SANTANDER CONSUMER FINANCE-SANTANDER INVESTOR DAY 2011

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Santander Consumer Finance se mueve en niveles récord de beneficios en 2011 y continuará haciéndolo en 2012 y 2013. Presentación Magda Salarich. Santander Investor Day 2011

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SANTANDER CONSUMER FINANCE-SANTANDER INVESTOR DAY 2011

  1. 1. Magda SalarichSantander Consumer Finance
  2. 2. DisclaimerSantander Consumer Finance, S.A. (“SCF”) and Banco Santander, S.A. ("Santander") both caution that this presentation containsforward-looking statements. 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-lookingstatements 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 andcounterparties. The risk factors that SCF and Santander have indicated in its past and future filings and reports, including inSantander’s case those with the Securities and Exchange Commission of the United States of America (the “SEC”) could adverselyaffect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materiallyfrom those in the forward-looking statements.Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, informationavailable and views taken on the date on which they are made; such knowledge, information and views may change at any time.Neither SCF nor Santander undertake any obligation to update or revise any forward-looking statement, whether as a result of newinformation, future events or otherwise.The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly availableinformation, including, where relevant any fuller disclosure document published by SCF and Santander. Any person at any timeacquiring securities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities forits purpose and only on such information as is contained in such public information having taken all such professional or other adviceas it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. Inmaking this presentation available, SCF and Santander give no advice and make no recommendation to buy, sell or otherwise dealin shares in SCF, Santander or in any other securities or investments whatsoever.Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buyany securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. SecuritiesAct of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation orinducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Servicesand Markets Act 2000.Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price orfuture earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in thispresentation should be construed as a profit forecast. 2
  3. 3. Business Santander Consumer has delivered record results andevolution become a consolidated leader during the economic downturnBusiness These results have been achieved thanks to SCF’s proven model business model Strategy Clear management priorities by geographies … … and growing in markets we know well, will allow SCF to Outlook achieve record results in 2011 and maintain recurrent profits2011/2013 in the 2012-2013 period 3
  4. 4. Business Santander Consumer has delivered record results andevolution become a consolidated leader during the economic downturnBusiness These results have been achieved thanks to SCF’s proven model business model Strategy Clear management priorities by geographies … … and growing in markets we know well, will allow SCF to Outlook achieve record results in 2011 and maintain recurrent profits2011/2013 in the 2012-2013 period 4
  5. 5. Since 2008, the Gross Margin profitability has constantly increased,reaching 7.6% in 2010, … Gross Margin evolution € Million % CAGR 10/08: +19.4% 4,634 4,090 7.6% 3,249 7.4% 6.6% 2008 2009 2010 Gross Margin as % of ANEAS ANEAs: Average Net Earning Assets (Gross Customer Loans – Delinquencies) 5
  6. 6. … with a stable Cost-to-Income of 27.5%, … Operating Expenses and Cost to Income € Million 1,273 1,118 875 26.9% 27.3% 27.5% 2008 2009 2010 Operating Expenses % Cost to income 6
  7. 7. … Loan Loss Provisions stabilizing, with the Cost of Riskdecreasing to 3.3%, … Loan Loss Provision€ Million +2.6% 1,967 2,017 1,393 … and considerably 3.5% 3.3% increasing the Coverage 2.8% ratio to 128% Coverage Ratio (%) 2008 2009 2010 Net loan-loss provisions as % of ANEASANEAs: Average Net Earning Assets (Gross Customer 128%Loans – Delinquencies) 97% 86% 2008 2009 2010 7
  8. 8. All in all, SCF has delivered record results during the crisis,reaching a PBT of €1,201 million and a ROA of 2% Profit Before Taxes € Million % CAGR 10/08: +11.8% +19,4% 1,201 960 960 1.9% 2.0% 1.7% 2008 2009 2010 Profit before Taxes % ROA * * ROA: Profit Before Taxes / ANEAs 8
  9. 9. SCF has become a consolidated leader in the industry during theeconomic downturn Key figures (Dec’2007) Key figures (Dec’2010) € Million loans € Million loans 47,900 volume * 69,224 volume * + 45% 9,654 € Million deposits 25,950 € Million deposits + 169% Intragroup Funding Intragroup Funding 8,312 (€ million) 6,950 (€ million) (Aug’11e) - 16% Intragroup Funding 17% Intragroup Funding % of Loan Volume 9% % of Loan Volume (Aug’11e) 9.4 Million customers 15.6 Million customers + 66% 108,000 Dealers 145,000 Dealers + 34% 674 € Million Profit 811 € Million Profit + 20% * Gross Customer Loans under management 9
  10. 10. Business Santander Consumer has delivered record results andevolution become a consolidated leader during the economic downturnBusiness These results have been achieved thanks to SCF’s proven model business model Strategy Clear management priorities by geographies … … and growing in markets we know well, will allow SCF to Outlook achieve record results in 2011 and maintain recurrent profits2011/2013 in the 2012-2013 period 10
  11. 11. These results have been achieved thanks to SCF’s proven businessmodel, based on: 1 Diversification 2 Leadership positions in core markets 3 Pan-European platform 4 Efficiency leadership 5 Strong risk & collections capabilities 11
  12. 12. 1 SCF is diversified across 7 main product lines and 14 key geographies … by products (%) … by geographies (%)Dec’10 SCF Loans €69 bn. Car Stock (Dec’10) Portugal Finance Other Durables UK Mortgages Auto 4% 5%4% - New Poland 2% 6% 5%Credit Cards 27% 5% Germany Nordic 32% and Others 8% Countries 9% 15% 12% Direct Italy 35% 12% 19% Spain USA Auto-Used 12
  13. 13. 1 SCF is diversified across 7 main product lines and 14 key geographies, … with the important weight of SCB Germany … … by geographies (%) SCB Germany’s Key FiguresSCF Loans €69 bn.(Dec’10) Dec’10 Portugal Other Loans*: €22.3 billion UK 2%4% Germany Poland 5% Deposits: €22.5 billion 5% Nordic 9% 32%Countries Profit: €391 million 12% % of SCF’s Profit: 48% Italy 12% 19% C/I: 31.4% USA Spain * Gross Customer Loans under management 13
  14. 14. 1 … with an active management of its business portfolio … … growing in markets we know … and exiting from markets … well … Nordics Global France deals + GE UK Hungary Global deals + GE Poland Czech Republic Germany AIG USA RBS + GE Triad + HSBC + SEB Slovakia Citi + GE Russia … where we have a leading … where we have not gained position … critical mass 14
  15. 15. 2 … and focused on achieving critical mass and leadership positions in core marketsMarket share PortfolioNew Business Car Loans (New and Used Cars); Market AutoFY2010, percent 0 10 20 30 position (€Mn) Norway* #1 2,736 Finland** #1 902 Poland* #2 774 Leading #1 4,388 Positions Spain* and Critical Portugal* #1 1,098 Mass in 10 Denmark** #2 619 Core Car Germany** #2 12,056 Financing UK* #3 2,779 Markets Sweden* #3 969 Italy* #3 3,964 * Source: Local Consumer Finance Associations ** Source: Internal estimates 15
  16. 16. 3 Thanks to its pan-European platform, with clear competitive advantages, … Pan-European platform Wide geographical coverage In-depth market knowledge (+20 years) An extensive Specific IT & Ops platforms for consumer financing network of Strong risk analytics and remarketing 130,000 POS* capabilities agreements Low cost-to-income provider in Europe Global brand recognition * Point of Sale 16
  17. 17. … SCF has been able to formalize 34 agreements and achieve a3 better performance34 agreements with 9 Car Manufacturers in PBT as % 12 European countries of Loans** CM 1 CM 2 CM 3 CM 4 CM 5 CM 6 CM 7 CM 8 CM 9 C3 3.32 Average: 2.1% SCF* 2.99 C2 2.33 C4 1.81 C1 1.30 Provides recurrent volumes of better risk Captive performance of the main Car Manufacturer’s finance captives: quality (first option financial provider) * SCF = Proforma results for the global agreements signed with CMs in Europe. ** Average Loans (2009-2010) CMs Finance Captives: VWFS Europe, Renault Credit International, Banque PSA Finance and Fiat Group Financial Services Source: Competitor Annual Reports 17
  18. 18. 4 Additionally, SCF maintains its efficiency leadership … Cost to income FACTORIES SYNERGIES FY2010 (%) €82 million 27.5 TARGET: €65 Mn C1 40.4 €30 million TARGET: €30 Mn C2 47.3 €42 million* TARGET: €34 Mn C3 52.2 * To be completed by the end 2012 Peers: BNP Financial Services, Credit Agricole Consumer Credit and Societe Generale Financial Services Source: Competitor Annual Reports 18
  19. 19. … like in SCB Germany, which has achieved the best Cost 4 to Income of its peers Implementation of Group’s Maximization of Synergies SCB Germany Cost IT in branches during integrations* to income FY2010 (2008-2010) (%) New Business Business Portfolio Current Businesses H2 2008 H2 2009 2011 Cards 31.4 Migration Migration (RBS:615.000 credit cards, 840.000 store cards) to to €63 million RBS SCB GE Partenón- Partenón- C1 40.0 Alhambra Alhambra TARGET: €50 Mn Banking & Savings (GE: ca.1.800 MM €) C2 46.7 SCB Legacies GE SCB RBS GE SCB Direct lending (GE: 1.000M €, RBS: 800 M €) €30 million C3 47.2 RBS GE SCB TARGET: 30 Mn Migration to C4 48.4 CAPS/MKE Leasing & Auto Loans Migration to Partenón- (GE: 800 M €) Alhambra SCB Legacy C5 52.4KWEB/XPS/NETADAM GE SCB GEATOS AS/400 MBS Consumer Loans (GE: <40 M €) GE SCB €93 Mn C6 60.0 GE SCB C7 69.7 * Includes SC Austria and SC Netherlands Peers: : VWFS Germany, Citibank / Targobank, Ford Credit Germany, Team Bank, CreditPlus, Norisbank and Hanseatic Bank Source: Competitor Annual Reports 19
  20. 20. 5 SCF’s strong risk & collections capabilities have helped to improve its main risk metrics, … Risk premium SCF NPL Ratio SCF (%) (%) 5.39 4.05 4.95 3.60 4.18 2.65 2008 2009 2010 2008 2009 2010 Coverage Ratio SCF (%) 128 97 86 2008 2009 2010 20
  21. 21. 5 … mainly through its high analytical capabilities, as well as its powerful collections platform, … Collections Business … which was successfully implemented Unit (CBU)GRP* SC Spain:€Mn Creation of the Gross Risk Premium (GRP)* CBU91 91 € Million For example, its implementation in Spain -3% 74 76 74 had an immediate impact 611 592 on the Gross Risk 49 Premium (GRP)* -83% 38 33 29 17 18 19 17 15 16 13 10 6 5 5 10 99 1 0 0 Aug-09 Aug-10 Jul-09 Jul-10 Jan-09 Apr-09 May-09 Jun-09 Nov-09 Jan-10 Feb-10 Apr-10 May-10 Jun-10 Nov-10 Feb-09 Mar-09 Sep-09 Dec-09 Mar-10 Sep-10 Dec-10 Oct-09 Oct-10 2008 2009 2010 * Gross Risk Premium = Last 12 months variation in delinquency balance plus Net Write Offs for the period 21
  22. 22. Business Santander Consumer has delivered record results andevolution become a consolidated leader during the economic downturnBusiness These results have been achieved thanks to SCF’s proven model business model Strategy Clear management priorities by geographies … … and growing in markets we know well, will allow SCF to Outlook achieve record results in 2011 and maintain recurrent profits2011/2013 in the 2012-2013 period 22
  23. 23. SCF has clear management priorities 2010 Portfolio*Growing in markets we know well … (€bn)SCF Portfolio €69 bn.(Dec’10) Germany 22.3 Nordics Global deals + GE UK Global USA 12.8 deals + GE Poland Germany AIG USA RBS + GE Triad + HSBC Citi + GE + SEB Spain 8.5 Poland 3.6… where we have a leading position * Gross Customer Loans under management 23
  24. 24. SCB Germany is leader in consumer finance, with a high market share Clear Management Priorities Market Share Installment Loans Santander Dec’10 (%) Consumer Volume: €145.6 Bn Other Bank banks1) 13.4 37.2 All Big Banks2) 3.8 All All Savings Cooperative Banks Banks 27.8 17.9 1) Other banks: branches of foreign banks, captives, banks with special purposes SCB Germany’s Key Figures 2) German Big Banks: Deutsche Bank, Commerzbank, HypoVereinsbank, Postbank Dec’10 Jun’11 Leader in core products Loans*: €22.3 bn €31.0 bn Dec’10 Deposits: €22.5 bn €29.9 bn Nr. 1 Consumer finance player Customers: 6.2 mn 7.1 mn Nr. 1 in Durables financing Nr. 2 in Auto financing Profit (Dec’10): €391 million Nr. 2 in Direct Loans * Gross Customer Loans under management Sources: Bankenfachverband, www.dsgv.de, www.bvr.de, internal data 24
  25. 25. SCB Germany has a highly diversified portfolio … Breakdown of Consumer Loan Portfolio Clear Management Priorities Dec’10 Stock Direct; Volume: €22.3 Bn Finance 23.6% 6.1% Credit Cards 2.1% Durables 9.0% Other 5.0% Used Cars 32.4% New Cars 21.8% Customer Deposits … and has almost € Million 22,488 doubled its customer 17,144 deposits 12,897 2008 2009 2010 25
  26. 26. SCB Germany has maintained a stable cost to income, … Clear Management Priorities Cost to income Gross Margin (%) € Million 32.8% 1,305 1,323 31.4% 1,069 27.8% 2008 2009 2010 2008 2009 2010 PBT & ROA € Million 517 510 517 … achieved a PBT above €500 million and a ROA of 2.5% 2.9% 2.5% 2.4% 2008 2009 2010 PBT % ROA ROA: Profit Before Taxes / ANEAs 26
  27. 27. SCB Germany Management PrioritiesClear Management Priorities Take advantage of the German economic environment Maximize captive agreements with Car Manufacturers Complete the implementation of Group’s IT Implement SAN’s commercial model in the SEB carve-out 27
  28. 28. SCF has clear management prioritiesGrowing in markets we know well … Germany USA Spain Poland… where we have a leading position 28
  29. 29. SC USA is a full auto service provider, … Clear Management Priorities ... which has been very active in negotiating portfolio servicing agreements with 3rd parties, … SC USA’s 3rd party servicing agreements Dec’10 $6 bn $4.8 bn $7.4 bn SC USA’s Key Figures Dec’10 Total service Loans*: $17.1 billion agreements reached Customers: 2 million $18.2 bn Profit: $338 million * Gross Customer Loans under management 29
  30. 30. … experiencing a substantial increase in margins, to reach a PBTclose to $600 million, … Gross Margin Clear Management Priorities € Million 2,083 1,566 1,296 2008 2009 2010 PBT & ROA (%) … maintaining a 598 high ROA during 384 the economic 264 downturn … 6.1% 5.1% 5.3% 2008 2009 2010 PBT % ROA ROA: Profit Before Taxes / ANEAs 30
  31. 31. Clear Management Priorities SC USA Management Priorities Sustain double digit growth of organic origination with margin discipline… and substantially improvingthe expected Net Credit Lossesof serviced portfolios Build a captive auto model similar to Europe Capture growth opportunities $115 Mn. improvement in NCLs 31
  32. 32. SCF has clear management prioritiesGrowing in markets we know well … Germany USA Spain Poland … where we have a leading position 32
  33. 33. SC Spain is number one in car financing, with leading positions in coreproducts, … Clear Management Priorities Market Share Total Auto Loans 2010 SCF 19.35% C1 17.97% C2 15.09% C3 8.61% C4 8.59% C5 8.42% C6 5.70% SC Spain’s Key Figures Dec’10 Leader in core products Loans*: €8.5 billion Dec’10 Nr. 1 in New Auto financing Customers: 2.2 million Nr. 2 in Used Auto financing C/I: 30.8% Nr. 2 in Durables financing Profit: € - 1 million Nr. 2 in Revolving Credit * Gross Customer Loans under management Peers: Volkswagen FS, Finanzia, RCI Banque, Banque PSA; 33 BMW Bank and Cetelem
  34. 34. … which experienced a decrease in margins derived from the crisis, … Clear Management Priorities Gross Margin € Million 548 514 456 2008 2009 2010 … but has embarked on a substantial workforce restructuring and cost cutting effort … Fulltime employees 1,213 -50% 918 595 595 2007 2008 2009 2010 34
  35. 35. … and implemented risk policies that have produced a considerabledecrease of its Delinquency Ratio and Risk Premium in 2010 Clear Management Priorities Delinquency Ratio Risk Premium 10.8% 8.9% 5.0% 5.7% 5.5% 1.1% 2008 2009 2010 2008 2009 2010 Coverage Ratio SC Spain has also managed to 100.9% substantially 73.5% increase its 54.4% Coverage Ratio 2008 2009 2010 35
  36. 36. SC Spain is returning to profit in 2011 Clear Management Priorities Profit BeforeTaxes € Million 60.8 -19.8 -27.9 H109 H110 H111 SC Spain Management Priorities Consolidate leadership in new and used car financing New finance captive agreements with Car Manufacturers Improve ROA 36
  37. 37. SCF has clear management prioritiesGrowing in markets we know well … Germany USA Spain Poland… where we have a leading position 37
  38. 38. SC Poland is the leader in new auto financing, … Clear Management Priorities Market Share New Car Auto Loans 2010 SCF 22.2% C1 16.5% C2 16.3% C3 12.3% C4 11.1% SCB Poland’s Key Figures … as well as in durables financing (22% share) Loans*: €3.6 billion Dec’10 Deposits: €1.0 billion Leader in core products Dec’10 Customers: 1.8 million Nr. 1 in New Auto financing C/I: 36.1% Nr. 2 in Durables financing Profit: €35 million * Gross Customer Loans under management Peers: Getin Noble, Volkswagen FS, Banque PSA and Fiat Bank Source: Market share from Open Finance 38
  39. 39. With the integration of AIG, SC Poland has achieved critical mass andexperienced a substantial increase in terms of PBT and ROA in 2010 Clear Management Priorities PBT & ROA € Million 65.3 32.7 22.5 2.5% 1.4% 1.0% 2008 2009 2010 PBT % ROA SC Poland Management Priorities Maximize captive agreements with Car Manufacturers Extract synergies in the integration of AIG Poland ROA: Profit Before Taxes / ANEAs 39
  40. 40. Business Santander Consumer has delivered record results andevolution become a consolidated leader during the economic downturnBusiness These results have been achieved thanks to SCF’s proven model business model Strategy Clear management priorities by geographies … … and growing in markets we know well, will allow SCF to Outlook achieve record results in 2011 and maintain recurrent profits2011/2013 in the 2012-2013 period 40
  41. 41. SCF achieved new record results in H1’11, with PBT up 77.1% YoY toreach €1 billion and a ROA* of 2.9%, … Profit Before Taxes € Million 1,006.5 +77.1% 538.5 568.4 470.1 2.9% 2.3% 1.9% 1.7% H108 H109 H110 H111 Profit before Taxes % ROA * * ROA: Profit Before Taxes / ANEAs (annualized) 41
  42. 42. … outperforming its European peers in 1H2011, … Gross Margin Cost to Income€ million (%) 2,193 +20.6% 26.5 SCF SCF Number 1 2,644 30.5 3,252 +6.0% 47.4 C1 3,447 C1 46.7 1,702 +1.0% 40.2 C2 1,718 C2 39.5 1,767 51.6 C3 1,753 -0.8% C3 52.9 H1’2010 H1’2011 Profit Before Taxes ROA*€ million (%) 568 +77.1% Number 1 1.81 Number 1SCF 1,006 SCF 2.66 581 +65.2% 0.79 C1 960 C1 1.26 404 +3.0% 1.05 C2 416 C2 1.06 241 0.95 C3 396 +64.3% C3 1.52 * ROA: PBT / Average Portfolio Peers: BNP Financial Services, Credit Agricole Consumer Credit and Societe Generale Financial Services Source: Competitor Annual Reports 42
  43. 43. … and maintaining high profitability during the economicdownturn ROA* by competitor (%) C3 2.66 2.42 2.16 1.81 1.83 1.57 1.57 1.63 1.52 1.08 1.05 1.06 1.26 C2 1.10 0.82 0.95 1.02 1.06 0.69 0.69 C1 0.76 0.41 0.79 0.93 0.48 0.43 0.38 -0.06 1H-08 2H-08 1H-09 2H-09 1H-10 2H-10 1H-11 * ROA: PBT / Average Portfolio Peers: BNP Financial Services, Credit Agricole Consumer Credit and Societe Generale Financial Services Source: Competitor Annual Reports 43
  44. 44. Outlook 2011/2013: SCF is expected to become a self-fundedbusiness by the end of 2012 … SCF’s Intragroup Funding € Billion % of Funding 25% % Requirements 15 13% 9%Self-funded ~ 6% 9 7 4/5 0% Dec09 Dec10 Aug11 e Dec11 e Dec12 eROA: 2%-2.4% ROA: Profit Before Taxes / ANEAs 44
  45. 45. … through reinforcing its deposits and securitizations SCF’s Intragroup Funding € Billion Deposits in Germany 25% (reinforced by SEB carve-out) 15 13% 9% Deposits in PolandSelf-funded 9 ~ 6% 7 4/5 0% Active Securitization strategy Dec09 Dec10 Aug11 e Dec11 e Dec12 eROA: 2%-2.4% ROA: Profit Before Taxes / ANEAs 45
  46. 46. SCF will maintain recurrent profits in the 2012-2013 period, …Self-funded  Macro Scenario: Low Interest Rates  German economy: favorable perspectives (32% of SCF’s portfolio; 48% of SCF’s Profit)  Nordics and Poland positive macro-environmentROA: 2%-2.4%  Healthy starting point in risks (1H’11: Risk Premium 2.3% and Coverage 128%)  Leadership in core markets  Solid & proven business model with the necessary skills to compete ROA: Profit Before Taxes / ANEAs 46
  47. 47. … through its clear management priorities and objectivesSelf-funded SCF’s aim:  TOP 3 in core markets • Macro Scenario: Low Interest Rates • German economy: favorable  “Captive finance” perspectives (32% of SCF’s portfolio; model leadership 48% of SCF’s Profit) • Nordics and Poland positive  Gain profitable market macro-environment shareROA: 2%-2.4% • Healthy starting point in risks (1H’11: Risk Premium 2.3% and Coverage  Efficiency leadership 128%)  Strong consumer • Leadership in core markets collections specialist • Solid & proven business model with the necessary skills to compete ROA: Profit Before Taxes / ANEAs 47
  48. 48. In summary, After reaching all-time record results and profitability in 1H11, over the next years we will focus on: Self-financed Keeping high profitability Value creation 48
  49. 49. 49

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