SANTANDER TOTTA-SANTANDER INVESTOR DAY 2011

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Santander Totta presentation by Nuno Amado. Santander Investor Day

Text of SANTANDER TOTTA-SANTANDER INVESTOR DAY 2011

  • 1. Nuno Amado Portugal

2. DisclaimerBanco Santander Totta, S.A. (Santander Totta) 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 risk factors that Santander Totta and Santander have indicated in its past and future filings and reports, includingin Santanders case those with the Securities and Exchange Commission of the United States of America (the SEC) couldadversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differmaterially from 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 Santander Totta nor Santander undertake any obligation to update or revise any forward-looking statement, whether as aresult 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 Totta 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 Totta and Santander give no advice and make no recommendation tobuy, sell or otherwise deal in shares in Santander Totta, 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. Index1 Business evolution2 Business environment3 Strategy4 Outlook 2011 / 2013 3 4. Index1 Business evolution2 Business environment3 Strategy4 Outlook 2011 / 2013 4 5. We are a Retail BankWho we areAcquisition in year 2000Attributable profitH111 131 million 2% (1)Groups AP(2)Third Private BankLoans 29.2 BnStrong Retail Network Solid Balance 730 branches Core Capital around 10% 1,701 ATM MKT ShareYearly average maturity 1.0 Bn(3) 6,108 employeesof wholesale funding 1.3 million active clients10% 10%(1) Recurring attributable profitCore Capital(2) Domestic Activity(3) Credit market share Consolidated criteria, June 2011 data5 6. with efficient revenue generation in recent years (Net Interest Inc. +Cost / Income Fees / Expenses Fees) / Credit 69.949.966.1 63.3 3.5 3.63.445.442.8 2009 2010 Jun112009 2010 Jun112009 2010 Jun11Consolidated criteria 6 7. that gives us a competitive advantage over ourPeersData in Local criteria Cost / Income NPLROE 15.3 60.1 3.3 45.5 1.5 6.3 BSTPeersBST Peers BSTPeers December 2010 Data; %7 8. Based on a strong balance sheet RWA optimization since 2008BalanceCredit/Deposits : 139% Dec10 / 131% Jun11 Closing the commercial GAP (*)Capital &Core Capital around 10%LiquidityStable liquidity plan Default Rate: 2.9% Dec10 / 3.3% Jun11 Credit Risk Coverage Rate: 60% Dec10 / 62% Jun11 Consolidated criteria (*) GAP: Net Credit - Deposits 8 9. We have been focused on balance sheet managementRWA (Bn)Over the last years we havereduced RWA 26.3 24.0 23.423.422.4Managed our commercial GAP2008 2009 Jun10 2010 Jun11GAP (Bn)Credit / Deposits (%)17.1 17.3 21021614.9 1811391318.4 7.02008 2009Jun10 2010 Jun11 2008 2009 Jun10 2010 Jun11Consolidated criteria, June 2011 data;%9 10. With a stable and sustained liquidity planDebtCapital BSTCore Amortization Debt Amortization Profile ( Bn)No wholesale amortizations until June/121.5 Less than 1Bn average wholesale market1.21.3 amortization per year until 2014 ECB liquidity2.4 Bn drawn of net liquidity (Aug/11)20122013 2014 Retail BondsCoveredSenior BondsunsecuredPortuguese Public DebtWe maintain 1.6 Bn in our balance10 11. We keep a controlled real estate riskMortgages 56% is the average LTV mortgageAverage LTV 56% Default rate 2.7% Construction portfolio represents less than92% first residential propose 4% of loans Construction CreditGBM Individuals1.1 Bn Loans1.9 Mortgages77% residential; 9% building land SMEDefault rate 13.4% (*) 7.8Foreclosed Assets16.3 1.1Portfolio 203 millon (0.7% of our 2.7credit balance)ConstructionCoverage rate 27% Rest (Individuals)Consolidated criteria, June 2011 data(*) August 2011 data 11 12. and our credit quality is better than the systemNPL MortgagesData in Local criteria 1.61.0NPL ratio 3.8BST Peers3.43.0 NPL Consumer and other 8.31.81.85.0 1.41.3 1.50.8 0.5BST PeersNPL Corporates2007 2008 2009 2010 Jun11 5.8BSTSystem2.4BST PeersJune 2011 Data; % 12 13. Index1 Business evolution2 Business environment3 Strategy4 Outlook 2011 / 2013 13 14. Portugal is under a macroeconomic program with stronggoals, although necessary and achievable140.0 Fiscal Deficit & Public Debt (% GDP) 12.0120.0 10.0100.0 8.0 General 80.06.0 60.0Government 40.0 4.02.0 20.00.0 0.02005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fiscal Adjustment Sustainability Public DebtFiscal Deficit Credit/Deposits Ratio (%) (*) 158% 151%139% 133%129%Financial System 120%DeleveragingSolvency2000 20102011 20122013 2014Potential GDP 2.5%2.0% 2.2%1.3%1.2%StructuralReforms -1.8% -2.2%ProductivityExports2010 2011 20122013 201420152016 Source: International Monetary Fund, World(*) Source: Finance Ministery, July 11, forecasts 2011 Economic Outlook Database, September 2011; 14 and 2012; 2013-2015: Memorandum of Understanding 15. Recovering the growth path in 2013 Years 2011 and 2012 will be the most acute in economic terms,recovering the growth path at the beginning of 2013% 13.4 13.412.0 12.212.4 10.68.5 10.1 9.1 5.9 Deficit Forecasts 2.3%3.5 3.44.5 2.1 2.53.02.6 1.4GDP 2.5%1.52.31.3-0.91.2 1.50Inflation 1.5%-2.2 -1.8 -2.5 Unemployment 12.4%FY 2008FY 2009FY 2010 FY 2011E FY 2012E FY 2013E FY 2014ESource: International Monetary Fund, World 15Economic Outlook Database, September 2011 16. The financial system has to achieve targets of deleveragingand minimum solvency ratios between 2011 and 2014 Data in Local criteria SystemCredit/Deposits Balance Sheet 120% Deleveraging162% 158%Credit/Deposits (Local) (*)2009 2010 ECB AccessECB Limit access 40Bn7BnLiquidity35Bn 35 Bn debt line of Financial Line guaranteed by thestate 20092010 Core CapitalCore Capital ratios 8.0% 8.3% Capital10% required 9% in 2011 and10% from 2012 onwards Core CapitalLine 12 Bn to recapitalize 2009 2010 16(*) Troika Plan 17. These impacts are beginning to reflect in thesystems profitability Data in Local criteriaROE 17.7 10.18.8 7.74.1 2007 2008 2009 2010 Jun11eSystem17 18. Index1 Business evolution2 Business environment3 Strategy4 Outlook 2011 / 2013 18 19. StrategyIndividualsPrivate Banking & PremiumProductivity (Ready Project)SOLVENCY CorporatesBalanced business planFocus on transactions Credit Risk DELEVERAGINGStrong NPL controlFocus on recovery with rigorous cost management19 20. Individuals Strategy CustomerSpreads NPL Resourcesmanagement managementControl50% of the network: 70% of50% of the network: its goals are 50% customerits objectives focus on funds, 25% gross income and 25% Credit risk Credit riskReady Project Private Banking & PremiumIncreased Productivity: Selective Focus: Important review of the Systematic ~65% of customer funds arefollow-up model and businessconcentrated in this segment, aboutobjectives6% of customers Revitalization program based on Development of segmented offering inindividual performances and rankingsterms of distribution / service / product Select Project (affluent) 20 21. Corporates StrategySELF FUNDED STRATEGY Balanced GrowthTransactional New Customers(Credit - Deposits)(Commissions Base)(Selective Focus)Liquidity: self-finance Factoring/Confirming:Key Element in theobjectives/to improve with controlled risk Strategy toCredit/Deposits ratiostrengthen theTrade-Finance: focus positionon exportSelective focus onCredit: repricing andhighly selectiv