3. 1. Santander Group Overview
2. Macroeconomic Scenario
3. Santander Brazil: Strategy
4. Business
5. Results
6. Loan Portfolio Quality
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: 2.2MM
Source: 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. 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
Santander is present in the main Latin American countries and is
the 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
8. 8
Macroeconomic 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. 1. Santander Group Overview
2. Macroeconomic Scenario
3. Santander Brazil: Strategy
4. Business
5. Results
6. Loan Portfolio Quality
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 holders³
Source: 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 Management
3) Customers with active accounts during a 30-day period, according to the Brazilian Central Bank.
11. Santander and ABN Real: two successful and complementary 11
long 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. Integration process moves as planned 12
1st stage 2nd stage 3rd stage
Aug/08
g Mar/09 May/10
y Sep/10
p
I 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. 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. 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
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 in
2010.
17. Managerial Loan Portfolio - BR GAAP¹ 17
R$ 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.10
1. The portfolio in BR GAAP is higher than in IFRS because includes portfolios acquired from other banks and portfolio
of the partnership Aymoré
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 Jurídica
1. 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. Deposits and Assets Under Management 19
R$ 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)
21. Highlights
Hi 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/10
1. General Expenses excluding amortization / Total Revenue excluding Cayman hedge
2. Net Fee/General Expenses excluding amortization
3. Excludes Goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
22. Net profit 22
Net profit growth is accelerating
R$ MM
112%
76% 11%
1,763
1,591 1,591
906 832
4Q08 4Q09 1Q09 4Q09 1Q10
23. Total R
T 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 Income
1. Result from Financial Operations excluding the fiscal effect of Cayman hedge + Others
25. General Expenses and Amortization 25
R$ MM
-3.5%
Variation
-6.9%
1Q10 1Q09 Y-o-Y Q-o-Q
3,048
3 048 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. 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 Expenses
1. Gross Revenue = Total Income excluding Cayman Hedge. Including Cayman Hedge 1Q10/1Q09 grows 7.6%
2. Excludes amortization
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 1Q10
1. Does not consider the fiscal effect of Cayman hedge
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 1Q10
1.General Expenses excluding amortization / Total Revenue excluding Cayman hedge
2. Net Fee/General Expenses excluding amortization
3. Excludes Goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
29. Non-recurrent events
N t t 29
Value (R$ Million)
Sale of Assets 64
Provision for contingencies (28)
Total (after tax) 37
31. Quality f L
Q 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 Total
1. Nonperforming loans for over 90 days + performing loans with high delinquency risk / total loans managerial
2. Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk
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 Total
1) Nonperforming loans for over 90 days / total loans BR GAAP
2) Nonperforming loans for over 60 days / total loans BR GAAP
3) Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk
33. Allowance for Loan Losses¹ - IFRS
Losses 33
R$ 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 Provision
1. Includes recoveries of written-off credits
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
36. 36
Reconciliation IFRS x BRGAAP
R ili ti
R$ 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. Adjusted Allowance for Loan Losses - BR GAAP
Losses¹ 37
R$ 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 Provision
1.Excluding recoveries of written-off credits
2.Allowance for Loan Losses adjusted by the increase/decrease in additional provision
38. 38
Corporate 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. 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 Sector
Sustainability 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. Corporate St
C t Structure
t 40
Date: 12.31.2009 * simplified
