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Credit suisse event_presentation

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Credit suisse event_presentation

  1. 1. Santander BrasilFinance May 26th,2010
  2. 2. 2This presentation was prepared by Banco Santander (Brasil) S.A. It is provided forinformational purposes only and does not constitute an offer to sell or a solicitationto buy 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 fromcurrent expectations. Past performance and/or these predictions are not guaranteeof future 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.
  3. 3. 3Highlights Net profit of R$ 1,763 MM in 1Q10, up 112% YoY and 11% vs. 4Q09 Net profit increase 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 Equity³ of R$ R$ 42,417 MM1. 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)
  4. 4. 4Net profit evolutionR$ MM Net profit growth is accelerating 112% 76% 11% 1,763 1,591 1,591 906 832 4Q08 4Q09 1Q09 4Q09 1Q10
  5. 5. 5Results by Segment¹ Global Wholesale BankingR$ MM 0.9x Net Profit before tax 847 758 Commercial Banking R$ MM 2.1x 1Q09 1Q10 Global 1,204 1 204 Wholesale Banking 575 Commercial Asset Management Banking 36% and Insurance 56% 1Q09 1Q10R$ MM 2.7x 8% 162 59 Asset Management and Insurance 1Q09 1Q101. Does not consider the fiscal effect of Cayman hedge
  6. 6. 6Gross Revenue vs General Expenses Gross Revenue¹ and General Expenses² R$ MM 1Q10 x 1Q109 7,776 8,032 7,288 7,471 7,598 10.2% 3.0 30 2.7 -2.8 % 2,731 2 731 2,649 2 649 2,674 2 674 2,893 2 893 2,655 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
  7. 7. 7 Total RevenuesR$ MM 10.2% 3.3% 7,776 8,032 8 032 Y-o-Y 7,471 7,598 7,288 260 577 1Q10 1Q09 Var. 409 386 673 1,556 1,666 1,622 Net Interest Income 5,833 5,172 12.8% 1,443 1,573 Net Fees 1,622 1 622 1,443 1 443 12.4% 12 4% 5,489 5,656 5,850 5,833 Subtotal 7,455 6,615 12.7% 5,172 Others¹ 577 673 -14.3% 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
  8. 8. 8Net FeesR$ MM 12.4% Y-o-Y 1Q10 1Q09 Var. -2.6% Banking fees 588 549 7.1% 7 1% 1,573 1,666 1,622 Insurance 342 259 32.2% 1,556 1,443 Asset Management 201 171 17.6% Credit and Debit Cards 213 171 24.9% Collection services 125 121 2.8% Capital Markets 108 64 68.1% 68 1% 1Q09 2Q09 3Q09 4Q09 1Q10 Trade (COMEX) 102 101 1.3% Others¹ (56) 8 n.a. Total 1,622 1,443 12.4%1. Includes taxes and others
  9. 9. 9General Expenses and AmortizationR$ MM -3.5% -6.9% 6 9% Variation 1Q10 1Q09 Y-o-Y Q-o-Q3,048 3,013 3,158 2,977 2,941 Other General 317 339 265 1,300 1,371 -5.2% -8.6% 328 286 Expenses Personnel 1,355 1,360 -0.4% -7.8%2,731 2,649 2,674 2,893 2,655 Expenses Depreciation and 286 317 -9.8% 7.9% Amortization1Q09 2Q09 3Q09 4Q09 1Q10 Total 2,941 3,048 -3.5% -6.9% Depreciation and Amortization General Expenses
  10. 10. 10Non-recurrent events Value (R$ Million) Sale of Assets 64 Provision for contingencies (28) Total (after tax) 37
  11. 11. 11Managerial Loan Portfolio¹ - IFRSR$ Billion 2.0% 1.1% Variation R$ Million 1Q10 1Q09 Y-o-Y Q-o-Q137.1 134.2 132.9 138.4 139.9 Individuals 43,992 40,503 8.6% 1.8% Consumer Financing 25,509 24,511 4.1% 1.6% SMEs 30,811 33,027 -6.7% -2.0%mar.09 jun.09 sep.09 dec.09 mar.10 Corporate 39,597 39,076 1.3% 2.5% Total IFRS 139,910 137,117 2.0% 1.1% Corporate Individuals 29% 31% SMEs Consumer 22% Finance 18%1. Loans for the year 2009 have been reclassified for comparison purposes with the current period, due tore-segmentation of clients occurred in 2010
  12. 12. 12Managerial Loan Portfolio - BR GAAP¹R$ Billion 3.6% Variation 1.5% R$ Million 1Q10 1Q09 Y-o-Y Q-o-Q 139.1 137.3 142.0 144.1 136.2 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% 5 9% 3.6% 1Q10/ 1Q10/ mar.10/ mar 10/ 1Q09 4Q09 feb.101. The portfolio in BR GAAP is higher than in IFRS because includes portfolios acquired from other banks and portfolioof the partnership Aymoré
  13. 13. 13Deposits and Assets Under ManagementR$ Billion 6.7% 0.3% Variation R$ Million 1Q10 1Q09 Y-o-Y Q-o-Q 225.2 235.7 235 7 243.1 243 1 239.5 239 5 240.3 240 3 Demand 13,699 12,356 10.9% -9.5% 80.1 85.5 93.1 98.4 106.6 Savings 25,781 20,447 26.1% 2.2% 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 (AUM) Funding from Clients¹ Clients 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)
  14. 14. 14Performance Ratios Efficiency Ratio¹ (%) Recurrence² (%) ROAE (adjusted)³ (%) 8.3 p.p. 2.6 p.p. -4.4 p.p. 61.1 57.0 52.8 52 8 19.3 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)
  15. 15. 15Allowance for Loan Losses¹ - IFRSR$ MM 1.8% 11.9% 11 9% 3,008 2,360 2,467 500 2,403 2,148 Y-o-Y 1Q10 1Q09 Var. 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
  16. 16. 16Quality of Loan Portfolio - IFRS Deliquency¹ (%) Coverage² 9.7 9.3 8.6 8.8 8.8 7.7 107% 101% 102% 103% 7.2 97% 7.0 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
  17. 17. 17Quality of Loan Portfolio – BR GAAP 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 7.4 7.2 6.8 6.5 6.2 6.4 6.2 114% 113% 120% 5.9 108% 5.4 97% 5.0 6.2 6.1 5.1 5.3 4.7 4.4 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 p Total Individuals Corporate p 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
  18. 18. 18Conclusion Integration is evolving as scheduled • Credit card platform integration concluded in the 1Q10 and final tests for branch network integration • Costs controlled and synergies obtained Activities A ti iti • Loan book growth is accellerating • Commercial re-alignment to cacht up loan activity in corporate loans • Launching of “C t I t L hi f “Conta Integrada” product f d ” d t focusing SME i SMEs Well behaved results Revenues • Balanced between Costs • Gross jaws increased by 13 p.p. Improved asset quality • Both NPLs over 60 and 90 days continue its declining trend • Increased coverage Net income jumped 112% YoY and 11% QoQ
  19. 19. 19 ANNEXESIncome StatementBalance Sheet
  20. 20. 20Adjusted Allowance for Loan Losses¹ - BR GAAPR$ MM $ -9.6% -11.4% 2,413 2,490 569 2,462 419 157 Variation 2,403 2,181 1Q10 1Q09 Y-o-Y Q-o-Q Adjusted Allowance 2,181 2,413 -9.6% -11.4% for Loan Losses 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
  21. 21. 21Quarterly Results ManagerialR$ MM Income Statements 1Q09 2Q09 3Q09 4Q09 1Q10 - Interest and Similar Income 9,996 9,775 9,731 9,841 9,278 - Interest Expense and Similar (4,824) (4,286) (4,075) (3,991) (3,445) Interest Income 5,172 5,489 5,656 5,850 5,833 Income from Equity Instruments 7 8 7 8 4 Income from Companies Accounted for by the Equity Method 205 52 33 5 10 Net Fee 1,443 1,573 1,556 1,666 1,622 - Fee and Commission Income 1,664 1,799 1,797 1,888 1,841 - Fee and Commission Expense (221) (226) (241) (222) (219) Gains/Losses on Financial Assets and Liabilities and Exchange Diferences 514 459 240 306 608 Other Operation Income (Expenses) (53) (110) 106 (59) (45) Total Income 7,288 7,471 7,598 7,776 8,032 General Expenses (2,731) (2,649) (2,674) (2,893) (2,655) - Administrative Expenses (1,371) (1,297) (1,345) (1,423) (1,300) -P Personnel espenses l (1,360) (1 360) (1,352) (1 352) (1,329) (1 329) (1,470) (1 470) (1,355) (1 355) Depreciation and Amortization (317) (328) (339) (265) (286) Provisions (net)¹ (559) (1,250) (1,190) (482) (629) Impairment Losses on Financial Assets (net) (2,381) (2,518) (3,844) (2,125) (2,407) - Allowance for Loan Losses² (2,360) (2,467) (3,008) (2,148) (2,403) - Impairment Losses on Other Financial Assets (net) (21) (51) (836) 23 (4) Net Gains on Disposal of Assets 49 1,040 2,280 34 117 Net Profit before taxes 1,349 1,766 1,831 2,045 2,172 Income Taxes (517) (153) (359) (454) (409) Net Profit 832 1,613 1,472 1,591 1,7631. Includes provision for tax contingencies and legal obligations2. Includes recovery of credits written off as losses
  22. 22. 22Income Statement ManagerialR$ MM Var Y-o-Y YoYIncome StatementsI S 1Q10 1Q09 ABS %- Interest and Similar Income 9,278 9,996 (718) -7.2%- Interest Expense and Similar (3,445) (4,824) 1,379 -28.6%Interest Income 5,833 5,172 661 12.8%Income from Equity Instruments 4 7 (3) -42.9% 42 9%Income from Companies Accounted for by the Equity Method 10 205 (195) -95.1%Net Fee 1,622 1,443 179 12.4%- Fee and Commission Income 1,841 1,664 177 10.6%- Fee and Commission Expense (219) (221) 2 -0.9%Gains/Losses on Financial Assets and Liabilities and Exchange Diferences 608 514 94 18.3%Other Operation Income (Expenses) (45) (53) 8 -15.1%Total Income 8,032 7,288 744 10.2%General Expenses (2,655) (2,731) 76 -2.8% p- Administrative Expenses ( (1,300) ) ( (1,371) ) 71 -5.2%- Personnel espenses (1,355) (1,360) 5 -0.4%Depreciation and Amortization (286) (317) 31 -9.8%Provisions (net)¹ (629) (559) (70) 12.5%Impairment Losses on Financial Assets (net) (2,407) (2,381) (26) 1.1%- Allowance for Loan Losses Losses² (2,403) (2 403) (2,360) (2 360) (43) 1.8% 1 8%- Impairment Losses on Other Financial Assets (net) (4) (21) 17 -81.0%Net Gains on Disposal of Assets 117 49 68 n.aNet Profit before taxes 2,172 1,349 823 61.0%Income Taxes (409) (517) 108 -20.9%Net Profit 1,763 832 931 111.9%1. Includes provision for tax contingencies and legal obligations2. Includes recovery of credits written off as losses
  23. 23. 23Balance Sheet - AssetsR$ MMAssets mar/09 jun/09 sep/09 dec/09 mar/10Cash and Balances with the Brazilian Central Bank 23,317 24,813 21,261 27,269 36,835Financial Assets Held for Trading 22,347 15,809 19,261 20,116 23,133Other Financial Assets at Fair Value Through Profit or Loss 6,462 6,068 16,986 16,294 15,873Available - for- Sale Financial Assets 27,294 30,593 44,763 46,406 37,183Loans and Receivables 159,356 161,645 149,973 152,163 150,003 - Loans and advances to credit institutions 30,977 31,993 27,932 24,228 20,330 - Loans and advances to credit customers 137,227 138,811 132,343 138,005 139,678 - Impairment losses (8,848) (9,159) (10,302) (10,070) (10,005)Hedging derivatives 99 178 157 163 133Non-current assets held for sale 120 58 53 171 41Investments in associates 460 502 417 419 423Tangible Assets 3,742 3,600 3,682 3,702 3,835Intangible Assets: 30,534 , 30,589 , 30,982 , 31,618 , 31,587 , - Goodwill 27,190 27,263 28,312 28,312 28,312 - Others 3,344 3,326 2,670 3,306 3,275Tax Assets 12,798 13,386 15,058 15,779 14,834Other Assets 3,170 1,637 3,642 1,872 2,169Total Assets 289,699 288,878 306,235 315,972 316,049
  24. 24. 24Balance Sheet - LiabilitiesR$ MM Liabilities mar/09 jun/09 sep/09 dec/09 mar/10 Financial Liabilities Held for Trading 8,268 4,887 5,316 4,435 4,505 Other Financial Liabilities at Fair Value Through Profit or Loss 257 363 2 2 2 Financial liabilities at amortized cost 208,267 207,644 205,801 203,567 203,499 - Deposits from the Brazilian Central Bank p 1,049 870 562 240 117 - Deposits from credit institutions 23,435 21,793 18,754 20,956 24,092 - Customer deposits 155,231 154,922 154,548 149,440 147,287 - Marketable debt securities 11,535 11,299 10,945 11,439 11,271 - Subordinated liabilities 10,938 10,996 11,149 11,304 9,855 - Other financial liabilities 6,079 6 079 7,764 7 764 9,843 9 843 10,188 10 188 10,877 10 877 Liabilities for Insurance Contracts - - 13,812 15,527 16,102 1 Provisions 9,749 10,203 11,555 9,480 9,881 Tax Liabilities 6,402 7,352 9,287 9,457 8,516 Other Liabilities² Liabilities , 6,084 6,624 , 4,796 , 4,238 , 2,815 , Total Liabilities 239,027 237,073 250,569 246,706 245,320 Equity Shareholders Equity 50,148 51,135 55,079 68,706 70,069 Minority Interests 5 5 5 1 1 Valuation Adjustments 519 665 582 559 659 Total Equity 50,672 51,805 55,666 69,266 70,729 Total Liabilities and Equity 289,699 288,878 306,235 315,972 316,0491. Includes provision for pension and contingencies2. Includes other financial liabilities at fair value in income and derivatives used as hedge
  25. 25. 25Reconciliation IFRS x BRGAAPR$ MM 1Q10 BR GAAP Net Profit 1,015 - Reversal of Goodwill amortization / Others 832 - PPA amortization ti ti (58) - Others (26) IFRS Net profit 1,763
  26. 26. Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. (55 T l ( 11) 3 3 3300 3553-3300 e-mail: ri@santander.com.br
  27. 27. Santander BrasilWholesale Banking May 26th, 2010
  28. 28. 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 solicitationto buy 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 guaranteeof future 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
  29. 29. 3Agenda Market Overview Santander Wholesale Banking Santander Wholesale Banking Growth Strategy
  30. 30. 0 100 200 300 400 500 600 150 200 250 300 350 Jun-05 5 Jan-08 33% 195 Sep-05 5 Mar-08 Dec-05 5 May-08 Mar-06 6 Jun-06 6 Jul-08 Sep-06 6 Sep-08 Dec-06 6 Nov-08 46% Mar-07 7 Jun-07 7 Jan-09Source: Brazilian Central Bank Credit to Corporate (Volume - BRL bln) Sep-07 7 Mar-09 Dec-07 7 Mar-08 8 May-09 Jun-08 8 Jul-09 Sep-08 8 Average Tenor (days) Credit (YoY Growth%) Sep-09 310 Dec-08 8 Mar-09 9 Nov-09 % 1% Jun-09 9 Jan-10 Sep-09 9 Dec-09 9 Mar-10 4% 0% Mar-10 0 287 Credit to Corporate (YoY Growth %) 10% 20% 30% 40% 50% Market Overview – Credit to Corporate 0,0 1,0 2,0 3,0 4,0 5,0 , 10 0 10,0 12,5 15,0 17,5 20,0 Jun-05 5 Jun-05 1,7 13,6 Sep-05 5 Sep-05 Dec-05 5 Dec-05 Mar-06 6 Mar-06 Jun-06 6 Jun-06 Sep-06 6 Sep-06 Dec-06 6 Dec-06 Mar-07 7 Mar-07 Jun-07 7 Jun-07 Sep-07 7 Sep-07 Dec-07 7 Dec-07 Mar-08 8 Mar-08 Spreads (%) Delinquency Jun-08 8 Jun-08 Sep-08 8 Sep-08 Dec-08 8 Dec-08 Mar-09 9 Mar-09 19,0 Jun-09 9 Jun-09 Sep-09 9 Sep-09 Dec-09 9 Dec-09 Mar-10 0 Mar-10 3,6 1 1 17,1 4
  31. 31. 5 Market Overview – Capital Markets (ECM & DCM) ECM Evolution – Volume & Number of Deals DCM Evolution – Volume & Number of DealsVolume = BRL MM; N = Number of Deals Volume (BRL MM) -5.5% -6.4% +34.2% N=12 +335% N=64 N=19 N=3 N 3 N=11 N=4 N=5 N=1 N=5 Foreign Investors Participation – YTD Feb10 Number of Deals +9.2% Source: ANBIMA
  32. 32. 6 Market Overview – Capital Markets (M&A) M&A Evolution – Volume & Number of Deals*Volume = BRL billion; N = Number of Deals N=2 N=1 N=2 N=1 N=65 N=134 N=86 N=91 N=40 N 40 N=14 N=10 N=15 N=10 N=9 Announced Deals by Value Capital Source (2009) Volume Number of Deals (*) – Source: ANBIMA. Megadeals include operations with volume greater than BRL 3.0 billion Source: ANBIMA
  33. 33. 7Agenda Market Overview Santander Wholesale Banking Santander Wholesale Banking Growth Strategy
  34. 34. 8Santander Wholesale Banking Client Segmentation Revenue Classification Criteria Client Distribution GB&M ~530 * GB&M Client List (10%) Corporate ~650 (13%) Corporate BRL 250MM and above Empresas ** ~3900 (77%) Empresas BRL 30MM-250MM () (*) Includes MRG model clients only (**) Annual revenues greater than BRL 20K
  35. 35. 9Santander Global Wholesale Banking* Overview – (IFRS Criteria) Profit Before Tax (% / Total)3M10 3M10 Total Revenues = BRL 931 MM Costs = BRL 167 MM Profit Before Tax = BRL 758 MM(*) GB&M onlySource: Santander Financial Statements (IFRS)
  36. 36. 10 Santander Wholesale Banking – Credit Evolution & League Tables Credit Evolution (Large Corporates) * League TablesBRL MM M&A (Announced Transactions – Value) ( ) 1.3% 1st Bloomberg - 2009 Project Finance (Fin. Advisor & Structuring) 1st Anbima - 2009 DCM (External Issues)* 1st Bond Radar - 2009 DCM (Domestic Issues) 4th Anbima - 2009 ECM (Closed Deals) 1stt Thomson Financial and Bloomberg - 2009 FX 3rd Banco Central de Brasil - 2009(*) Does not include Empresas. Volumes do not include guarantees and other collaterals Source: Managerial Information 1Q10
  37. 37. 11Agenda Market Overview Santander Wholesale Banking Santander Wholesale Banking Growth Strategy
  38. 38. 12Santander Wholesale Banking Growth Strategy General Strategy… Focus on clients relationship Empresas (BRL 30- Increase share of wallet cross-selling and lead strategic transactions/loans with wallet, 250MM) the existents key clients ~3,900 active clients 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…C Increase cross-selling and diversification Corporate (BRL 250MM Expand use of our wholesale and Investment Banking product platforms and above) ~650 clients Increase share of wallet Continuous active NPL management (recovery and prevention) Cross-selling Cross selling to individual clients
  39. 39. 13GB&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. 3 The concept of one-stop shop and the first option for share of mind products. p p p p p Santander is well positioned in Investment Banking products and intends to take advantage of the good 4 perspectives for 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.
  40. 40. Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. ( T l (55 11) 3553-3300 3 3 3300 e-mail: ri@santander.com.br
  41. 41. Santander BrasilSantander Cards Business May 26th, 2010
  42. 42. 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 solicitationto buy 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 guaranteeof future 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
  43. 43. 3Agenda Overview of Brazilian Cards Industry Santander Cards Issuer Santander Cards Acquirer
  44. 44. Overview of Brazilian Cards Industry 4Cards industry continues to show substantial growth rates, even considering the competitivescenario consolidation and recent regulation changes Total industry debit + credit cards and spend 600 500 400 18.8% a.a. 300 200 23.7% a.a. 100 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 # cards (MM) Total Spend (R$ bn) Source: ABECS. Prepared by Ferrés Consultoria.
  45. 45. Overview of Brazilian Cards Industry 5Cards transactions have been strongly replacing checks transactions last 10 years In billions transactions (cards include debit + credit) 7 6 5 21% a.a. 4 3 ‐8.1% a.a. 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Cards Checks Source: ABECS and BCB. Prepared by Ferrés Consultoria.
  46. 46. Overview of Brazilian Cards Industry 6Lower 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 Economic classes Total AB C DE Card holders (% of pop.) Cards 67% 81% 64% 36% Credit Cards 45% 61% 38% 20% Debit Cards 53% 70% 49% 19% Check accounts holders (% of pop ) pop.) 67% 82% 64% 33% Source: Researches Abecs. Survey on 11 metropolitan areas.
  47. 47. Overview of Brazilian Cards Industry 7The relative lower participation as a mean of payment shows a relevant up side opportunity forBrazilian Cards Industry Higher utilization of cards in private consumption (1) 15.8% 17.1% 19.1% 21.4% 12.4% 14.0% 2003 2004 2005 2006 2007 2008 ...but below developed countries (2) 2X(1) Source : ABECS and IBGE(2) Source: ABECS, Bank of International Settlements, United Nations, IBGE
  48. 48. Overview of Brazilian Cards Industry 8Card penetration, average ticket and transactions per card are still low in Brazil Number of cards (MM) ~ 15 MM credit cards / year 628 565 514 453 201 217 233 249 225 173 196 153 104 147 124 136 2007 2008 2009 2010 (e) Credit Debit Private Label Total Spend (R$ Bn) Average Ticket (R$ per transaction) CAGR: 21.1% CAGR: 3.7% 535 444 375 98 100 104 302 93 309 75 256 68 71 73 215 53 52 55 51 174 158 48 53 51 52 107 129 83 53 60 68 45 2007 2008 2009 2010 (e) 2007 2008 2009 2010 (e) Credit Debit Private Label Total Credit Debit Private Label TotalSource: ABECS (Associação Brasileira das Empresas de Cartões de Crédito e Serviços)
  49. 49. 9Agenda Overview of Brazilian Cards Industry Santander C d Issuer S t d Cards I Santander Cards Acquirer q
  50. 50. Santander Cards Issuer – Role in the Value Chain 10 Sets rules for issuers and acquirers Card Brands Issues credit and debit cards Captures and processes transactions Issuers Acquirers Use credit and debit cards Clients Merchants
  51. 51. 11Santander Cards Issuer – our approachTo 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
  52. 52. Santander Cards Issuer – our model 12 Is based on managing all levers along the product lifecycle … ACQUISITION PORTFOLIO MANAGEMENT Acquisition Activation Spending Outstandings Retention Depth of customer relationship Product innovation and… Unlimited Platinum r Reward Free Cancellation Mini Card Light VALUE h Flex Time Launch strategies Specialized risk management Multichannel Profitability management… supported by an end-to-end view of RISKS and TECHNOLOGY
  53. 53. Santander Cards Issuer – our model 13The Business expansion will be held in two dimensions: Customer Base and Profitabilityper Account Increase the profitability by using Card Accounts the card’s platforms as Δ Profitability per Account a distribution channel for other banking products and services 1Q10 Net income e 7% Personal Loan 1Q09 Savings S i Insurance 1Q09 1Q10 10% Payment Services Continuous product innovation as a growth lever(1) Source: Internal data
  54. 54. Santander Cards – market position 14In Brazil, where our model is already well established, our market share has improvedsignificantly Market Share end of 1Q10 Other Banks BANK “A” A increases to 23.40 25.30 9.9% Rev BANK “D” 7.10 volving Ba 15.10 15 10 9.4 BANK “C” 19.70 BANK “B” 3.6 9.4 alance % 2.3 3.5 % 2005 Organic Growth Banco Real Current Dec/2009 Santander AcquisitionNote 1: Competitor data as of December, 09, source Competitor Quarter Reports, BCB and internal analysis.Santander´s current Market Share as of December, 09Note 2: Include non interest bearing due to unpaid balances
  55. 55. Santander Cards Issuer – continuous growth 15The Credit market continues to show substantial growth rates, even considering the competitivescenario consolidation and recent regulation changes Cards C d (MM) CAGR (06~09) (06 09) Market Santander 124 136+21% (04~09) 104 82 +18% Key Observations 68 53 8 10 ~80% of the Cards Market is 5 7 +22% concentrated at the top 4 04 05 06 07 08 2009 Banks (Banco do Brasil, Itaú, Total Spend (R$ Bi) Bradesco and Santander) 256 215 There is an important+22% (04~09) 174 +22% opportunity for cards revolving 142 115 95 growth 14 19 26 33 +33% 33% Relevant regulation changes R l t l ti h are being implemented, 04 05 06 07 08 2009 Revolving Balance (R$ Bi) representing significant 25.7 opportunities for issuers and +27% (04~09) 22.1 22 1 new acquiring business +24% 17.2 13.4 players 11.3 8.2 1.2 1.7 2.1 2.4 +26% 04 05 06 07 08 2009Note 1: Source Banco Central do Brasil, including +360 days balanceNote 2: Source ABECs – Brazilian Cards Association
  56. 56. Santander Cards Issuer – 1Q10 performance 16The business growth is leveraged by Cards Accounts expansion… Cards Accounts (MM) Cards (MM) Key Notes +14% +16% Cards Accounts +20% +13% has presented sustainable growth, 7.542 7.890 7 890 9.745 10.042 10 042 year over year 6.916 8.674 Cards Accounts growth rate has continuously increased quarter 1Q09 4Q09 1Q10 1Q09 4Q09 1Q10 over last quarter, reflecting our strategy YoY growth Quarter annualized growth
  57. 57. Santander Cards Issuer – 1Q10 performance 17… generating relevant revenue increase Net Fee (R$ MM) +25% 213 171 1Q09 1Q10Source: Santander Income Statement 1Q10
  58. 58. 18Agenda Overview of Brazilian Cards Industry Santander Cards Issuer Santander Cards Acquirer
  59. 59. Santander as Issuer and Acquirer 19 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
  60. 60. Santander’s Experience in Other Countries 20 Sovereign Puerto Rico UK Mexico Totta Colombia Spain S i Argentina Portugal Santander Santander + Acquiring Partners
  61. 61. New Model: Santander (Acquiring + Financial Services) 21 Innovative value offer Products and Services + Acquiring + rs Acquirer Other POS Capturing Services ACQUIRER FINANCIAL SERVICES SERVICES Banks FINANCIAL SERVICES + ACQUIRING - packaged in a suitable value offer to corporate clients
  62. 62. Partnership Santander & GetNet 22 Creation of a Partnership leveraged by GetNet’s p g y technological expertise and POS network Brand MASTERCARD Investment in Capturing Network and g License Processing Platform Partnership Integrated value offer – 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
  63. 63. GetNet Tecnologia 23 Entrance in the Acquirer industry through a technological partner - GetNet Tecnologia GETNET TECNOLOGIA Campo Bom – RS Technological Platform for capturing, CORREA DA SILVA GROUP authorizing and the processing of Domestic Capital transactions N&SP – Network and Service Provider 165 thousand POS Customized solutions for capturing, authorization and processing of transactions and information Services at Capturing Terminals: Main Clients: Goodcard, Banco BNG, Serasa, Microsoft, Base Card, Wal- - Mobile Recharge Mart, Brasil Telecom, Claro, Tim, Vivo, Telefonica, Oi, Embratel, CTBC, - “Vale Transporte” (transportation ticket) Amazonia Celular, Banco Matone, etc. Recharge - “PAT Alimentação e Refeição” (meal ticket) PAT Refeição Over 800 employees - “Cartão Convênio” / Private Label / Cobrand Annual turnover of R$ 2,29 Bn (2009)
  64. 64. Santander Conta Integrada: Innovative value propose 24 Santander (Acquiring + Financial Services) & Getnet = Capillarity Synergy and corporate client base + technological knowledge SECUNDARY BENEFITS: A “Win-win” Relationship: the bank recognizes the financial volume of the client in transactions made with MASTERCARD brand credit card: Competitive rates for prepayment of receivables Reduction of up to 100% of checking account fee for financial transaction volume over R$ 3 Prepayment of receivables through thousand/month in each POS POS (pioneer in the market) 5 days without interest rate charge by using overdraft Call center support to merchants 24hours / 7 days Guarateed Account or Working Capital limits based on financial transaction volume multiples negotiated in the POS Mobile Recharge Corporate current account with integrated bank domicile SERASA / RECHEQUE* consultancy POS connection using both dial-up and/or broadband. Regional cards capture * Credit Bureau

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