) SA. All Rights Reserved.
  • 3. Agenda 3 Our ambitions 2010 – Challenges g Results Conclusions
  • 4. Our ambition 4 Be the best and most efficient bank in Brazil Be a market leader in Revenue Growth and Profitability Be the best bank in Customer Satisfaction Be the best bank to Work for Build the B ild th most t Attractive and Recognized Brand among Banks in Brazil
  • 5. To achieve our goals, we must have . . . 5 Profitable Clients Satisfied
  • 6. ... And . . . 6 • Valuable Products • Robust and Versatile Technology • Effective Credit Management • Wide and well placed branch network • Engaged and recognized People • Strong and admired Branch
  • 7. Agenda 7 Our ambitions 2010 – Challenges g Results Conclusions
  • 8. Our challenges . . . 8 Brand Integration ... Unification ... U Increase of our active Client loyalty and customer base ... satisfaction ... Network expansion ... p Unleash Business segment ... t
  • 9. With the following premises . . . 9 Maintain the Retain talents and attributes of each maintain a good bank . . . organizational climate . . . Deliver the budget of the year ... Minimizing the impact on customers
  • 10. The integration is progressing according to schedule . . . 10 2009 1st semester of 2010 2nd semestre of 2010 3o Trimestre 1st semester of 2011 • Integration of senior g • Organization of Real g • Unified attendance; •Technological management and and Santander integration; i t ti central areas; networks; • Brand unification; • Integration of the Wholesale, Private, Asset, consumer finance and broker; • Integration of credit • All the customers from card and insurance Real turn into Santander systems; customers. •New structure and new New • Interoperability and business model for retail platform unification banking; for the cashiers and ATMs; •Santander “Conta Integrada” and Van • IPO and Santander Gogh services for high • New competences in tower; income clients; credit decision; •Preparation for the technological integration;
  • 11. Our challenges . . . 11 Brand Integration ... Unification ... Increase of our active Client loyalty and costumers base ... satisfaction ... Network expansion ... p Unleash Business segmente ... t
  • 12. Brand unification and external layout of the branches . . . 12 2010 Mar Transition T iti Nov Brand unification Dec D
  • 13. Our challenges . . . 13 Brand Integration ... Unification ... U Increase of our active Client loyalty and customers base ... satisfaction ... Network expansion ... p Unleash Business segmente ... t
  • 14. Increase of our active customers base . . . 14 Growth of the Account Holders base (Levers) ( ) Growing in the most p g profitable segments (focus) g ( ) Revenue by client Opening 600 new branches until 2013 7.2 72X Increase of Strengthen our position in Credit cards our active 2.8 X customers Strengthen the current strategy base - New products - Universities and students - Payrolls (Cross sellI with Lower income Menor Renda medium income Média Renda highRenda Alta income wholesale) Business 4.5 X Increase Focusing on high-income average segments and on the emerging revenue middle income individuals and Revenue between Revenue between SMEs R$ 0.5 – R$ 5 MM R$ 5 – R$ 30 MM
  • 15. Our challenges . . . 15 Brand Integration ... Unification ... U Increase of our active Client loyalty and costumers base ... satisfaction ... Network expansion ... p Unleash Business segmente ... t
  • 16. We are emphasizing . . . 16 Business support Relationship Investing in infrastructure Van Gogh (high income) ~120 new branches till the end of 2010 Model standardization Call Center Brand Unification of the technological platform Unification New front end for clients Unification of the attendance model Consolidating the CRM Model Better approach Technological integration Multi Channels New functions and services Relationship platform Tests: 100,000 clients are testing the new platforms Credit cards Cartão Ferrari Santander Free Flex and Reward Free, Insurance Cross selling Partnerships
  • 17. Van Gogh Model Standardization . . . 17 Infrastructured service network with the Santander Branch . . . Space and personalized attendance for high income clientes . . .
  • 18. Van Gogh Model Standardization . . . 18 V l bl Off Valuable Offer Account Investment account included Differentiated price system: each R$ 1 invested equals 1 point. Credits Santander Master (10 days without interests) Special rates for loans and automobiles Investments Access to investment specialists by phone Complete portfolio of investment products Meeting with experts Investment-driven events all over the country Credit Cards 1 Santander STYLE Platinum MasterCard and + additionals 1 Santander STYLE Platinum Visa + 5 additionals Services Exclusive account manager, certified by Anbid Call Center 365 days/year and 16 hours/day Specialists in investments, Mortgages, Insurances on Superlinha Private spaces in branches
  • 19. Investing in infrastructure . . . 19 Branches B h +37 2,090 2,127 sep/09 sep/10 ATMs +43 18,081 18,124 sep/09 sep/10 Source : Results 9M2010.
  • 20. Our challenges . . . 20 Brand Integration ... Unification ... U Increase of our active Client loyalty and costumers base ... satisfaction ... Network expansion ... p Unleash Business segmente ... t
  • 21. Network expansion. . . 21 The new branches will have specific management during a specific period of time and should be incorporated into the "Current Network" gradually. Place Pl People P l Profitability P fit bilitRevenues after provisions (MBL) Leadership p committee (Break-even)Period in months 12 18 Branches with specific Branches are incorporated management into the current network
  • 22. Our challenges . . . 22 Brand Integration ... Unification ... U Increase of our active Client loyalty and costumers base ... satisfaction ... Network expansion ... p Unleash Business segment ... t
  • 23. Unleash Business segment . . . Unidades (mil) 23 Santander “Conta Integrada” Conta Integrada Relationship with clients Acquirers Banks Acquirers s Acquirers ACQUIRER FINANCIAL SERVICES SERVICES “No price war” Focus Banks 1st Bank in Brazil to offer financial and acquiring services Banks Higher results than expected Goals for 2012 300,000 new affiliated merchants More than 75,000 affiliated merchants 150,000 new current accounts More than 15,000 new current accounts R$ 5 billion in loans Package with high fidelity driver g g y 10% of the credit card market share Source : Results 9M2010.
  • 24. Agenda 24 Our ambitions 2010 – Challenges g Results Conclusions
  • 25. Resulting in . . . 25 More clients • Relationship More satisfied More profitable + 2.1 million total clients Real: Maintaining the Net profit + 39% + 517 thousand current satisfaction index account holders Santander: Significative improvement in the satisfaction index Clients Only once between the top 3 Ranking of Financial Institutions Profitable with the highest number of client complains in 13 months Increase of the internal satisfaction level Satisfied
  • 26. More clients . . . 26 IFRS Total Clients (Thousand) +10% 24,092 Current account (Thousand) 21,926 +5% 10,571 sep/09 sep/10 10,054 sep/09 sep/10 Source : September, 2010. Current accounts with 30 days, as per the Central Bank.
  • 27. More clients . . . 27 Growth in the period (%) 23.9 22.8 22.6C1 -1% 20.3 20.5 +18 % 18.4 19.2 17.3C2 15.6 14.7 14.9 +15 % 13.5C3 10.6 10 6 10.2 9.8 +17 % 9.0 4.9 4.4C4 4.1 +2% 4,4 Dec/08 Dec/09 Sep/10 jan/08 Source : September, 2010. Brazilian Central Bank
  • 28. More satisfied . . . 28Financial Institutions with the highest number of client complains (Over 1MM customers) Only one time between the top 3 in 13 months Maintaining the satisfaction index Significative improvement in the satisfaction index Source : September, 2010
  • 29. Increasing internal satisfaction levels . . . 29 2nd Semester of 1st Semester of 2010 2010 + 4 p.p Branch Expected 100% engageme Network nt index Expected Administrative 100% engageme areas + 11 p.p nt index , um banco cada vez melhor Source: September,2010
  • 30. More Profitable . . . 30 Gross revenues G 7,6% Provisions 24,057 24 0 22,357 -17% Costs* Comissões 7,835 +1% Net profit 6,465 9,166 +39% sep/09 sep/10 9,038 5,464 sep/09 sep/10 3,917 sep/09 sep/10 sep/09 sep/10 Source : Results 9M2010. * includes depreciation and amortization.
  • 31. Agenda 31 Our ambitions 2010 – Challenges g Results Conclusions
  • 32. Conclusions 32 We are investing in our structure; Improving the attendance quality; Accelerating the commercial activity; Taking care of our customers and employees; Aggregating the best of each world to build the new bank; Generating solid results
  • 33. 33 Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. T l (55 11) 3553 3300 3553-3300 e-mail: ri@santander.com.br
  • 34. Santander CardsField Trip Barclays, 16th NFi ld T i – B l November 2010 b
  • 35. 35This presentation was prepared by Santander (Brazil) SA and does not constitutea solicitation or an offer to purchase securities.It may contain information about future events and these projections / estimates y p jare subject to risks and uncertainties related to factors outside the Companysability to control or estimate precisely, such as market conditions, competitiveenvironment, currency fluctuations and inflation, changes in governmental andregulatory policies and other factors relating to the Companys operations, and g yp g p y p ,the Companys future results may differ materially from those projected.Those projections and estimates should not be understood as a guarantee offuture performance.The Company undertakes no obligation to publicly review or update these p y g p y pprojections and forward the events or circumstances that may occur.© 2010 by Banco Santander (Brazil) SA. All Rights Reserved.
  • 36. 36 AgendaOverview of Brazilian Cards Industry Santander Cards Issuer Santander Cards Acquirer
  • 37. Overview of Brazilian Cards Industry 37 Cards industry continues to show substantial growth rates, even considering the competitive scenario consolidation and recent regulation changes Cards Total Spending# Million R$ Billion CAGR 628 +13% 535 565 CAGR 514 153 +22% 444 453 136 124 375 388 104 309 336 82 249 302 256 Credit 68 233 245 215 217 201 200 174 187 142 Debit 171 Credit 115 158 107 129 196 225 Debit 83 147 173 56 67 P. Label abe 9 97 118 P. Label abe 45 53 60 68 29 36 2005 2006 2007 2008 2009 2010(F) 2005 2006 2007 2008 2009 2010(F) Source: ABECS
  • 38. Overview of Brazilian Cards Industry 38 Cards transactions have been strongly replacing checks transactions last 10 years In billions transactions (cards include debit + credit) 8 +20,6% 20 6% 7 Cards 6 5 4 3 -8,2% 2 1 Checks 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(F)Source: ABECS and BCB. 2010(F) –Abecs & Bacen
  • 39. Overview of Brazilian Cards Industry 39 Lower income population’s tool as formal payment means and bank services inclusionFor classes D/E the ratio of card holder is higher than check account holders Social Pyramid Total AB C DE Cards Holders (% of pop.) Cards 71% 83% 67% 44% Credit 50% 65% 43% 20% Debit 56% 72% 50% 28% Check Account Holders (% of pop ) pop.) 69% 82% 65% 44%Source: Researches Abecs-Datafolha July 20101 - survey on 11 metropolitan areas.
  • 40. Overview of Brazilian Cards Industry 40The relative lower participation as a mean of payment shows a relevant up side opportunity for Brazilian Cards Industry %Private 25,0% consumption(2) 21,4% 19,1% 15,8% 17,1% 12,4% 12 4% 14,0% 14 0% 20 20 20 2006 2007 2008 2009 03 04 05 ...but below developed countries (2) ~2 x(1) Source : Abecs and IBGE (2) Source: ABECS, Bank of International Settlements, United Nations, IBGE
  • 41. Overview of Brazilian Cards Industry 41 Card penetration, average ticket and transactions per card are still low in Brazil Number of cards (MM) ~ 15 MM credit cards / year CAGR +14% Credit 627 514 565 452 153 124 136 Credit 104 233 249 Debit 201 217Private Label 147 173 196 225 20 20 20 2010 07 Spend (R$ Bn) 08 Average Ticket (R$ per (F) 09 transaction) CAGR: 21.1% CAGR: 3.7% 309 100 104 215 256 93 98 174 158 107 129 83 53 60 68 53 52 55 51 45 48 53 51 52 2007 2008 2009 2010(F) 2007 2008 2009 2010(F) Credit Debit Private Label Credit Debit Private Label Source: ABECS (Associação Brasileira das Empresas de Cartões de Crédito e Serviços)
  • 42. Santander Cards Issuer – Role in the Value Chain 42 Sets rules for issuers and acquirersIssues credit and Card Brands debit cards Captures and processes transactions Issuers Acquirers Use credit and debit cards Clients Merchants
  • 43. Santander Cards Issuer – Business model 43 To be the world’s best integrated cards monoliner within a retail bank…Monoliner Retail Bank Product focus Access to customers’ base p Specialized capabilities Traditional channels: branches / agents Direct channels: Telemarketing / Mailings Brand Global specialized Economies of scale systems … contributing to improving our local banks’ performance
  • 44. Santander Cards Issuer – Business Model 44 Is based on managing all levers along the customer lifecycle …ACQUISITION PORTFOLIO MANAGEMENT Activation Spending Outstandings Retention Acquisition Profitability Product ionship innovationUnlimited Platinum and… and ustomer relatiReward Free CancellationMini Card Light Depth of cu VALUE Flex Ferrari Time Specialized risk management … supported by an end-to-end view of RISKS and TECHNOLOGY
  • 45. Santander Cards Issuer – Business Model 45The Business expansion will be held in two dimensions: Customer Base and Profitability per Account Increase the profitability by using Card Accounts the card’s platforms as a distribution channel for other banking products and services me Net incom Personal Loan Savings S i Insurance Payment Services Continuous product innovation as a growth lever Source: Internal data
  • 46. Santander Cards Issuer – Continuous growth 46The Credit market continues to show substantial growth rates, even considering the competitive scenario consolidation and recent regulation changes Cards C d (MM) CAGR (06~10*) Market Santander 136 149+19% (04~10) 124 104 Key Observations 82 +16% 68 53 5 7 8 10 11 ~80% of the Cards Market is +20% concentrated at the top 4 0 0 0 0 0 0 Sep Banks (Banco do Brasil, Itaú, 4 5 Total Spend (R$8Bi) 9 6 7 10 Bradesco and Santander) 309+22%(04~10*) 256 There is an important 215 174 +21% 142 opportunity for cards revolving 95 115 growth 14 19 26 33 29 +21% Relevant regulation changes 0 0 0 0 0 9 Sep are being implemented, 4 Revolving Balance 8 5 6 7 (R$ Bi) 10 representing significant 28,6 opportunities for issuers and pp +23%(04~10*) (04 10*) 25,7 25 7 22,1 +21% new acquiring business 17,2 11,3 13,4 players 8,2 1,2 1,7 2,1 2,4 3,1 +27% 04 05 06 07 08 9 Sep 10 Note 1: Source Banco Central do Brasil, including +360 days balance Note 2: Source ABECs – Brazilian Cards Association * Data until Sep 10th
  • 47. Santander Cards Issuer – 3Q10 performance 47 The business growth is leveraged by Cards expansion…Total CardsT lC d Million YoY QoQ 21% 4% 9,7 97 10,0 10 0 , 10,7 11,1 9,2 92Credit Sep’09 Dec ’09 Mar ’10 Jun’10 Sep ’10Total Cards YoY QoQ Million 11% % 2% % 22,8 23,6 24,0 24,6 25,2Debit Sep’09 Dec ’09 Mar ’10 Jun’10 Sep ’10
  • 48. Santander Cards Issuer – 3Q10 performance 48 … generating relevant revenue increase Total Spending T lS di R$ Billion YoY QoQ +19% +9% 28,3 28 3 26,3 26,9 29,2 29 2 24,5 3Q ’09 4Q ’09 1Q ’10 2Q ’10 3Q ’10 YoY QoQ Total Balance +24% +5% R$ Billion 9,2 9,7 8,7 8,7 7,8 5,8 6,2 6,6 66 5,1 6,2 YoYRevolving 2,7 2,5 2,9 3,0 3,1 +15% Sep ’09 Dec ’09 Mar ’10 Jun ’10 Sep ’10 Source: Santander Income Statement 3Q10
  • 49. 49 AgendaOverview of Brazilian Cards Industry Santander Cards Issuer Santander Cards Acquirer
  • 50. Santander as Issuer and Acquirer 50 Sets rules for issuers and acquirers Card BrandIssues credit and Captures and processes debit cards transactions Issuers Acquirers Uses credit and debit cards Clients Merchant
  • 51. Santander’s Experience in Other Countries 51 Sovereign Puerto Rico UK Mexico Totta Colombia Spain S i Argentina PortugalSantander Santander + Acquiring Partners
  • 52. Partnership Santander & GetNet 52 Creation of a Partnership leveraged by GetNet’s GetNet s technological expertise and POS network Brand MASTERCARD Investment in Capturing Network and g License Processing Platform Partners Integrated value offer hip– Acquiring and Banking Other POS Capturing Business Services Ser ices Commercial Model – Distribution/Pricing 165 POS (Capturing Communication and Terminals - 2009) “Time To Market” Media
  • 53. Santander Cards: Acquirer 53 Better than expected results in the first 6 Months of Operations Better than Expected Results in the First months of operation Results Target (%) ( ) Sep/10 2012 FINANCIAL ACQUIRING SERVICES SERVICES Affiliated Merchants 75 300 25.0% (thousand) New Accounts N A t 15 150 10.0% (thousand) Santander Acquiring Revenues: R$ 400 Million Credit Package with high fi i i fidelity driver; i i Number of transactions: 4.3 Million 6 mo. of operation with Mastercard Revenues: R$ 200 Million Debit 2 mo. of operation with Visa; Number of transactions: 4.7 Million Most of the Loans were made with SME Revenues: R$ 600 Million companies; TOTAL Number of transactions: 9 Million
  • 54. Conclusion 54 Santander i the i S t d is th pioneer i l in launching thi acquiring model i hi this ii d l in BrazilThe partnership provides the bank access to a network of more f than 160,000 merchants and to GetNet’s know howThe credit card industry is expected to grow around ~20% p.y. and double its size in 4 years This strategy focuses on strengthening the relationship with SME clients – main competitors are banksSantander Conta Integrada – “Win-Win” relationship betweenthe bank and small and middle market companies (SMEs)
  • 55. Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. (55 11) 3553-3300 e-mail: ri@santander.com.br
  • 56. Wholesale Banking gField Trip Barclays, 16th NFi ld T i – B l November 2010 b
  • 57. 57This presentation was prepared by Santander (Brazil) SA and does not constitutea solicitation or an offer to purchase securities.It may contain information about future events and these projections / estimates y p jare subject to risks and uncertainties related to factors outside the Companysability to control or estimate precisely, such as market conditions, competitiveenvironment, currency fluctuations and inflation, changes in governmental andregulatory policies and other factors relating to the Companys operations, and g yp g p y p ,the Companys future results may differ materially from those projected.Those projections and estimates should not be understood as a guarantee offuture performance.The Company undertakes no obligation to publicly review or update these p y g p y pprojections and forward the events or circumstances that may occur.© 2010 by Banco Santander (Brazil) SA. All Rights Reserved.
  • 58. 58 Agenda Market Overview Santander Wholesale BankingSantander Wholesale Banking Growth Strategy
  • 59. 5959 Market Overview – Credit to Corporate Credit (YoY Gro th%) Growth%) Spreads (%) Average Tenor (days) DelinquencySource: Brazilian Central Bank
  • 60. 6060 Market Overview – Capital Markets (ECM & DCM) ECM Evolution – Volume & Number of Deals DCM Evolution – Volume & Number of Deals Volume = BRL MM; N = Number of Deals N=18 Volume (BRL MM) -5.3% +48.6% 67.174 63.591 37.007 54.997 +558% N=24N=15 N=10 Foreign Investors Participation – YTD Sep/10 Number of Deals 289 323 213 255 Source: Boletim ANBIMA – October/ 2010
  • 61. 6161 Market Overview – Capital Markets (M&A) M&A Evolution – Volume & Number of DealsVolume = BRL billion; N = Number of Deals N=73 N=75 N=73 N=148 N=124 N=99 N=95 N=89 N=59 N=31 Announced Deals by Value y Capital Source (1º sem 2010) Volume Number of Deals Source: Boletim ANBIMA – 1st semester 2010
  • 62. 62 Agenda Market Overview Santander Wholesale BankingSantander Wholesale Banking Growth Strategy
  • 63. 6363Santander Wholesale Banking Client SegmentationRevenue Classification Criteria Client Distribution * GB&M GB&M ~530 * 530 Client List Corporate (10%) Corporate ~650 (13%) BRL 250MM and above Empresas ** Empresas ~3900 (77%) BRL 30MM-250MM (*) Includes MRG model clients only (**) Annual revenues greater than BRL 20K
  • 64. 64 64 Santander Global Wholesale Banking* Overview (IFRS Criteria) 9M10 Profit Before Tax (% / Total) Total Revenues = BRL 2.615 MM 9M1 0 Total Costs = BRL 554 MM Profit Before Tax = BRL 2.057MM(*) – GB&M only Source: Santander Financial Statements (IFRS)
  • 65. 65 Santander Wholesale Banking – Credit Evolution & League Tables65 Credit Evolution (Large C C dit E l ti (L Corporates) * t ) League T bl L Tables BRL MM Project Finance (Fin. Advisor & 24.3% 24 3% 1st Structuring) St t i ) Anbima - 2009 1st DCM (External Issues) Bond Radar – Sep / 2010 4th DCM (Domestic Issues) Anbima - Aug / 2010 4th FX Banco Central do Brasil – Jul / 2010 3rd ECM (Closed Deals) 1 ( ) Bloomberg – Out / 2010 8th M&A (Value) 2 Bloomberg Out / 2010(*) - Does not include Empresas. Volumes do not include guarantees and other collaterals Source: Management Information 3Q10 Note: (1) 3rd also in Latin America (2) 4th in Latin America
  • 66. 66 Agenda Market Overview Santander Wholesale BankingSantander Wholesale Banking Growth Strategy
  • 67. 6767 Santander Wholesale Banking Growth Strategy General Strategy Strategy… Focus on clients relationship Increase share of wallet, cross-selling and lead strategic transactions/loans with the Empresas existents key clients (BRL 30- 250MM) Expand market penetration with new clients and clients with unexplored potential Cross-selling to individual clientsCompanies Explore value chain and sector opportunities with large companies General Strategy… Increase cross-selling and diversification Corporate Expand use of our wholesale and Investment Banking product platforms (BRL 250MM and above) d b ) Increase share of wallet Continuous active NPL management (recovery and prevention) Cross-selling to individual clients
  • 68. 6868 GB&M Growth Strategy Become the top relationship bank for the main players of sectors with high growth perspectives, like1 Energy, Mining, Construction, Infrastructure and Agribusiness.2 Take advantage of our global capabilities and support local clients who intends to become international international.3 The concept of one-stop shop and the first option for share of mind products. Santander is well positioned in Investment Banking products and intends to take advantage of the good perspectives for4 M&A, ECM and DCM markets.5 Increase our client’s satisfaction, generating value to the Bank.6 Leverage Retail opportunities through our origination capacity.7 Increase net profit, ensuring full costs control and preserving a low risk profile.
  • 69. Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. (55 11) 3553-3300 e-mail: ri@santander.com.br