Download Santander Brasil

Banco Santander (Brasil) S.A.
Fixed Income Investor Presentation
March, 2012
Important Information
2
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.
3
Index
Brazilian Economy and Financial System
Santander Brasil
Santander Group
Annexes
4
Macroeconomic Scenario
GDP (Y-o-Y growth %)
Interest Rate - Selic(%)
End of period
Inflation (IPCA %)
Exchange Rate – (R$/US$)
End of period
Sources: Brazilian Central Bank, IBGE and Santander Research Estimates
5
Strong domestic fundamentals – High International Reserves
International Reserves and External Debt
US$ billion
External
debt
Reserves
215
211
201
169
49
53
54
2002
2003
2004
2005
350
180
194
86
193
198
198
2006
2007
2008
2009
2010
2011
38%
43%
40%
37%
2008
2009
2010
2011
173
38
239
289
257
284
Net Public Sector Debt / GDP %
61%
2002
55%
2003
Sources: Brazilian Central Bank
51%
2004
48%
47%
45%
2005
2006
2007
6
Social dynamics show a favorable scenario for Brazil
Favorable Demographic Dynamics1
Social Mobility Trends2
∆abc= 19
∆abc= 46
200
Millions of People
Demographic
Bonus
150
66
+55%
100
102
2009
D
14.00
12.00
12.3
11.5
10.00
9.9
9.3
8.00
4.00
2.00
2009
2008
2007
2006
2005
2004
2003
2002
2001
1999
1998
1997
1996
.00
1995
C
10.0
6.00
1993
16
2014
A/B
Unemployment Rate and Real Income³
7.0 7.1 7.3
6.5 6.6 6.8
6.3
6.2
6.0
5.4 5.5 5.6 5.7
5.0 5.1 5.3
1992
40
26
E
1. IBGE and Santander Research
2. Ministry of Finance; * estimated
3. IBGE
113
39
49
2003
Sources:
+11%
47
50
0
Educational Bonus (years of study)³
31
23
13
6.4
5.1
6.2
8.1
8.1
7.4
6.7
4.9
3.1
3.1
2004
7.9
2005
2006
2007
2008
Unemployment Rate (%)
2009
2010
Payroll (YoY%)
2011
Sound Financial System – Banks are well prepared for Basel III
7
As of Sep/11
Solid,
Profitable
 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
Highly regulated
and sizeable
financial system
 High Reserve requirements
Banks are
well prepared
for Basel III
Source: Brazilian Central Bank
 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
Plain Vanilla Balance Sheet
4 Major listed banks in Brazil¹ – Dec/11
(US$ Bi)
1,284
Loans + Corporate
Bonds²
Reserve
Requirements
Bonds
Deposits in guarantee
Deferred Tax Assets
Intangible Assets 1%
Others
1,284
Deposits
49%
15%
21%
51%
 No hidden risks
4%
Letras Financeiras
15%
Issuance
8%
4%
Credit Lines &
Onlending
Provisions
2%
4%
10%
Capital
8%
7%
Others
Assets
Assets
Liabilities
Liabilities
1. Itaú, Santander, Bradesco and Banco do Brasil
2. Debentures, Commercial Papers and CRI
 Originated to hold
model
 No credit derivatives
Significant domestic pool of liquidity
Low reliance
on external
funding
Buffer
Quality
Significant
domestic pool
of liquidity...
...with a
challenge
9
 Only ~10% of the total funding in Brazil comes from external
sources.
 Outward mobility of domestic pool of fund is relatively limited
 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.
10
Financial System Evolution
Total Loans
Total Deposits
US$ billion (Constant FX rate)
US$ billion (Constant FX rate)
16.9%
1,781
974
995
1,026
13.3%
875
910
964
1,019
1,055
20.6%
Dec.10
Mar.11
Jun.11
Sep.11
Dec.11
Funding from Clients
Tenor
Individuals
Total
Corporate
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
Individuals
Dec-11
Jun-11
Dec-10
Jun-10
Dec-09
Jun-09
Dec-08
Jun-08
Dec-07
Jun-07
Dec-06
Dec-11
Aug-11
Apr-11
Dec-10
Apr-10
Aug-10
Dec-09
Aug-09
Apr-09
Dec-08
Apr-08
Aug-08
Dec-07
Aug-07
Apr-07
Dec-06
Apr-06
Aug-06
150
Jun-06
250
3.9%
Dec-05
350
5.5%
Dec-04
403
Jun-04
450
7.3%
Dec-03
497
Jun-03
600
550
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Dec-02
Data in days
Dec-05
AUM
Delinquency Ratios
650
Corporate
2,082
956
%12M Total
%12M Public Banks
2,015
906
Jun-05
%12M Private Banks
1,937
1,866
Dec11
vs.
Dec10
Total
11
Index
Brazilian Economy and Financial System
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Santander Group
Annexes
12
Universal bank focused on retail
Revenues* by Segment – 4Q11
 +19.3 million of Customers¹
Commercial
Commercial
Bank
Bank
Commercial Network
Global
Banking and
Markets
Asset Manag.
and Insurance
*Considers managerial
Customer Base
 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
data
Sound Credit Rating²
Standard & Poor’s
Moody’s
Fitch
1.
2.
BBB (stable)
Baa2 (under review)
BBB+ (stable)
Total current account: active and inactive account during a 30-day period, according to the Brazilian Central Bank
Foreign Currency Rating
Strategy
13
Maior volume de
Maior
volume de
Wenegócios
are
focused
onnegócios
our goals
Quality in customer
services
 + 100/120 branches per year during
2011-2013
 To be the 1º in customer satisfaction
until 2013
Commercial punch in key
segments and products
 SMEs
 Credit Card, Mortgage, Santander
Acquiring and Auto Finance
Prudent Risk Management
Intensify customer
relationships
 To be the bank of choice of our
customers by 2013
 Improve our value proposition
for each customer segment
Cross - Sell
 Identify and take advantages of
cross-sell opportunities (products
and segments of Retail and
GB&M)
Brand Attractiveness
 To increase Brand Attractiveness
14
Index
Brazilian Economy and Financial System
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Santander Group
Annexes
15
Managerial Loan Portfolio¹
US$ billion
21.3%
Dec.11
Dec.10
Y-o-Y
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%
103,521
85,595
20.9%
5.1%
7,825
6,192
26.4%
0.9%
111,346
91,787
21.3%
4.8%
US$ million
Total IFRS
Other Transactions²
Expanded Credit
portfolio²
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
Q-o-Q
Variation
16
Santander Loan Portfolio
Credit
CreditPortfolio
PortfolioConcentration¹
Concentration¹– –Risk
Risk(%)
(%)
Total Loan Portfolio
Dec/11
Dec/11
Total Credit
Total: US$ 104,0 billion
100 largest
Corporate
27%
26.3%
50 largest
Individuals
32%
20.3%
20 largest
Consumer
finance
16%
SMEs
25%
13.3%
10 largest
9.7%
Largest debtor
3.8%
Loan Portfolio Breakdown by Segment – Dec/11
Consumer Finance³
Corporate + SMEs
Total US$ 53.5 billion
Leasing /
Auto Loans
3.0%
Working
capital /
Others
62.1%
Total US$16.2 billion
Construction
Loans
6.3%
Large Vehicles
5%
Consumer
Credit
7%
Personal
Loans/Others
35.1%
Trade Finance
17.7%
On-lending
9.0%
Individuals
Total US$ 35.3 billion
Mortgages
15.8%
Vehicles &
Motorcycles
88%
Agricultural
Loans
1.9%
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.
Agricultural
Loans
3.9%
Leasing/Auto
Loans¹
3.6%
Credit Card
22.3%
Payroll
Loans²
19.3%
17
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)
18
Deposits and Assets Under Management (AUM)
US$ billion
8.2%
Dec.11
Dec.10
Y-o-Y
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%
156,483
144,589
8.2%
0.0%
US$ million
Total Funding
1.
2.
Debentures repurchase agreement, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
Bonds issued by Financial Institution on the domestic market
Q-o-Q
Variation
19
Index
Brazilian Economy and Financial System
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Santander Group
Annexes
20
Income Statement
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%
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%
5,628
5,184
8.6%
9.2%
(1,493)
(1,248)
19.6%
34.8%
4,134
3,935
5.1%
-0.2%
Other Operating Income
Net profit before tax
Income tax
Net profit
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
21
Performance Ratios
Efficiency Ratio¹ (%)
-0.2 p.p.
ROAA³(%)
-0.2 p.p.
Recurrence² (%)
-1.5 p.p.
ROAE (adjusted)4 (%)
-0.7 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
22
BIS and Leverage Ratios
Leverage Ratio (%)
BIS Ratio (%) – Dec/2011
Santander¹
22.5
Santander ²
24.8
8.8
17.5
19.9
C1
12.3
16.0
C2
12.3
15.0
C3
10.9
Tier 1
12.0
13.0
14.4
Tier 2
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
16.1
Total Assets / Tier 1
23
Index
Brazilian Economy and Financial System
Santander Brasil
- Strategy
- Business
- Results
- Liquidity and Funding
Santander Group
Annexes
24
3 Pillars Model
Strong local presence / economies
of scale (“vertical strategy”)
Subsidiary model with financial
autonomy
Grupo Santander
UK
US
Portugal
Mexico
Brazil
Chile
…
Operational
Integration
Decentralized Model: Financial and capital independent subsidiaries’25
based model
 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.
26
Liquidity Firewall
The Brazilian Law
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.
Dividend Policy
Supervision
Limited
Regulation: max.
95% of Profits (BR
GAAP).
Santander: approx.
90% (BR GAAP)
and 50% (IFRS).
The Central Bank
of Brazil has a
close and
rigorous
supervision.
Corporate Governance
Level 2
There is a Policy for
Transactions with
Related Parties
Bylaws are designed to
protect shareholders.
Decentralized Model
Independent
subsidiaries in terms of
capital and liquidity.
Financing Strategy: we manage our balance sheet in a very
prudent and conservative way
Santander’s basic liquidity management principles
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»)
27
28
Financing Strategy: good liquidity position
Reduced Short Term Funding
Short Term Funding1 / Total Funding2
Funding Offshore Maturity³
Volume Outstanding:
USD 5.5 Billion
Liquidity Ratios at comfortable levels
Dec/2011

Loans / Deposits: 107%

Loans / (Deposits + M/L Term Funding) : 87%
1.Funding up to 3 months
2. Institutional Funding
3.Includes Senior Unsecured Bond, Syndicated Loan, DPR and EuroCD
Financing Strategy
Santander Brasil Capital Markets funding is carried out through a
diversified approach by markets, tenor and instruments
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.
29
30
Index
Brazilian Economy and Financial System
Santander Brasil
Santander Group
Annexes
31
Santander Group
Main financial figures
2011
Sound credit ratings
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
Long term
Standard & Poor’s
Moody’s
Aa3
Fitch
A
DBRS
AA
Attributable Profit by geographical area
USA
6%
Continental
Europe
31%
Other LatAm
23%
Brazil
28%
1.
2.
In 2011, estimated data of May 2012 scrip dividend
Includes Total Assets, Mutual and Pension Funds and Managed Portfolios
A+
United
Kingdom
12%
Santander Group – High diversification by geographies
(1) Over operating areas attributable profit
(2) Expected GDP growth age for 2012-2013
Source: International Monetary Fund, World Economic Outlook Database, January 2012
32
Santander Group – Balance Sheet Strengthening: Capital ratio
10.02%¹
1. Core capital under Basel II criteria
(*) Including Valores Santander (compulsorily convertible bonds)
33
Santander Group – Balance Sheet Strengthening: Liquidity
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
34
Santander Group
Main elements of our business model…
1.1
Diversification is key: good balance between emerging and mature
economies…with dominant local positions in large and attractive countries
2.2
We are increasingly playing the international connectivity and the business
derived from it
3.3
Our banking model has two strong pillars non-negotiable: low risk
profile…and cost austerity
4.4
Subsidiary based model-financial de-centralisation with strong operational
centralisation
5
...AND A STRONG BALANCE SHEET MANAGEMENT
35
36
Index
Brazilian Economy and Financial System
Santander Brasil
Santander Group
Annexes
37
Balance Sheet - Total Assets – IFRS
US$ million
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
9,563
9,652
9,810
350
355
156
113
77
50
33
0
0
0
0
0
119
112
114
122
123
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
198
210
215
223
225
2,409
2,439
2,441
2,505
2,670
17,039
17,032
17,102
16,587
16,759
15,093
15,093
15,093
14,510
14,510
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
OTHER FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
- Loans and amounts due from credit institutions
- Loans and advances to customers
- Debt instruments
- Equity instruments
INVESTMENTS IN ASSOCIATES
TANGIBLE ASSETS
INTANGIBLE ASSETS
- Goodwill
- Other intangible assets
Total Assets
199,735
204,706
216,905
221,230
213,181
38
Balance Sheet - Total Liabilities – IFRS
US$ million
Liabilities
FINANCIAL LIABILITIES HELD FOR TRADING
FINANCIAL LIABILITIES AT AMORTISED COST
Dec-10 Mar-11
2,551
2,611
Jun-11
2,845
Sep-11 Dec-11
3,538
2,691
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
0
0
1
13
19
0
10,472
0
10,758
0
10,938
11,914
0
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
HEDGING DERIVATIVES
LIABILITIES DIRECTLY ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE
LIABILITIES FOR INSURANCE CONTRACTS
Total Liabilities
Total Equity³
Total Liabilities and Equity
1. Includes repo
2. Includes provisions for pensions and contingent liabilities
3. Includes minority interest and adjustment to market value
160,624 164,875 176,773 180,185 171,582
39,111 39,832 40,132 41,045 41,599
199,735 204,706 216,905 221,230 213,182
39
Quarterly Managerial¹ Income Statement
US$ million
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)
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
(227)
(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
Income Taxes
Net Profit
1,158
(218)
940
1,231
(289)
941
1,374
(343)
1.032
1,421
(398)
1.022
1,452
(348)
1.104
1,430
(320)
1.110
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
1,312
(351)
961
1,433
(474)
959
40
Managerial Loan Portfolio - BR GAAP¹
R$ billion
20.9%
R$ million
Dec.11
Dec.10
Y-o-Y
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%
197,062
165,377
19.2%
4.6%
11,784
7,414
58.9%
3.7%
208,846
172,792
20.9%
4.5%
Total BR GAAP
Other Credit Risk
Transactions ²
Expanded Credit
portfolio² BR GAAP
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
Q-o-Q
Variation
41
Asset Quality Ratios - IFRS
Delinquency ratio¹ (%)
Coverage ratio² (%)
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)
42
Total Revenues
US$ Million
13.9%
2011
2010
Y-o-Y
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%
19,416
17,502
10.9%
3.0%
US$ Million
Total Revenues
1.
2.
Considers Leasing’s accounting standardization proceeding occurred during the system integration of Banco Real and Banco Santander.
Results from Financial Operations excluding the fiscal effect of Cayman hedge + Other Operational Revenues (expenses) + Others
Q-o-Q
Variation
43
General Expenses and Amortization
US$ Million
14.1%
US$ Million
2011
2010
Y-o-Y
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%
779
659
18.2%
13.6%
7,375
6,646
11.0%
9.4%
Depreciation
and
Amortization
Total
Q-o-Q
Variation
Dividend policy according to the Parent Company
Dividend policy
Limited
Regulation: max.
95% of Profits (BR
GAAP).
Santander: approx.
90% (BR GAAP)
and 50% (IFRS).
44
• 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%)
45
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.
Corporate
Governance
Segments
Segmentos de
Governança Corporativa
Classification
Corporate Governance
Level 2
There is a Policy for
Transactions with
Related Parties
Bylaws are designed to
protect shareholders.
Corporate
Governance
Banks
New Market
Banco do
Brasil
Level 2
Level 1
Santander
Bradesco and
Itaú
Requirements
Share
Allows only ON
25% free float
Allows ON / PN
25% free float
Allows ON / PN
25% free float
Source: Bovespa Stock Exchange and Financial Institutions
Tag Along
100 % ON Shares
Board
of Directors
5 Members
(20% independent)
Term of Office: 2 years
100 % ON /PN Shares
5 Members
(20% independent)
Term of Office: 2 years
80 % ON Shares
3 Members
46
Household Debt Ratio and Delinquency
45%
42.5%
40%
19.0%
17.0%
35%
15.0%
30%
13.0%
11.0%
25%
21.9%
9.0%
20%
7.3%
15%
7.0%
5.0%
Household Debt Ratio*
Source: The Brazilian Central Bank
* New methodology released on September/11
Household Debt Service Ratio*
Nov-11
Sep-11
Jul-11
May-11
Mar-11
Jan-11
Nov-10
Sep-10
Jul-10
May-10
Mar-10
Jan-10
Nov-09
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
Mar-07
Jan-07
3.0%
Nov-06
10%
Deliquency Ratio Individuals (RHS)
Source: The Brazilian Central Bank
Corporate
Individuals
Total
Dec-11
Sep-11
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
Sep-06
Jun-06
Mar-06
Dec-05
Spreads – Corporate x Individuals
47
(p.p.)
60%
50%
40%
33.7%
30%
26.9%
20%
17.9%
10%
0%
Jan-04
Apr-04
Jul-04
Oct-04
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Apr-07
Jul-07
Oct-07
Jan-08
Apr-08
Jul-08
Oct-08
Jan-09
Apr-09
Jul-09
Oct-09
Jan-10
Apr-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
46%
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%
Loans to Individuals – Secured* x Unsecured Loans
Secured Lending*
Source: The Brazilian Central Bank
Unsecured Lending
*Payroll Loan + Mortgage + Auto Loans divided by total loans to individuals. Interest Rate Reference Credit Operations.
48