Santander securities presentation

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Santander securities presentation

  1. 1. Banco Santander ( d (Brasil) S.A. il) Investor Meetings Presentation May 2010
  2. 2. 2This presentation was prepared by Banco Santander (Brasil) S.A. It is provided for p p p y ( ) pinformational purposes only and does not constitute an offer to sell or a solicitation tobuy any security. It may contain forecasts about future events. Thesepredictions/estimates evidently involve risks and uncertainties, whether foreseen ornot by the Company. Therefore, the future results of the Company may differ from y p y , p y ycurrent expectations. Past performance and/or these predictions are not guarantee offuture performance. The Company is not obliged to update the presentation/suchforecasts in light of new events or circumstances.© 2010 by Banco Santander (Brasil) S.A.. All Rights Reserved. y ( ) g
  3. 3. 1. Santander Group Overview2. Macroeconomic Scenario3. Santander Brazil: Strategy4. Business5. Results6. Loan Portfolio Quality
  4. 4. Santander Group has a worldwide presence 4 The Group’s Footprint USA UK 3 • Branches: 722 • Ranking1: 6th • Customers: 1 7MM 1.7MM • Mkt share1: 10% Mkt. • Branches: 1,322 • Customers: 25.6MM Brazil 6 • Ranking1: 3rd • Mkt share1: 10% Mkt. h • Branches: 3,593 • Customers: 22.4MM Spain 2 • Ranking1: 1st • Mkt. share1: 17% • Branches: 4,764 Mexico • Customers: 11.4MM • Ranking1: 3rd • Mkt. share1: 15% t s a e 5% • Branches: 1,093 • Customers: 8.8MM Chile Portugal 5 Santander Consumer 4 • Ranking1: 1st • Ranking1: 4th • Branches: 311 • Mkt. share1: 19% • Mkt. share1: 10% • Dealers: >100,000 • Branches: 498 • Branches: 763 • Customers: 12.9MM 12 9MM • Customers: 3.2MM • Customers: 2.2MMSource: Santander(1) Loans + deposits (balance sheet funds) + mutual funds(2) Santander Consumer not included (in Spain: 3.3 million customers and 77 branches; Portugal: 0.3 million customers and 7 branches)(3) Ranking 3rd by retail deposits and 2nd by mortgages portfolio.(4) Presence in 17 countries. Loyalty cards not included under customers(5) Third largest private bank in Portugal and first by profit in 2009(6) Excluding public-sector banks.
  5. 5. Grupo Santander is among the largest banks in the world 5 Significant presence in Europe and in One of the largest banks in the world the Americas US$ MM 1Q10 Assets 1,539,787 ICBC (China) 246.4 Loans 920,817 China Construction Bank 191.5 Shareholders’ Equity 101,944 Assets Under Management 1,730,791 Bank of America 179.1 Net Attributable Income 1 3,061 JPMorgan Chase 177.8 1 Excludes Income distributed to Minority Shareholders HSBC 176.8 Wells Fargo 161.2 Group’s credit ratings Bank of China 152.3 Standard & Poor’s Poor s AA Citigroup 115.7 115 7 Moody’s Aa2 Santander 109.6 Fitch AA DBRS AA BNP Paribas 91.2 Source: Bloomberg (as of March 31, 2010)
  6. 6. 6Santander is present in the main Latin American countries and isthe leader among the international banks operating in the region US$ MM Santander Latin America Highlights 1Q10 Branches 5,757 Puerto Rico Employees 86,576 Customers (million) 37.7 Loans 137,688 Mexico Deposits 156,328 Mutual and Pension Funds1 92,376 Brazil Colombia Net Attributable Income2 5,331 1 Include Managed portfolios 2 Excludes Income distributed to Minority Shareholders Peru Profits by geographical area Chile Uruguay Argentina Latin America represents 35% of Santander’s world results
  7. 7. 1. Santander Group Overview2. Macroeconomic Scenario3.3 Santander Brazil: Strategy4. Business5. Results6. Loan Portfolio Quality
  8. 8. 8Macroeconomic Scenario Economy retakes growth in 2010 GDP (year-on-year g (y y growth %) Interest Rate - Selic (%) End of Period 6.1 5.8 5.1 13.75 4.5 12.00 12.00 11.25 8.75 -0,2 2007 2008 2009 2010(e) 2011(e) 2007 2008 2009 2010(e) 2011(e) Inflation (IPCA %) Exchange Rate – (R$/US$) End of Period 5.9 5.5 5.0 4.5 4.3 43 2.34 2 34 1.95 2.10 1.77 1.74 2007 2008 2009 2010(e) 2011(e) 2007 2008 2009 2010(e) 2011(e)Sources: The Brazilian Central Bank, IBGE and Santander Research
  9. 9. 1. Santander Group Overview2. Macroeconomic Scenario3. Santander Brazil: Strategy4. Business5. Results6. Loan Portfolio Quality
  10. 10. Santander Brasil National Footprint p 10 It is the 3rd largest private bank in Brazil, with scale to compete with top Banks in the Region Mar/10 M /10 Market Share by number of branches February/2010 Loans (R$ MM) 139,910 North: 5% of GDP Share: 5% Funding from Clients¹ (R$ MM) 133,757 Funding Total² (R$ MM) 240,329 Northeast: 13% of GDP Net Income (R$ MM) 1,763 Share : 7% Strong distribution platform… St di t ib ti l tf Middle-west: 9% of GDP Middl t f Share : 5% One of the banks with highest number of distribution outlets in the Southeast: 57% of GDP South/Southeast region (73% of GDP) Share : 15% 2,091 1,496 18.102 Mini South: 16% of GDP Branches ATM’s Branches Share : 9% Over 10.4 MM active account holders³Source: The Brazilian Central Bank and IBGE. GDP date: 2007.1) Demand Deposits + Time Deposits + Savings + Debentures + Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)2) Includes Assets Under Management3) Customers with active accounts during a 30-day period, according to the Brazilian Central Bank.
  11. 11. Santander and ABN Real: two successful and complementary 11long stories in Brazil Acquisition of Geral Opening of the Representative do Comércio and Noroeste Acquisition of Meridional, Office and establishment Bozano Simonsen and of Santander Investments 1997 Banespa 1982-1991 2000 2007 Santander acquires  Banco Real  2003 August Acquisition of Sudameris 2008 Founding of Banco Holandês da América 1998 Merger of do Sul / Banco da Banco Real Acquisition of Banco Lavoura de Minas Real and Bandepe p Gerais G i Ratings R ti 1917-1925 Standard & Poor’s BBB- (stable) Moody’s 1 Baa3 (stable) Fitch BBB (stable) 1 Long-term deposits rating
  12. 12. Integration process moves as planned 12 1st stage 2nd stage 3rd stageAug/08 g Mar/09 May/10 y Sep/10 pI Senior Management Integrated II Centralized areas integrated Risk management, Human resources, Marketing, Auditing financial control, Compliance, etc. III Wholesale, Private & Asset III integrated GB&M, Corporate, e Middle Re-branding IV IV Credit card system V IV ATMs integrated ATMs plataform Upgrade on branches infrastructure VIII Complete Integration/ VI VI Unified Network/ V Insurance System Unified Brands Branches “Big Bang” VII V New comercial model Call center integration Unification of Brands
  13. 13. Synergies 13 Synergies R$ million +338 1,338 1 338 We reached cost synergies 1,000 800 of R$ 1,338 MM in 1Q10 R$ 338 MM 1Q10, above expectations 2009e 1T10e 1T10 Expected p Achieved
  14. 14. Santander Acquiring / Conta Integrada q g g 14 Pioneer strategy of commercial model Brand Investment in Capturing I t ti C t i Network and Processing MASTERCARD License Platform FINANCIAL ACQUIRER Integrated value offer – SERVICES SERVICES Acquiring and Banking q g g Other POS Capturing Business Services Commercial Model – Distribution/Pricing 165 thousands POS Communication and M di C i ti d Media (Capturing Terminals - 2009) “Time To Market” 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
  15. 15. 1. Santander Group Overview2. Macroeconomic Scenario3.3 Santander Brazil: Strategy4. Business5. Results6. Loan Portfolio Quality
  16. 16. Santander Loan Portfolio - IFRS 16 R$ Billion 2.0% R$ Million 1Q10 1Q09 YoY QoQ 1.1% Individuals 43,992 43 992 40,503 40 503 8.6% 8 6% 1.8% 1 8% 137.1 134.2 132.9 138.4 139.9 Consumer 25,509 24,511 4.1% 1.6% Financing SMEs 30,811 30 811 33,027 33 027 -6.7% 6 7% -2.0% 2 0% Corporate 39,597 39,076 1.3% 2.5% mar.09 jun.09 sep.09 set.09 dec.09 dez.09 mar.10 Total T t l IFRS 139,910 139 910 137,117 137 117 2.0% 2 0% 1.1% 1 1% Corporate Individuals 29% 31% SMEs Consumer 22% Financing 18%1. Loan´s balances of 2009 were reclassified in order to be comparable to current period numbers, due to re-segmentation of clients in2010.
  17. 17. Managerial Loan Portfolio - BR GAAP¹ 17R$ Billion 3.6% 1.5% Variation R$ Million Milli 139.1 137.3 136.2 142.0 144.1 1Q10 1Q09 Y-o-Y Q-o-Q Individuals 46,439 41,349 12.3% 3.5% Consumer 27,842 26,224 6.2% 1.9% Financing SMEs 30,811 33,027 -6.7% -2.0%mar.09 jun.09 sep.09 dec.09 mar.10 Corporate 39,031 38,497 1.4% 1.7% Annualized growth rate Total BR GAAP 144,124 139,097 3.6% 1.5% >15% 5.9% 3.6% 1Q10/ 1Q10/ mar.10/ Q 1Q09 4Q09 Q feb.101. The portfolio in BR GAAP is higher than in IFRS because includes portfolios acquired from other banks and portfolioof the partnership Aymoré
  18. 18. Loans to Individuals: Main Products 18 Payroll Loans¹ Auto Loans R$ MM R$ MM 32.9% 6.2% 23,054 10,694 8,046 21,711 Mar.09 Mar.10 Mar.09 Mar.10 Credit Cards Mortgage² R$ MM R$ MM 22.5% 30.4% 9,689 7,432 8,357 55.8% 4,324 6,820 2,775 4,657 5,365 15.2% Mar.09 Mar.10 Mar.09 Mar.10 Individuals Pessoa Física Corporate Pessoa Jurídica1. Includes purchase of portfolio of R$ 2,535 million in Mar/10 and R$ 846 million in Mar/09.2. Includes funding for Individuals and Corporate.
  19. 19. Deposits and Assets Under Management 19R$ Billion 6.7% Variation R$ Million 0.3% 1Q10 1Q09 Y-o-Y Q-o-Q Demand 13,699 12,356 10.9% -9.5% 225.2 235.7 243.1 239.5 240.3 Savings 25,781 20,447 26.1% 2.2% 80.1 85.5 93.1 98.4 106.6 Time 68,252 68 252 87,954 87 954 -22 4% 22.4% -9 9% 9.9% 145.1 150.2 150.0 141.1 133.8 Others¹ 26,025 24,333 7.0% 4.3% mar.09 jun.09 sep.09 dec.09 mar.10 Funding from 133,757 145,090 -7.8% -5.2% Funds F d (AUM) Funding from Cli t ¹ F di f Clients¹ Clients Demand Funds (AUM) 106,572 80,125 33.0% 8.3% 6% Savings 11% Total 240,329 225,215 6.7% 0.3% Funds 44% Time 28% Others¹ 11%1. Repurchase commitments backed on Debentures, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
  20. 20. 1. Santander Group Overview2. Macroeconomic Scenario gy3. Santander Brazil: Strategy4. Business5. Results6.6 Loan Portfolio Quality
  21. 21. HighlightsHi hli ht 21 Net profit of R$ 1,763 MM in 1Q10, (up 112% YoY and 11% QoQ) driven by revenue growth and cost control Performance Ratios improved Efficiency Ratio¹: 33.1%, drop of 4.4 p.p. YoY and 4.1 p.p. QoQ Recurrence²: 61.1%, increase of 8.3 p.p. YoY and 3.5 p.p. QoQ ROAE³: 18.0%, increase of 2.6 p.p. YoY and 0.1 p.p. QoQ Sound Balance Sheet Metrics BIS Ratio³: 24.4% in mar/10 Coverage: 102.8% in mar/101. General Expenses excluding amortization / Total Revenue excluding Cayman hedge2. Net Fee/General Expenses excluding amortization3. Excludes Goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
  22. 22. Net profit 22 Net profit growth is acceleratingR$ MM 112% 76% 11% 1,763 1,591 1,591 906 832 4Q08 4Q09 1Q09 4Q09 1Q10
  23. 23. Total RT t l Revenues 23 10.2% 10 2% R$ MM 3.3% 1Q10 1Q09 Y-o-Y 8,032 Net Interest Income 5,833 5,172 12.8% 7,471 , 7,598 , 7,776 7,288 7 288 260 577 409 386 Net Fees 1,622 1,443 12.4% 673 1,556 1,666 1,622 1,443 1,573 Subtotal 7,455 6,615 12.7% Others¹ 577 673 -14.3% 5,172 5,489 5,656 5,850 5,833 Total Revenues 8,032 7,288 10.2% 1Q09 2Q09 3Q09 4Q09 1Q10 Others¹ Net Fees Net Interest Income1. Result from Financial Operations excluding the fiscal effect of Cayman hedge + Others
  24. 24. Net Fees 24R$ MM 1Q10 1Q09 Y-o-Y 12.4% Banking fees 588 549 7.1% Insurance 342 259 32.2% -2 6% 2.6% Asset Management 201 171 17.6% 1,573 1,666 1,622 1,556 1,443 Credit and Debit Cards 213 171 24.9% Collection services 125 121 2.8% Capital Markets 108 64 68.1% 68 1% Trade (COMEX) 102 101 1.3% Others¹ (56) 8 n.a. 1Q09 Q 2Q09 Q 3Q09 Q 4Q09 Q 1Q10 Q Total 1,622 1,443 12.4%1. Includes taxes and others
  25. 25. General Expenses and Amortization 25R$ MM -3.5% Variation -6.9% 1Q10 1Q09 Y-o-Y Q-o-Q3,0483 048 3,013 3 013 3,158 3 158 2,977 2,941 Other General 317 339 265 1,300 1,371 -5.2% -8.6% 328 286 Expenses Personnel Expenses 1,355 1,360 -0.4% -7.8%2,731 2,649 , 2,674 2,893 2,655 , Depreciation & 286 317 -9.8% 7.9% Amortization Total 2,941 3,048 -3.5% -6.9%1Q09 2Q09 3Q09 4Q09 1Q10 Depreciation and Amortization General Expenses
  26. 26. Gross Revenue vs General Expenses 26 Gross Revenue¹ and General Expenses² R$ MM 1Q10 x 1Q109 7,776 8,032 7,288 7,471 7,598 10.2% 3.0 2.7 -2.8 % 2,731 2,649 2,674 2,893 2,655 1Q09 2Q09 3Q09 4Q09 1Q10 Gross Revenue General Expenses1. Gross Revenue = Total Income excluding Cayman Hedge. Including Cayman Hedge 1Q10/1Q09 grows 7.6%2. Excludes amortization
  27. 27. Results by Segment¹ Segment 27 Global Wholesale Banking R$ MM 0.9x Net Profit before tax 847 758 Commercial Banking R$ MM 2.1x 1Q09 1Q10 Global 1,204 Wholesale Banking 575 Commercial Asset Management Banking 36% and Insurance dI 56% 1Q09 1Q10 R$ MM 2.7x 8% 162 59 Asset Management and Insurance 1Q09 1Q101. Does not consider the fiscal effect of Cayman hedge
  28. 28. Performance Ratios 28 Efficiency Ratio¹ (%) Recurrence² (%) ROAE (adjusted)³ (%) 8.3 p.p. 2.6 p.p. -4.4 p.p. pp 61.1 57.0 52.8 19.3 18.0 36.3 37.5 15.4 33.1 2009 1Q09 1Q10 2009 1Q09 1Q10 2009 1Q09 1Q101.General Expenses excluding amortization / Total Revenue excluding Cayman hedge2. Net Fee/General Expenses excluding amortization3. Excludes Goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
  29. 29. Non-recurrent eventsN t t 29 Value (R$ Million) Sale of Assets 64 Provision for contingencies (28) Total (after tax) 37
  30. 30. 1. Santander Group Overview2. Macroeconomic Scenario3.3 Santander Brazil: Strategy4. Business5. Results6. Loan Portfolio Quality
  31. 31. Quality f LQ lit of Loan Book - IFRS B k 31 Delinquency Rates¹ (%) Coverage² 9.7 9.3 8.6 8.8 8.8 107% 101% 102% 103% 7.7 97% 7.0 7.2 7.0 6.0 6.1 5.7 5.3 5.3 4.2 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 Individuals Corporate Total1. Nonperforming loans for over 90 days + performing loans with high delinquency risk / total loans managerial2. Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk
  32. 32. Quality of Loan Book – BR GAAP 32 Delinquency Over 90¹ (%) NPL Over 60² (%) Coverage Ratio Over 90³ 9.2 9.4 9.2 8.9 8.7 7.9 7.8 7.6 7.7 7.2 72 7.4 74 7.2 72 6.8 6.5 6.2 6.4 6.2 5.9 114% 113% 120% 5.4 108% 5.0 6.2 6.1 97% 5.1 5.3 4.7 47 4.4 44 4.2 4.0 3.7 3.2 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 1Q09 2Q09 3Q09 4Q09 1Q10 Individuals Corporate Total Individuals Corporate Total1) Nonperforming loans for over 90 days / total loans BR GAAP2) Nonperforming loans for over 60 days / total loans BR GAAP3) Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk
  33. 33. Allowance for Loan Losses¹ - IFRS Losses 33R$ MM 1.8% 11.9% 3,008 3 008 2,360 2,467 500 2,403 2,148 1Q10 1Q09 YoY Y-o-Y 2,508 Allowance for loan 2,403 2,360 1.8% losses 1Q09 2Q09 3Q09 4Q09 1Q10 Additional Provision1. Includes recoveries of written-off credits
  34. 34. Conclusion 34 Integration is evolving as scheduled • Credit card platform integration concluded in the 1Q10 and final tests for branch network integration i t ti • Costs controlled and synergies obtained Activities • Loan book growth is accellerating • Commercial re-alignment to cacht up loan activity in corporate loans • Launching of “Conta Integrada” product focusing SMEs Well behaved results Revenues • Balanced between Costs • Gross jaws increased by 13 p p p.p. Improved asset quality • NPLs over 60 and 90 days continue its declining trend • Increased coverage
  35. 35. Annexes
  36. 36. 36Reconciliation IFRS x BRGAAPR ili tiR$ MM 1Q10 BR GAAP Net Profit 1,015 -R Reversal of G d ill amortization / Oth l f Goodwill ti ti Others 832 - PPA amortization (58) - Others (26) IFRS Net profit 1,763
  37. 37. Adjusted Allowance for Loan Losses - BR GAAP Losses¹ 37R$ MM -9.6% -11.4% 2,413 2,490 569 2,462 419 157 2,403 2,181 1Q10 1Q09 Y-o-Y YoY Q-o-Q QoQ Adjusted Allowance 2,181 2,413 -9.6% -11.4% for Loan Losses² 1Q09 2Q09 3Q09 4Q09 1Q10 Increase in Additional Provision Decrease in Additional Provision1.Excluding recoveries of written-off credits2.Allowance for Loan Losses adjusted by the increase/decrease in additional provision
  38. 38. 38Corporate Governance Banco Santander’s units are listed in BM&FBOVESPA and in the NYSE Level 2 of BM&FBOVESPA stock exchange with 100% of Tag Along The Bank is managed by the Board of Directors and the Executive Board, supported by specialized committees Board of Directors 3 Executive Board 3 Board Members of 3 Independent Board Members Grupo Santander Spain Members
  39. 39. Sustainable Development 39 Sustainability in business Business: Santander Universities; Real CDB Sustentável; Fundo Ethical; Fundo Floresta Real; Financing for Sustainability; Real ; ; g y; Microcredit; Carbon Credits; Real Tourism Involving clients: Put Sustainability into Practice, Socio Environmental Risk Assessment; Sustainability Program in the Construction SectorSustainability in Management Involving Staff (Program for Development of Leadership for Sustainability; Workshops on Sustainability, Diversity) and suppliers (providing management) Eco-efficiency: Use of paper certified as eco-friendly; Eco-efficiency in the group’s branch network; collection of used batteries; ISO14001 certified administrative buildings; Sustainable Branches; Torre Santander S t d Private and Social Investment : Implementing projects with public and private partners, employees, NGOs and community. For example: Amigo de Valor; Projeto Escola Brasil (Brazilian Schools Project); Parceiros em Ação Schools’ Ação.
  40. 40. Corporate StC t Structure t 40Date: 12.31.2009 * simplified
  41. 41. Investor RelationsJuscelino Kubitscheck Avenue 2,235 10th floorSão Paulo | SP | Brazil | 04543-011Tel. (55 11) 3553-3300e-mail: ri@santander.com.br

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