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
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 bilit
Revenues 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.
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 22.6
C1 -1%
20.3 20.5
+18 %
18.4
19.2
17.3
C2
15.6
14.7 14.9 +15 %
13.5
C3
10.6
10 6
10.2
9.8
+17 %
9.0
4.9
4.4
C4 4.1 +2%
4,4
Dec/08 Dec/09 Sep/10
jan/08
Source : September, 2010. Brazilian Central Bank
28. More satisfied . . . 28
Financial 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.
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 Relations
Juscelino 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
36. 36
Agenda
Overview 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 inclusion
For 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 40
The 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 201 217
Private 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
acquirers
Issues 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
innovation
Unlimited Platinum
and…
and ustomer relati
Reward Free
Cancellation
Mini 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 45
The 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 46
The 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 Cards
T lC d
Million YoY QoQ
21% 4%
9,7
97 10,0
10 0 ,
10,7 11,1
9,2
92
Credit
Sep’09 Dec ’09 Mar ’10 Jun’10 Sep ’10
Total Cards YoY QoQ
Million 11%
% 2%
%
22,8 23,6 24,0 24,6 25,2
Debit
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
YoY
Revolving 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
Agenda
Overview of Brazilian Cards Industry
Santander Cards Issuer
Santander Cards Acquirer
50. Santander as Issuer and Acquirer 50
Sets rules for
issuers and
acquirers
Card Brand
Issues 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 Portugal
Santander
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
Brazil
The partnership provides the bank access to a network of more
f
than 160,000 merchants and to GetNet’s know how
The 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 banks
Santander Conta Integrada – “Win-Win” relationship between
the bank and small and middle market companies (SMEs)
59. 5959
Market Overview – Credit to Corporate
Credit (YoY Gro th%)
Growth%) Spreads (%)
Average Tenor (days) Delinquency
Source: 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=24
N=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 Deals
Volume = 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
63. 6363
Santander Wholesale Banking Client Segmentation
Revenue 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
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 clients
Companies
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, like
1 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 for
4 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.
