SANTANDER BRASIL-SANTANDER INVESTOR DAY 2011

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Marcial Portela presentación Santander Brasil en el Investor Day 2011

Text of SANTANDER BRASIL-SANTANDER INVESTOR DAY 2011

  • 1. Marcial PortelaBrazil

2. DisclaimerBanco Santander (Brasil) S.A. (Santander Brazil) and Banco Santander, S.A. ("Santander") both caution that this presentationcontains forward-looking statements. These forward-looking statements are found in various places throughout this presentation andinclude, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements 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 assumptions for the perspectives on slide 32 are included in slides 22, 23, 26, 27 and 28, 29 and 31 of thispresentation. The risk factors that Santander Brazil and Santander have indicated in its past and future filings and reports, includingthose with the Securities and Exchange Commission of the United States of America (the SEC) could adversely affect our businessand financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in theforward-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.Unless otherwise provided in applicable regulations, neither Santander Brazil nor Santander undertake any obligation to update orrevise any forward-looking statement, whether as a result of new information, 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 Santander Brazil and Santander. Any person atany time acquiring securities must do so only on the basis of such persons own judgment as to the merits or the suitability of thesecurities for its purpose and only on such information as is contained in such public information having taken all such professionalor other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in thepresentation. In making this presentation available, Santander Brazil and Santander give no advice and make no recommendationto buy, sell or otherwise deal in shares in Santander Brazil, 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. Summary Growth delivery delayedSantander IT platform integratedBrazil from2008-11 Income Net Profit & Jaw widening Costs EfficiencyBrazilian Encouraging outlook for coming yearseconomy andSustainable credit growthbanking sector Maximize operating leverage, improvingStrategic plan customer satisfaction and become thefor 2011-13bank of choice of our customers3 4. Index1 Business evolution2 Business environment3 Strategy4 Targets for 2012 and 2013 4 5. Index1 Business evolution2 Business environment3 Strategy4 Targets for 2012 and 2013 5 6. Our Business Model A universal bank focused in retail Customer oriented Strong presence in all segments Global franchiseScale and expertise Aim to be the best bank Cost Efficiency in cost efficiency Prudent riskComfortable coverage ratio managementCorrect risk pricing Strong capital base and prudent Solid balance sheet liquidity risk management 6 7. Customer oriented: a universal bankfocused in retail Largest foreign Bank in Brazil and 3rdRevenues by Segment Jun/11private Bank in total assetsCommercial11.4% market share2 in terms ofBankbranches10.3% market share2 in loans 86% 24 million customersIndividuals: 23.0 millionCorporate: 1.0 million9.3 million Current Active Account Holders 11%11.9 million Credit Cards3% Global Bankingand Markets InfrastructureAsset Management3.7 thousand points of saleand Insurance176 new branches (Jun11/Jun10) 18,099 ATMs1- Spanish Gaap, Includes net interest income, net fees, gain (losses) on financial transactions and other operating incomes2- Brazil Central Bank: Last data available: Jun/113- Total Retail Customers (non-active and active customers) 7 8. Customer oriented: Strong presence in allsegments Credit Portfolio US$ Billion 9.5%CAGR:1H11/2008 CAGR 114.691.3 38.6Individuals 25.0 14.0%26.4SMEs21.9Corporate 28.531.1 4.6%Consumer Finance15.818.520081H11 * Exchange rate R$/US$ of Jun/11: 1.5638 1- Includes credit portfolio acquired from other banks 8 9. Global franchise: scale and expertise Bring the best of the Group to Brazil.Global scale and synergiesCorporate IT platform Exchange of global best practicesGlobal corporate customerbase9 10. Efficiency: Income growth coupled with effectivecost control... Income Net ProfitUS$ BillionSpanish Gaap Spanish Gaap US$ Billion CAGR:11% 20.5CAGR:26% 16.519.811.1 4.8 3.9 3.0 2008 200920101H11 2.3 3.7 4.0 2.9 1.9Cost(*)US$ BillionSpanish Gaap 2008200920101H11CAGR: -1% Minority InterestsNet profit Attributable7.1 6.7 6.9 3.6 The year 2011 suffers from impacts of the integration 2008 2009 2010 1H11Average Constant Fx Rate R$/US$ of Jun/11: 1.6311(*) Cost: without depreciation and amortization.10 11. ...which led to a convergence in efficiency inrelation to main local peersEfficiency Ratio % BR GAAP58.548.1 46.2 46.145.544.0 2008 1H11 Santander Competitor-B Competitor-A Source: Published Financial Statments (BR GAAP) 1. General Expenses /Total Income (Interest Income, fees, revenues from 11 insurance and other operational revenues/expenses and tax expenses) 12. Prudent Risk Management: Comfortable CoverageRatio and Correct Risk PricingRisk PremiumNPLs Coverage ratio Spanish GAAPSpanish GAAP5.9%6.2% 6.1%5.7% 5.0% 5.1%102%101% 102%92% 99% 98%Dec.08Jun.09 Dec.09Jun.10 Dec.10 Jun.11 Dec.08 Jun.09 Dec.09 Jun.10 Dec.10 Jun.11 1. Risk Premium = ((NPL t NPL t-1) + Charge offs Write offs collections)/Average credits 12 13. Solid Balance Sheet: Strong capital base andprudent liquidity risk management BIS Ratio (%) Loans / Deposits (%) BR GAAPBR GAAP25.6% 4.9%22.1%21.4% 103% 108%111%3.1%2.9%95%14.7%11%4.0%10.8% 20.7%19.0%18.6%20082009 2010 1H112008 2009 2010 1H11 Tier I Tier II Minimum BIS ratio required 13 14. Index1 Business evolution2 Business environment3 Strategy4 Targets for 2012 and 2013 14 15. Brazil: Consistent and profitable growth opportunity 1.Sustainable 3-4% GDP growth 2.Substantial planned investments 3.Social mobility room for greater bankarization 4.A solid Financial System 5.Sustainable credit growth due to solid macro fundamentals15 16. 1. Sustainable 3-4% GDP growth due to sound macroeconomic conditions Real GDP Growth (%)7.56.15.75.2 4.03.8 3.6 4.2 3.2 -0.620042005 2006 2007 2008 20092010 2011e 2012e 2013eSource: Brazil Central Bank and IMF Estimates16 17. 1. Strong domestic fundamentals Net Public Debt / GDP (%)International Reserves(Total consolidated public sector) and External DebtUS$ billionExternal debt35035151% 34038% 36%309 201Reserves532004 2005 2006 2007 2008 2009 2010 2011e 2012e 2013e2004 2005 2006 2007 2008 2009 2010 2011e 2012e 2013e Inflation target Unemployment Rate (%) Inflation 12 months % - IPCA11.5%17.8%Interest Rate% Selic11.0%11.0%7.66.7% 7.0% 4.2 6.6 2004 2005 20062007 20082009 2010 2011e 2012e 2013e2004 2005 2006 2007 2008 2009 2010 2011e 2012e 2013e Source: Brazil Central Bank, Santander Research Estimates and IMF Estimates 1. Includes private and public sector external debt 17 18. 2. Robust pipeline of infrastructure investment in thecoming yearsBrazil Investment Schedule (2011-2016), R$ 1 trillionPetrobras Pre-Salt13%4% World Cup3% Olympic GamesOther PACinvestment80%Sources: Brazil World Cup official website / Brazilian Ministry of Development . 2016 Olympic Games Brazilian Candidacy Dossier / Santander estimates1. In Brazil, recently was discovered its biggest oil reserves in the pre-salt layer, estimates of recoverable volumes are at 6 to 10 billion barrels of oil&gas. 18 19. 3. Social mobility provides room for greater bankarization Social Mobility Trend GDP Per Capita and Formal JobMillion of individuals GDP Per Capita ( R$ thousand) Formal job creation (Million)abc= 46 abc= 19CAGR: 10.1%23 31A/B 13 + 15 million jobs created 22.724.8 since 2003 20.7C66+55% 102 +11% 113 16.0 16.6 16.814.212.8 10.711.7 2.9D479.52.41.8 1.81.91.8 1.739 0.8 40E4926 1620032011 2014 + 46 million people moved to upper and middle class and a further 19 million expected by 2014 Source: Brazil Central Bank , Instituto Brasileiro de Geografia e Estatstica (IBGE) and Fundao Getlio Vargas (FGV) 19 20. 4. A solid, profitable and well capitalized Financi