banco santander (brasil) s.a. · markets asset manag. and insurance revenues* by segment – 4q11...
TRANSCRIPT
Banco Santander (Brasil) S.A.
Fixed Income Investor Presentation
March, 2012
Important Information
This presentation may contain certain forward-looking statements and information relating to Banco Santander
(Brasil) S.A. (“Santander Brazil") and its subsidiaries that reflect the current views and/or expectations of Santander
Brazil and its management with respect to its performance, business and future events. Forward looking statements
include, without limitation, any statement that may predict, forecast, indicate or imply future results ,performance
or achievements, and may contain words like "believe", "anticipate", "expect", "estimate", "could", "envisage",
"potential", "will likely result", or any other words or phrases of similar meaning. Such statements are subject to a
number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause
actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this
presentation. We do not undertake any obligation to update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise. In no event shall Santander Brazil, or any of its subsidiaries,
affiliates, shareholders, directors, officers, agents or employees be liable to any third party (including investors) for
any investment or business decision made or action taken in reliance on the information and statements
contained in this presentation or for any consequential, special or similar damages.
In addition to factors identified elsewhere in this presentation, the following factors, among others, could cause
actual results to differ materially from the forward-looking statements or historical performance: changes in the
preferences and financial condition of our consumers, and competitive conditions in the markets we serve;
changes in economic, political and business conditions in Brazil; governmental interventions resulting in changes in
the Brazilian economy, taxes, tariffs or regulatory environment; our ability to compete successfully; changes in our
business; our ability to successfully implement marketing strategies; our identification of business opportunities; our
ability to develop and introduce new products and services; changes in the cost of products and our operating
costs; our level of indebtedness and other financial obligations; our ability to attract new customers; inflation in
Brazil, devaluation of the Real against the U.S. Dollar and interest rate fluctuations; present or future changes in
laws and regulations; and our ability to maintain existing business relationships, and to create new relationships.
2
Index
Santander Brasil
Brazilian Economy and Financial System
Annexes
Santander Group
3
Macroeconomic Scenario
Sources: Brazilian Central Bank, IBGE and Santander Research Estimates
4
GDP (Y-o-Y growth %) Interest Rate - Selic(%)
Inflation (IPCA %) Exchange Rate – (R$/US$)
End of period
End of period
Strong domestic fundamentals – High International Reserves
International Reserves and External Debt US$ billion
Net Public Sector Debt / GDP %
61%55% 51% 48% 47% 45%
38% 43% 40% 37%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
38 49 53 5486
180 194239
289350
211215
201169 173
193 198 198
257284
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
External
debt
Reserves
5
Sources: Brazilian Central Bank
4926 16
47
3940
66102 113
1323 31
0
50
100
150
200
2003 2009 2014
Mill
ion
s o
f P
eo
ple
E D C A/B
+55% +11%
Social dynamics show a favorable scenario for Brazil
Sources: 1. IBGE and Santander Research
2. Ministry of Finance; * estimated
Sources: 1. IBGE and Santander Research
2. Ministry of Finance;
3. IBGE
Favorable Demographic Dynamics1
Demographic Bonus
Unemployment Rate and Real Income³ Educational Bonus (years of study)³
Social Mobility Trends2
∆abc= 19 ∆abc= 46
6
5.0 5.1 5.3 5.4 5.5 5.6 5.7 6.0 6.2 6.3 6.5 6.6 6.8 7.0 7.1 7.3
199
2
199
3
199
5
199
6
199
7
199
8
199
9
200
1
200
2
200
3
200
4
200
5
20
06
200
7
200
8
200
912.3
11.5 9.9 10.0
9.3 7.9 8.1
6.7
3.1
5.1 6.4 6.2
7.4
3.1
8.1
4.9
.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2004 2005 2006 2007 2008 2009 2010 2011
Unemployment Rate (%) Payroll (YoY%)
Sound Financial System – Banks are well prepared for Basel III
Source: Brazilian Central Bank
7
Well-capitalized financial system BIS Ratio: 15,5%
Coverage index: 108%
High Profitability ROE: 17%
Sizeable market: The four largest listed Brazilian banks are ranked
within the 40 largest banks of the world in market capitalization
Conservative regulation and strict prudential rules:
11% minimum BIS ratio required
High Reserve requirements
Solid,
Profitable
Highly regulated
and sizeable
financial system
As of Sep/11
Banks are well prepared
for Basel III
In December, the Brazilian Central Bank opened public consultations on
adherence to Basel III rules. Consultations will remain open through May.
Current capital requirement in Brazil is higher than the international
standard.
8% 7% 1%
10% 4%
4% 2%
8% 21%
15%
4% 15%
49% 51%
Assets Liabilities
-
Plain Vanilla Balance Sheet
Loans + Corporate
Bonds²
Reserve
Requirements
Bonds
Deposits in guarantee
Deferred Tax Assets
Intangible Assets
Others
Deposits
Issuance
Credit Lines &
Onlending
Provisions
Capital
Others
No hidden risks
Originated to hold
model
No credit derivatives
1. Itaú, Santander, Bradesco and Banco do Brasil
2. Debentures, Commercial Papers and CRI
1,284 1,284
4 Major listed banks in Brazil¹ – Dec/11 (US$ Bi)
8
Assets Liabilities
Letras Financeiras
9
Only ~10% of the total funding in Brazil comes from external
sources.
Outward mobility of domestic pool of fund is relatively limited
Significant domestic pool of liquidity
Low reliance
on external
funding
Buffer
Quality
Significant
domestic pool
of liquidity...
...with a challenge
Low interconnectivity: Interbank deposit market is quite small
Banks liquidity deployed basically in government bonds and in
the government bond repo market
Sizable asset management industry controlled basically by the
big retail banks: USD 1,031 billion (the 4 largest banks
concentrate 63%)
Deposits of USD 754 billion (the 4 largest banks concentrate
69%)
Creation of new instruments that allow for a better liquidity risk
management.
875 910 964 1,019 1,055
906 956 974 995 1,026
Dec.10 Mar.11 Jun.11 Sep.11 Dec.11
Funding from Clients AUM
Financial System Evolution
Source: Brazilian Central Bank / CETIP
Funding from Clients – Deposits , Letras Financeiras and Others
• Deposits – Demand deposits, Savings Accounts and Time deposits • Others – Debentures repurchase agreement, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
• Letras Financeiras – Bonds issued by Financial Institution on the domestic market
Tenor Delinquency Ratios
Data in days
403
600
497
150
250
350
450
550
650
De
c-0
5
Ap
r-06
Au
g-0
6
De
c-0
6
Ap
r-07
Au
g-0
7
De
c-0
7
Ap
r-08
Au
g-0
8
De
c-0
8
Ap
r-09
Au
g-0
9
De
c-0
9
Ap
r-10
Au
g-1
0
De
c-1
0
Ap
r-11
Au
g-1
1
De
c-1
1
Corporate Individuals Total
3.9%
7.3%
5.5%
0%1%2%3%4%5%6%7%8%9%
10%
De
c-0
2
Ju
n-0
3
De
c-0
3
Ju
n-0
4
De
c-0
4
Ju
n-0
5
De
c-0
5
Ju
n-0
6
De
c-0
6
Ju
n-0
7
De
c-0
7
Ju
n-0
8
De
c-0
8
Ju
n-0
9
De
c-0
9
Ju
n-1
0
De
c-1
0
Ju
n-1
1
De
c-1
1
Corporate Individuals Total
%12M Total %12M Private Banks %12M Public Banks
Total Loans
US$ billion (Constant FX rate)
16.9%
Total Deposits
US$ billion (Constant FX rate)
10
1,781 1,866 1,937 2,015 2,082
Dec11
vs.
Dec10
13.3%
20.6%
Index
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Brazilian Economy and Financial System
Annexes
Santander Group
11
Universal bank focused on retail
Commercial
Bank
Global
Banking and Markets
Asset Manag. and Insurance
Revenues* by Segment – 4Q11 Customer Base
Commercial Network
+19.3 million of Customers¹
2,355 branches (+154 branches in
12 months and +61 in the quarter)
1,420 PABs (mini branches)
18,419 ATMs
54.6 thousand employees
1. Total current account: active and inactive account during a 30-day period, according to the Brazilian Central Bank 2. Foreign Currency Rating
*Considers managerial data
Sound Credit Rating²
Standard & Poor’s BBB (stable) Moody’s Baa2 (under review) Fitch BBB+ (stable)
Commercial Bank
12
Maior volume de negócios Maior volume de negócios
Strategy
We are focused on our goals
Quality in customer
services
Cross - Sell
Intensify customer
relationships To be the bank of choice of our
customers by 2013
Brand Attractiveness Prudent Risk Management
To increase Brand Attractiveness
Identify and take advantages of cross-sell opportunities (products
and segments of Retail and
GB&M)
+ 100/120 branches per year during 2011-2013
To be the 1º in customer satisfaction until 2013
SMEs
Credit Card, Mortgage, Santander
Acquiring and Auto Finance
Commercial punch in key
segments and products
Improve our value proposition
for each customer segment
13
Index
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Brazilian Economy and Financial System
Santander Group
Annexes
14
Managerial Loan Portfolio¹
21.3%
Dec.11 Dec.10
Y-o-Y
Variation
Q-o-Q
Variation
Individuals 33,806 27,178 24.4% 5.4%
Consumer
Finance 16,238 14,377 12.9% 6.1%
SMEs 25,557 20,353 25.6% 8.5%
Corporate 27,920 23,686 17.9% 1.4%
Total IFRS 103,521 85,595 20.9% 5.1%
Other Transactions² 7,825 6,192 26.4% 0.9%
Expanded Credit
portfolio² 111,346 91,787 21.3% 4.8%
1. Loans for the year 2010 have been reclassified for comparison purposes with the current period, due to re-segmentation of customers
occurred in 1Q11
2. Includes others Credit Risk Transactions with customers (Debenture, FIDC, CRI, Floating Rate Notes and Promissory Notes) and portfolios
acquired from other banks. Total amount of R$ 2.9 billion in Dec/11 and R$ 4.2 billion in Dec/10
US$ million
US$ billion
15
Leasing / Auto Loans
3.0% Construction Loans6.3%
Trade Finance17.7%
On-lending9.0%
Agricultural Loans1.9%
Working capital / Others62.1%
16 Santander Loan Portfolio
1. Includes: Credit Portfolio and Credit Guarantees, Securities and Derivatives Financial Instruments
2. Includes acquired portfolio
3. Vehicles (Cars, Motorcycles), Large vehicles and Others: Clubcard, CVC.
Total Credit
Loan Portfolio Breakdown by Segment – Dec/11
Leasing/Auto Loans¹3.6%
Credit Card22.3%
Payroll Loans²19.3%Mortgages
15.8%
Agricultural Loans3.9%
Personal Loans/Others
35.1%
Individuals32%
Consumer finance
16%SMEs25%
Corporate27%
Total: US$ 104,0 billion
Dec/11
3.8%
9.7%
13.3%
20.3%
26.3%
Largest debtor
10 largest
20 largest
50 largest
100 largest
Dec/11
Individuals Corporate + SMEs Consumer Finance³
Vehicles & Motorcycles
88%
Large Vehicles5%
Consumer Credit
7%
Total Loan Portfolio Credit Portfolio Concentration¹ – Risk (%) Credit Portfolio Concentration¹ – Risk (%)
Total US$ 35.3 billion Total US$ 53.5 billion Total US$16.2 billion
Quality of Loan Portfolio - BR GAAP
NPLs Over 90¹ (%) NPLs Over 60² (%) Coverage Ratio Over 90³
1. Nonperforming loans over 90 days / total loans BR GAAP
2. Nonperforming loans over 60 days / total loans BR GAAP
3. Allowance for Loan Losses / (nonperforming loans for over 90 days + performing loans with high delinquency risk)
17
Deposits and Assets Under Management (AUM)
Dec.11 Dec.10
Y-o-Y
Variation
Q-o-Q
Variation
Demand 7,229 8,600 -15.9% -1.0%
Savings 12,418 16,155 -23.1% -23.1%
Time 44,750 36,740 21.8% 11.1%
Others¹ 21,211 20,200 5.0% -2.6%
Letras
Financeiras² 10,622 3,539 200.1% 10.2%
Funding from
customers 96,230 85,234 12.9% 1.2%
AUM 60,253 59,355 1.5% -1.9%
Total Funding 156,483 144,589 8.2% 0.0%
8.2%
1. Debentures repurchase agreement, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
2. Bonds issued by Financial Institution on the domestic market
US$ billion
US$ million
18
Index
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Brazilian Economy and Financial System
Annexes
Santander Group
19
Income Statement
1. Excludes amortization of goodwill. Includes the Cayman tax reclassification, interest on emissions and recoveries of written-off credits
2. Considers Income from Services Rendered and Income from Banking Fees
3. Considers Personnel Expenses, Other Administrative Expenses, and Profit Sharing
4. Considers Other Operating Income (expenses) and Non operating(expenses) income
US$ million
2011 2010 Y-o-Y 4Q11/3Q11
Net Interest Income¹ 14,875 13,138 13.2% 10.2%
Net Fee² 3,912 3,643 7.4% 1.0%
Other Operating Income 629 720 -12.6% -87.4%
Total Income 19,416 17,502 10.9% 3.0%
General expenses³ (6,596) (5,987) 10.2% 8.9%
Impairment losses on Financial
Assets (net) (5,002) (4,682) 6.8% -14.2%
Net Provisions/Others4 (2,191) (1,649) 32.9% 15.8%
Net profit before tax 5,628 5,184 8.6% 9.2%
Income tax (1,493) (1,248) 19.6% 34.8%
Net profit 4,134 3,935 5.1% -0.2%
20
Performance Ratios
Recurrence² (%)
ROAE (adjusted)4 (%) ROAA³(%)
Efficiency Ratio¹ (%)
-0.7 p.p.
-0.2 p.p.
-0.2 p.p.
-1.5 p.p.
1. General Expenses excluding amortization / Total Revenue excluding Cayman hedge and considers Leasing’s accounting standardization proceeding occurred
during the system integration of Banco Real and Banco Santander
2. Net Fee/General Expenses excluding amortization
3. Net Profit / Average Assets
4. Excludes goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência) as international rules in Tier I
21
BIS and Leverage Ratios 22
10.9
12.3
12.3
17.5
22.5
C3
C2
C1
Santander ²
Santander¹ 24.8
16.0
15.0
14.4
Tier 1
19.9
Tier 2
BIS Ratio (%) – Dec/2011 Leverage Ratio (%)
Source: Brazilian Central Bank
1. In accordance with the Brazilian Central Bank
2. Excludes goodwill
C1, C2 and C3 are the main competitors of Santander Brasil
8.8
12.0
13.0
16.1
Total Assets / Tier 1
Index
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Brazilian Economy and Financial System
Annexes
Santander Group
23
3 Pillars Model
UK US Mexico Brazil Chile Portugal
…
Grupo Santander
24
Strong local presence / economies
of scale (“vertical strategy”) Subsidiary model with financial
autonomy
Operational
Integration
According to Financial Stability Board (FSB) and BIS III.
The aim is to limit the contagion risk between units of the group and
establish a plan (LIVING WILL) to face severe crisis scenarios in terms of
liquidity and capital.
3 Pillars model:
1) “Self funded”
2) Financial autonomy
3) Focus on Brazilian assets
Low level of funding from the parent company - USD 580 MM in
dec/11, corresponding to 0.3% of total assets.
No exposure to peripheral Europe sovereign risk.
13,5% of total funding in foreign currency.
Decentralized Model: Financial and capital independent subsidiaries’
based model
25
The Central Bank
of Brazil has a
close and
rigorous
supervision.
Supervision
Limited
Regulation: max.
95% of Profits (BR
GAAP).
Santander: approx.
90% (BR GAAP)
and 50% (IFRS).
Dividend Policy
It is forbidden to lend money to Parent Company
(Lei 4.595/64; Lei 7.492/86; MNI 02-01-16). In Brazil it's a white-collar crime.
The Brazilian Law
Independent
subsidiaries in terms of
capital and liquidity.
Decentralized Model
There is a Policy for
Transactions with
Related Parties Bylaws are designed to
protect shareholders.
Corporate Governance
Level 2
Liquidity Firewall 26
Santander’s basic liquidity management principles
Financing Strategy: we manage our balance sheet in a very prudent and conservative way
27
Decentralized, but coordinated action
Diversification: market, maturity, currency, instrument
Limited short term funding
Limited intra-group funding (principle of autonomy in the context of the «Living Wills»)
Financing Strategy: good liquidity position
Liquidity Ratios at comfortable levels
28
1.Funding up to 3 months
2. Institutional Funding
3.Includes Senior Unsecured Bond, Syndicated Loan, DPR and EuroCD
Loans / Deposits: 107%
Loans / (Deposits + M/L Term Funding) : 87%
Reduced Short Term Funding
Funding Offshore Maturity³
Volume Outstanding:
USD 5.5 Billion
Dec/2011
Short Term Funding1 / Total Funding2
Short Term
EuroCD: US$1 billion Programme (Reg. S Notes only)
Medium and Long Term
Eurobond market: Senior transactions in all major currencies
through a US$ 10 billion EMTN Programme (Reg S and 144-A).
Structured and Private Placements are also issued under the
Programme.
Diversified Payment Rights (future flows securitization) – MT103 and
MT202 through established programme. Rated A2 Moody’s/A S&P/
A+ Fitch.
Santander Brasil Capital Markets funding is carried out through a
diversified approach by markets, tenor and instruments
Financing Strategy 29
Index 30
Santander Brasil
Santander Group
Annexes
Brazilian Economy and Financial System
Main financial figures
Attributable Profit by geographical area
USA
6% Continental
Europe31%
United
Kingdom
12%
Brazil
28%
Other LatAm
23%
Sound credit ratings
Long term
Standard & Poor’s A+
Moody’s Aa3
Fitch A
DBRS AA
Santander Group
2011 Million Euros
Total assets 1,251,525
Net customer loans 750,100
Shareholders’ equity1 80,629
Total managed funds2 1,382,980
Attributable profit 5,351
1. In 2011, estimated data of May 2012 scrip dividend
2. Includes Total Assets, Mutual and Pension Funds and Managed Portfolios
31
Santander Group – High diversification by geographies 32
(1) Over operating areas attributable profit
(2) Expected GDP growth age for 2012-2013
Source: International Monetary Fund, World Economic Outlook Database, January 2012
Santander Group – Balance Sheet Strengthening: Capital ratio 33
10.02%¹
1. Core capital under Basel II criteria
(*) Including Valores Santander (compulsorily convertible bonds)
Santander Group – Balance Sheet Strengthening: Liquidity 34
Note: Liquidity balance sheet in terms of management (trading derivatives, interbank balances and fixed assets are netted)
(*) Including retail commercial paper
(**) Including FHLB lines in the US to Sovereign
Santander Group
1. Diversification is key: good balance between emerging and mature
economies…with dominant local positions in large and attractive countries
2. We are increasingly playing the international connectivity and the business
derived from it
3. Our banking model has two strong pillars non-negotiable: low risk
profile…and cost austerity
4. Subsidiary based model-financial de-centralisation with strong operational
centralisation
...AND A STRONG BALANCE SHEET MANAGEMENT
Main elements of our business model…
35
1
2
3
4
5
Index
Santander Brasil
Brazilian Economy and Financial System
Annexes
Santander Group
36
37
US$ million
Balance Sheet - Total Assets – IFRS
Assets Dec-10 Mar-11 Jun-11 Sep-11 Dec-11
CASH AND BALANCES WITH THE BRAZILIAN CENTRAL BANK 30,280 30,623 33,404 34,810 35,152
FINANCIAL ASSETS HELD FOR TRADING 13,232 12,550 16,740 15,877 15,940
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 9,563 9,652 9,810 350 355
- Loans and amounts due from credit institutions 156 113 77 50 33
- Loans and advances to customers 0 0 0 0 0
- Debt instruments 119 112 114 122 123
- Equity instruments 9,288 9,427 9,619 179 200
AVAILABLE-FOR-SALE FINANCIAL ASSETS 25,166 27,813 29,683 23,583 23,781
LOANS AND RECEIVABLES 92,817 95,297 97,365 103,493 108,091
- Loans and amounts due from credit institutions 12,080 12,749 11,555 10,819 10,497
- Loans and advances to customers 85,595 87,748 91,363 98,479 103,521
- Allowances for credit losses -4,900 -5,241 -5,595 -5,848 -5,960
- Debt instruments 43 42 42 43 33
HEDGING DERIVATIVES 62 68 56 42 43
NON-CURRENT ASSETS HELD FOR SALE 36 35 25 13,261 70
INVESTMENTS IN ASSOCIATES 198 210 215 223 225
TANGIBLE ASSETS 2,409 2,439 2,441 2,505 2,670
INTANGIBLE ASSETS 17,039 17,032 17,102 16,587 16,759
- Goodwill 15,093 15,093 15,093 14,510 14,510
- Other intangible assets 1,946 1,939 2,009 2,076 2,249
TAX ASSETS 7,912 7,646 8,238 9,055 8,663
OTHER ASSETS 1,020 1,341 1,826 1,444 1,432
Total Assets 199,735 204,706 216,905 221,230 213,181
1. Includes repo
2. Includes provisions for pensions and contingent liabilities
3. Includes minority interest and adjustment to market value
38 Balance Sheet - Total Liabilities – IFRS
US$ million
Liabilities Dec-10 Mar-11 Jun-11 Sep-11 Dec-11
FINANCIAL LIABILITIES HELD FOR TRADING 2,551 2,611 2,845 3,538 2,691
FINANCIAL LIABILITIES AT AMORTISED COST 135,058 139,146 149,435 150,964 155,374
- Deposits from Central Bank and deposits from credit institutions 22,599 19,722 24,363 22,583 27,469
- Customer deposits¹ 89,535 92,986 94,256 95,233 93,013
- Marketable debt securities 10,708 14,344 17,374 20,318 20,573
- Subordinated liabilities 5,168 5,317 5,478 5,653 5,815
- Other financial liabilities 7,047 6,777 7,964 7,178 8,504
HEDGING DERIVATIVES 0 0 1 13 19
LIABILITIES DIRECTLY ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE 0 0 0 11,914 0
LIABILITIES FOR INSURANCE CONTRACTS 10,472 10,758 10,938 0 0
PROVISIONS² 5,009 4,803 4,996 4,857 5,073
TAX LIABILITIES 5,614 5,646 6,467 6,431 6,331
OTHER LIABILITIES 1,922 1,911 2,091 2,467 2,095
Total Liabilities 160,624 164,875 176,773 180,185 171,582
Total Equity³ 39,111 39,832 40,132 41,045 41,599
Total Liabilities and Equity 199,735 204,706 216,905 221,230 213,182
Quarterly Managerial¹ Income Statement
US$ million
1. Includes the Cayman tax reclassification, the unification of the accounting classification of leasing transactions and non-recurring events.
2. Includes provisions for civil, labor and others litigations.
3. Includes recovery of credits written off as losses
39
Income Statements 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
- Interest and Similar Income 4,946 5,245 5,653 5,965 6,292 6,761 7,078 7,450
- Interest Expense and Similar (1,773) (2,043) (2,354) (2,500) (2,752) (3,158) (3,400) (3,396)
Interest Income 3,173 3,202 3,298 3,465 3,539 3,604 3,678 4,054
Income from Equity Instruments 2 7 1 17 3 24 5 19
Income from Companies Accounted for by the Equity Method 5 7 6 5 10 8 7 4
Net Fee 865 912 947 920 950 995 979 989
- Fee and Commission Income 981 1,028 1,082 1,084 1,114 1,155 1,190 1,216
- Fee and Commission Expense (117) (117) (135) (164) (164) (160) (211) (227)
Gains/Losses on Financial Assets and Liabilities and Exchange Rate Diferences 324 155 251 124 147 224 286 96
Other Operating Income (Expenses) (24) (32) (56) (74) (15) (78) (25) (84)
Total Income 4,345 4,251 4,448 4,458 4,633 4,776 4,930 5,077
General Expenses (1,415) (1,479) (1,519) (1,574) (1,577) (1,582) (1,645) (1,791)
- Administrative Expenses (693) (723) (732) (679) (716) (739) (768) (831)
- Personnel espenses (722) (755) (787) (895) (861) (843) (877) (961)
Depreciation and Amortization (152) (156) (165) (186) (180) (190) (191) (218)
Provisions (net)² (335) (155) (359) (203) (336) (333) (344) (393)
Impairment Losses on Financial Assets (net) (1,347) (1,256) (1,049) (1,042) (1,102) (1,229) (1,446) (1,245)
- Allowance for Loan Losses³ (1,344) (1,276) (1,045) (1,017) (1,098) (1,227) (1,441) (1,237)
- Impairment Losses on Other Assets (net) (2) 20 (4) (26) (5) (3) (5) (9)
Net Gains on Disposal of Assets 62 26 19 (32) 15 (12) 8 3
Net Profit before taxes 1,158 1,231 1,374 1,421 1,452 1,430 1,312 1,433
Income Taxes (218) (289) (343) (398) (348) (320) (351) (474)
Net Profit 940 941 1.032 1.022 1.104 1.110 961 959
20.9%
40 Managerial Loan Portfolio - BR GAAP¹
Dec.11 Dec.10
Y-o-Y
Variation
Q-o-Q
Variation
Individuals 65,568 55,146 18.9% 4.1%
Consumer Finance 35,629 29,814 19.5% 8.7%
SMEs 47,940 38,306 25.1% 8.5%
Corporate 47,925 42,111 13.8% -1.1%
Total BR GAAP 197,062 165,377 19.2% 4.6%
Other Credit Risk
Transactions ² 11,784 7,414 58.9% 3.7%
Expanded Credit
portfolio² BR GAAP 208,846 172,792 20.9% 4.5%
R$ million
R$ billion
1. a) The credit portfolio in BR GAAP is higher than in IFRS because it includes loan portfolio acquired from other banks and
consolidates the credit portfolio of our consumer finance joint ventures (Santander Financiamentos) b) Loans for the
year 2010 have been reclassified for comparison purposes with the current period, due to re-segmentation of customers
occurred in 1Q11 2. Includes other Credit Risk Transactions with customers (Debenture, FIDC, CRI, Floating Rate Notes
and Promissory Notes) and anticipated acquiring receivables
Delinquency ratio¹ (%) Coverage ratio² (%)
41 Asset Quality Ratios - IFRS
1. (Nonperforming loans over 90 days + performing loans with high delinquency risk) / managerial loan portfolio
2. Allowance for Loan Losses / (nonperforming loans over 90 days + performing loans with high delinquency risk)
Total Revenues
13.9%
US$ Million 2011 2010
Y-o-Y
Variation
Q-o-Q
Variation
Net Interest Income¹ 14,875 13,138 13.2% 10.2%
Net Fees 3,912 3,643 7.4% 1.0%
Subtotal 18,787 16,782 12.0% 8.3%
Others² 629 720 -12.6% -87.4%
Total Revenues 19,416 17,502 10.9% 3.0%
US$ Million
1. Considers Leasing’s accounting standardization proceeding occurred during the system integration of Banco Real and Banco Santander.
2. Results from Financial Operations excluding the fiscal effect of Cayman hedge + Other Operational Revenues (expenses) + Others
42
General Expenses and Amortization
14.1%
US$ Million 2011 2010
Y-o-Y
Variation
Q-o-Q
Variation
Other General
Expenses 3,054 2,828 8.0% 8.1%
Personnel
Expenses 3,542 3,159 12.1% 9.5%
General
Expenses 6,596 5,987 10.2% 8.9%
Depreciation
and
Amortization 779 659 18.2% 13.6%
Total 7,375 6,646 11.0% 9.4%
US$ Million
43
Limited
Regulation: max.
95% of Profits (BR
GAAP).
Santander: approx.
90% (BR GAAP)
and 50% (IFRS).
Dividend policy
Dividend policy according to the Parent Company
• Dividend policy: 50% of IFRS results, which has
been practice of the Parent Company for a
long time
• On the basis of the amortization of the
goodwill, which is only in BR GAAP, the 50%
IFRS dividend distribution policy represents a higher percentage in BR GAAP, with levels
close to the regulatory cap (95%)
44
Level 2 of Corporate Governance
Board of Directors with 3 independent members, Audit
and Remuneration Committees being totally separated
from the group.
In order to protect the minority shareholders, additional
procedures have been established.
Highlight – Related Parties: Any transactions to
be entered into with the Controlling Shareholders, which
contemplate a disbursement by the Bank in an amount
equal to or higher than 1% or R$ 660 million (in one or a
series of transactions during a certain period) of Santander
Brasil capital, must be submitted to the Audit Committee
and approved by the Board of Executive Officers.
45
Source: Bovespa Stock Exchange and Financial Institutions
Classification
Corporate
Governance Banks Share Tag Along
Board of Directors
Banco do
Brasil
Santander
Bradesco and
Itaú
Segmentos de Governança Corporativa
Requirements
New Market
Level 2
Level 1
Allows only ON
25% free float
Allows ON / PN
25% free float
Allows ON / PN
25% free float
100 % ON Shares
100 % ON /PN Shares
80 % ON Shares
5 Members
(20% independent)
Term of Office: 2 years
3 Members
5 Members (20% independent)
Corporate Governance Segments
There is a Policy for
Transactions with
Related Parties Bylaws are designed to
protect shareholders.
Corporate Governance
Level 2
Term of Office: 2 years
Household Debt Ratio and Delinquency
Source: The Brazilian Central Bank * New methodology released on September/11
42.5%
21.9%
7.3%
3.0%
5.0%
7.0%
9.0%
11.0%
13.0%
15.0%
17.0%
19.0%
10%
15%
20%
25%
30%
35%
40%
45%
No
v-0
6
Ja
n-0
7
Ma
r-0
7
Ma
y-0
7
Ju
l-0
7
Se
p-0
7
No
v-0
7
Ja
n-0
8
Ma
r-0
8
Ma
y-0
8
Ju
l-0
8
Se
p-0
8
No
v-0
8
Ja
n-0
9
Ma
r-0
9
Ma
y-0
9
Ju
l-0
9
Se
p-0
9
No
v-0
9
Ja
n-1
0
Ma
r-1
0
Ma
y-1
0
Ju
l-1
0
Se
p-1
0
No
v-1
0
Ja
n-1
1
Ma
r-1
1
Ma
y-1
1
Ju
l-1
1
Se
p-1
1
No
v-1
1
Household Debt Ratio* Household Debt Service Ratio* Deliquency Ratio Individuals (RHS)
46
Source: The Brazilian Central Bank
(p.p.)
Spreads – Corporate x Individuals
17.9%
33.7%
26.9%
0%
10%
20%
30%
40%
50%
60%
De
c-0
5
Ma
r-0
6
Ju
n-0
6
Se
p-0
6
De
c-0
6
Ma
r-0
7
Ju
n-0
7
Se
p-0
7
De
c-0
7
Ma
r-0
8
Ju
n-0
8
Se
p-0
8
De
c-0
8
Ma
r-0
9
Ju
n-0
9
Se
p-0
9
De
c-0
9
Ma
r-1
0
Ju
n-1
0
Se
p-1
0
De
c-1
0
Ma
r-1
1
Ju
n-1
1
Se
p-1
1
De
c-1
1
Corporate Individuals Total
47
*Payroll Loan + Mortgage + Auto Loans divided by total loans to individuals. Interest Rate Reference Credit Operations.
Source: The Brazilian Central Bank
Loans to Individuals – Secured* x Unsecured Loans 4
6%
47
%
48
%
48%
50%
51
%
52%
52%
54%
54
%
57
%
57
%
59
%
59
%
60%
61
%
61
%
61
%
60
%
60
%
60
%
60%
62
%
63
%
64
%
65
%
66
%
67
%
67
%
67
%
67
%
69
%
67
%
68
%
68
%
68
%
68
%
68
%
68
%
68
%
68
%
68
%
68
%
68
%
54
%
53
%
52
%
52
%
50
%
49
%
48
%
48
%
46
%
46
%
43
%
43
%
41
%
41
%
40%
39
%
39
%
39
%
40
%
40
%
40
%
40%
38
%
37
%
36
%
35
%
34
%
33
%
33
%
33
%
33
%
31
%
33
%
32
%
32
%
32
%
32
%
32
%
32
%
32
%
32
%
32
%
32
%
32
%
Ja
n-0
4
Ap
r-0
4
Ju
l-0
4
Oc
t-04
Ja
n-0
5
Ap
r-0
5
Ju
l-0
5
Oc
t-05
Ja
n-0
6
Ap
r-0
6
Ju
l-0
6
Oc
t-06
Ja
n-0
7
Ap
r-0
7
Ju
l-0
7
Oc
t-07
Ja
n-0
8
Ap
r-0
8
Ju
l-0
8
Oc
t-08
Ja
n-0
9
Ap
r-0
9
Ju
l-0
9
Oc
t-09
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Au
g-1
0
Se
p-1
0
Oc
t-10
No
v-1
0
De
c-1
0
Ja
n-1
1
Fe
b-1
1
Ma
r-1
1
Ap
r-1
1
Ma
y-1
1
Ju
n-1
1
Ju
l-1
1
Au
g-1
1
Se
p-1
1
Oc
t-11
No
v-1
1
De
c-1
1
Secured Lending* Unsecured Lending
48
