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Apresentacao renda fixa_final.v2

R
risantander

The document is a presentation by Banco Santander (Brasil) S.A. for fixed income investors in February 2011. It discusses Brazil's solid macroeconomic fundamentals including large foreign reserves, declining debt levels, and stable interest and inflation rates. It also notes Brazil's favorable social dynamics including a demographic bonus from a growing workforce and increasing social mobility. The presentation aims to provide investors an overview of the Brazilian economy, Santander Group, and Santander Brasil.

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Banco Santander (Brasil) S.A. FIXED INCOME INVESTOR PRESENTATION February 2011
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.
3 Index Brazilian Economy and Financial System Santander Group Santander Brasil Annexes
4 For the first time in a long period, we are living in a truly DUAL WORLD Need for PUBLIC SECTOR MATURE MARKETS to adjust large fiscal have started to deficits behave like mature markets… LOW HIGH i.e., not growing… Leverage HIGH MATURE MARKETS Need for PRIVATE …and EMERGING SECTOR to MARKETS have started to deleverage behave like emerging markets… i.e., delivering Balanced LOW DIFFERENTIAL GROWTH… EMERGING MARKETS
5 Solid macroeconomic fundamentals… International Reserves and External Debt Interest Rates vs. Inflation US$ billion 17.8% 18.0% 16.5% 13.3% 13.8% 289 External 11.3% 10.8% 215 239 9.3% debt¹ 201 207 7.6% 8.8% 169 173 180 247 5.7% 193 198 198 3.1% 86 5.9% Reserves 49 53 54 5.9% 4.5% 4.3% 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 Interest Rates (SELIC) Inflation (IPCA) Net Public Sector Debt / GDP % Real GDP Growth % 54.9% 50.6% 48.2% 7.7% 47.0% 45.1% 42.9% 40.4% 38.4% 2.5% 2.9% 1.1% 1.7% 0.7% 2003 2004 2005 2006 2007 2008 2009 2010 E 2003 2004 2005 2006 2007 2008 2009 2010E Brazil USA Euro Zone Source: Central Bank, IBGE and Santander Research 1. Last data available for external debt: Nov/10
... which led to less macroeconomic volatility 6 Duration in months of the Brazilian economic expansion and contraction periods Largest Most brief expansion contraction period Feb83 Dec91 Sep95 Feb99 Sep01 Jun03 Jan87 Nov94 Sep97 Nov00 Sep02 Jun08 48 8 36 25 22 13 61 21 28 20 30 9 16 9 8 6 Oct80 Feb87 Jun89 Dec94 Oct97 Dec00 Oct02 Jul08 Jan09 Jan83 Sep88 Nov91 Aug95 Jan99 Aug01 Mai03 Dec08 Oct10 Source: The Brazilian Central Bank
7 Social dynamics shows a favorable scenario for Brazil Favorable Demographic Dynamics1 Social Mobility Trends2 90% 200 ∆abc= 36 ∆abc= 29 Demographic 31 80% 20 Bonus 13 Millions of People 150 70% 66 95 113 +44.0% +19.0% 60% 100 47 50% 50 44 40 40% 49 29 16 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 0 2003 2009 2014* Population in Active Ages= 15-64 years Dependence Ratio E D C A/B Per capita Income – US$ thousand Annual Average Unemployment Rate(%) CAGR: 6,6% 12.3% 11.5% 8.9 8.5 7.4 9.8% 10.0% 9.3% 6.0 7.9% 8.1% 4.9 3.8 6.7% 3.5 2003 2004 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 Sources: 1 – IBGE and Santander Research 2 - Ministry of Finance; * estimated
8 Sound Brazilian Financial System  Well-capitalized financial system: BIS Ratio: 17,4% Solid and Profitable  Coverage index: 109%  High Profitability - ROE: 17%  Concentration: The five largest banks account for 75% of the assets  Sizeable market: The four largest Brazilian banks rank the 30 largest banks of the world in market capitalization Highly regulated and sizeable financial  Conservative regulation and strict prudential rules: system  The minimum BIS ratio required is 11%  High Reserve requirements: average ratio¹ 33% Source: Central Bank of Brazil 1. Total System reserve requirement / Total system deposits
9 Increasing credit penetration but still low for international standards Total Credit / GDP* México 32% Credit Evolution in Brazil US$ Billion Y-o-Y Colômbia 41% 1,027 852 739 564 20.5% 366 441 252 300 Brasil 46% 8.8% Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Chile 83% USA 209% Source: Central Bank of Brazil and Santander Research *Last data available for Total Credit/GDP: Dec/08, except from US:Dec/07
10 Brazil: a country with great opportunities The banking sector has a big opportunity The triple Multiplier The triple Multiplier The triple Multiplier Differential GDP growth (not involved in the excesses of the past cycle) Increased bancarisation (development of middle class) Sound Financial System (Low leverage, conservative, good profitability, supervision)
11 Index Brazilian Economy and Financial System Santander Group Santander Brasil Annexes
12 Santander Group Today Santander is one of the largest financial groups worldwide Market cap.: EUR 66,033 mill. # 10 worldwide # 1 in the (# 12 in 2006) Eurozone 2010 profit: EUR 8,181 mill. # 4 worldwide (# 3 in 2008; # 5 in 2007) # 1 by international branch network: ~14,086 # 1 by number of shareholders: 3.2 million Note: Bloomberg Data as of December 30, 2010
13 Santander Group Main financial figures Sound credit ratings EUR MM 2010 Long term Outlook Assets 1.217.501 Standard & Poor’s AA Negative Loans 724.154 Moody’s Aa2 Negative Shareholders’ equity 75.273 Fitch AA Stable Assets Under Management 1.362.289 DBRS AA Stable 8.181 Net profit Profits by geographical area Assets by geographical area Other LatAm USA 4% Retail Spain USA 18% Other Continental 15% 4% LatAm Europe 9% 45% Other Retail Europe Brazil 11% 12% Brazil 25% United Kingdom 18% Global United Business Kingdom Europe 30% 9% Continental Europe: 37%
Santander’s Model 14 Our strategy 1.Critical mass in our core markets 2.High diversification by geographies and businesses: focus on retail banking 3.Solid retail banking model. Commercial focus (expand the “front”), continue efficiency improvement (reduce the “back”) and a prudent risk policy. 4.Balance sheet strength: a distinguishing feature of Santander Group 5.Active management of business portfolio: improving our strategic positioning during the crisis
Santander’s model 15 Critical mass in our core markets USA7 UK3  Branches: 722  Ranking1: 4th  Customers: 1.7 mill.  Mkt. share1: 12%  Branches: 1,328 Mexico  Customers: 26.4 mill.  Ranking1: 3rd  Mkt. share1: 15%  Branches: 1,093 Spain2  Customers: 9.0 mill.  Ranking1: 1st  Mkt. share1: 15% Brazil6  Branches: 4,780  Customers: 12.1  Ranking: 3rd mill.  Mkt. share: 10%  Branches: 3,696  Customers: +24 mill. Portugal2 Santander Chile Consumer4  Ranking1: 4th (5)  Ranking1: 1st  Mkt. share1: 10%  Branches: 523  Mkt. share1: 19%  Branches: 762  Dealers: 135,000  Branches: 500  Customers: 1.9 mill.  Customers: 13.7 mill.  Customers: 3.0 mill. (1) Loans + deposits (balance sheet funds) + mutual funds (2) Santander Consumer not included (in Spain: 2.7 million customers and 77 branches; Portugal: 0.3 million customers and 7 branches) (3) Ranking 3rd by retail deposits and second by mortgages portfolio (4) Present in 15 countries. Loyalty cards not included under customers (5) Third largest private bank in Portugal and first by profit in 2009 (6) Excluding public-sector banks. (7) Only data from Sovereign Bank. Customer-homes data.
Santander’s model 16 Santander: Low risk business model Profit before tax Retail Banking (by business area) Loans/Assets (%) Top World Banks: Loan/ Assets (% ) Retail Global 70 Banking Banking& 60 Markets 50 40 30 72% 24% 20 10 4% 0 Wells Barclays RBS BNP UBS RBC HSBC Citi BBVA BoA SocGén Deutsche Santander JPM Unicredit Asset Management& Insurance Source: Banks' dat a 76% retail
Santander’s model 17 Efficiency as a goal: we believe in improving our efficiency, year after year Group efficiency ratio* Efficiency ratio vs Peers** (%) In percentage C1 40.4 SAN C2 41.3 efficiency: 66.1 SAN 41.7 Global Model 64.1 Abbey’s C4 49.7 of entry Technology, C5 50.6 61.4 Operations 59.7 C6 52.1 and Costs B. Real’s C7 54.1 entry C8 55.3 56.3 54.7 54.1 C9 55.6 C10 55.8 SOV, A&L and C11 57.6 49.7 GE’s entry C12 57.8 C13 59.4 45.5 C14 59.6 44.6 Peers… 60.6 42.9 41.7 C15 64.8 C16 69.4 C17 69.9 C18 72.5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 9M'10 C19 87.5 (*) Efficiency ratio with amortisations. Figures from 2004 on C20 98.4 according to IFRS (**) Note: Data as of December 2009. “Peer Group” are 19 large banks that because of their size, charateristic and/or degree of direct competition are the reference group to surpass: Banco Itaú, Bank of America, Barclays, BBVA, BNP Paribas, Citigroup, Credit Agricole, HSBC, Intesa Sanpaolo, JP Morgan, Lloyds, Mitsubishi, Nordea, Royal Bank of Canada, RBS, Societe Generale, UBS, Unicredito, Wells Fargo.
18 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
19 Santander Brasil Overview  The only international retail bank among the top 5 largest banks in  Acquisition of two large Brazil banks in Brazil (Banespa in  With 3,696 branches nationwide 2001, and Banco Real in  Over 24 million 2007) Solid franchise Customers in Brazil  Integration converted in  3rd largest Brazilian through a profitability Top universal successful private bank bank franchise process of in Brazil acquisition Focus on Risk and asset Commercial quality  Proven risk management banking management  Provide a broad range of commercial banking  Approvals, monitoring and products control of risks are coordinated worldwide within the Santander Group
20 Santander Brasil Overview Santander Brasil rank among the largest banks by market cap¹ in the world US$ Bi llion 24º 25º 26º 27º 28º 29º 30º 31º Profit before Tax 32º 33º 59.5 54.1 52.0 51.7 51.6 51.4 50.0 49.6 48.2 47.7 Deutsche Credit US Bancorp Barclays Bank Of National Sumitomo Santander Communic Banco do Australia Suisse Scotia Nova Bank Of Mitsui Bank Brasil ations Brasil Main financial figures Focus on Commercial banking US$ million 2010 Y-o-Y Assets 225.741 18,6% Profit before tax 2010 Loans 96.739 16,0% Commercial Funding ² from client 92.332 8,6% Banking Funding ² from client+ AUM 159.415 10,5% 64% Net profit 4.198 34,0% Global Wholesale Sound credit ratings Asset Banking Management Standard & Poor’s BBB- (stable) 28% & Insurance Moody’s* Baa3 (stable) 8% Fitch BBB (positive) * Long- term deposits rating 1. Source: Bloomberg – 12/31/2010 2. Demand Deposits + Time Deposits + Savings + Debentures + Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
21 Santander Brasil is a top universal bank franchise in Brazil Santander is the 3rd largest Brazilian private bank in total assets, with a market share¹ in loans of 11% Market share Number of branches Strong distribution platform… Total Country December/2010 Market Share: 12% North: 5% of GDP Bank with one of the highest numbers of point Market Share: 5% of sales in South/Southeast (73% of GDP) Northeast: 13% of GDP • 2,201 Branches Market Share: 7% • 1,495 Mini Branches Middle-west: 9% of GDP • 18,312 ATM’s Market Share: 6% Southeast: 56% of GDP +10.9 million current accounts², an Market Share: 16% increment of 661 thousand current accounts in 12 months South: 17% of GDP Opening of 110 new branches Market Share: 9% in 12 months Source: The Brazilian Central Bank and IBGE. GDP date: 2008 1. Santander’s market share in total loans of private sector: 17% (Dec/10) 2. Current accounts within 30 days, according to Central Bank as of dec/2010
22 Construction of a franchise which is within the largest Brazilian banks
23 Integration Process - Status 1st and 2nd Stages concluded 3rd Stage Aug/08 Jun/10 Dec/10 1H11 1 Senior Management Integrated 2 Centralized areas integrated  Risk Management, Human Resources, Marketing Auditing financial Control, Compliance, etc. 3 Wholesale, Private & Asset integrated Re-branding  GB&M, Corporate and Middle 4 Credit card system 5 ATMs integrated VI 8 Re-branding  ATMs platform  Upgrade on branches infrastructure 9 Unified Customer Services 6 Insurance System  95% of volume 7 New commercial model Technology migration 10 Tests and Simulations
24 Santander Loan Portfolio Total Loan Portfolio (US$) Credit Portfolio Concentration¹ – – Risk (%) Credit Portfolio Concentration¹ Risk (%) Dec/10 Total Credit Dec/10 Total: US$ 96,7 bi 100 largest 29.8% Corporate Individuals¹ 50 largest 23.8% 27% 32% 20 largest 16.0% Consumer SMEs finance 24% 10 largest 11.5% 17% Largest debtor 2.8% 2010 Loan Portfolio Breakdown by Segment (US$ Billion) – Dec/10 Individuals Corporate + SMEs Consumer Finance³ Total: US$ 30,7 billion Total: US$ 49,8 billion Leasing / Total: US$ 16,2 billion Other Leasing/Auto Auto Loans Consumer Credit 0,4% Loans¹ 3.7% Large 7,2% 4.5% Construction 8,6% Loans Personal Credit Card 6.5% Loans/Others 19.5% Trade Finance Working 33.8% 24.0% capital / Payroll Others Vehicles & Loans² 53.5% On-lending Motorcycles Mortgages 25.0% 9.8% 83,8% 12.1% Agricultural Agricultural Loans Loans 5.1% 2.5% 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.
25 Business - Portfolio Evolution – IFRS US$ billion US$ million Y-o-Y Q-o-Q 2010 2009 Variation Variation 16.0% Individuals 30,717 26,029 18.0% 5.6% 4.3% Consumer Finance 16,249 15,124 7.4% 1.9% 92.8 96.8 100.0 83.4 84.3 88.3 8.5% SMEs 23,080 18,948 21.8% 7.1% 80.0 4.7% 5.1% 6.5% 4.1% 4.3% Corporate 26,693 23,284 14.6% 1.9% 60.0 4.5% 40.0 Total IFRS 96,739 83,385 16.0% 4.3% 1.1% 2.5% 20.0 0.5% Others Credit Risk 4,624 1,946 137.6% 38.5% dec.09 mar.10 jun.10 sep.10 dec.10 -1.5% Transactions¹ - Q-o-Q Var. Expanded Credit 101,363 85,331 17.2% 4.0% portfolio¹ Expanded Credit portfolio¹ including 103,893 86,669 19.9% 5.2% acquired portfolio² 1. Loans for the year 2009 have been reclassified for comparison purposes with the current period, due to re-segmentation of clients occurred in 2010 2. Portfolio acquired from other banks
26 Profitability and asset quality levels Delinquency IFRS³ (%) Coverage Ratio IFRS² 9.3 101.7% 102.8% 101.7% 101.4% 8.8 98.3% 8.2 7.9 7.6 7.2 7.0 6.6 6.1 5.8 5.3 5.3 5.1 4.5 4.3 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 Individuals Corporate Total Net Interest Margin¹ 8.8% 7.9% 2009 2010 1) Net interest income (including dividends on equity securities) divided by average interest earning assets. 2) Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk 3) Nonperforming loans for over 90 days + performing loans with high delinquency risk / total managerial loans
27 Deposits and Assets Under Management (AUM) US$ billion 10.5% 4.5% 152.5 159.4 Y-o-Y Q-o-Q 144.3 144.8 147.8 US$ million 2010 2009 Variation Variation 64.7 67.1 59.3 64.2 66.0 Demand 9,719 9,122 6.5% 8.8% 92.3 Savings 18,259 15,194 20.2% 8.6% 85.0 80.6 81.8 87.8 Time 41,523 45,653 -9.0% 4.5% dec.09 mar.10 jun.10 sep.10 dec.10 AUM Funding from Clients Others¹ 22,831 15,040 51.8% 2.1% Funding from 92,332 85,009 8.6% 5.1% Demand Clients 6% Savings AUM 67,083 59,292 13.1% 3.8% 11% AUM Total 159,415 144,301 10.5% 4.5% 42% Time 26% Others¹ 14% 1. Debentures repurchase agreement, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
28 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
29 Income Statement – IFRS US$ Billion 2010 2009 Y-o-Y Net Interest Income 13.702 12.606 8,7% Net Fee 3.886 3.547 9,6% Other Operating Income 768 983 -21,8% Total Income 18.356 17.136 7,1% General expenses¹ (7.090) (6.935) 2,2% Allowance for loan losses (4.682) (5.677) -17,5% Net Provisions/Others (1.055) (548) 92,7% Net profit before tax 5.530 3.976 39,1% Income tax (1.332) (843) 57,9% Net profit 4.198 3.132 34,0% 1. Includes depreciation and amortization.
30 Santander Brazil Performance Ratios - IFRS Efficiency Ratio¹ (%) ROAA²(%) -1.5 p.p. 0.4 p.p. 2.2% 36.3 34.8 1.8% 2009 2010 2009 2010 ROAE (adjusted)³ (%) BIS³ (%) -2.4 p.p. -3.5 p.p. 19.3 25.6% 16.9 22.1% Average Peers* 15,1% Current Minimum Requirement 11,0% 2009 2010 2009 2010 Average Banco do Brasil, Itaú Unibanco Bradesco (sep-10) 1. General Expenses excluding amortization / Total Revenue excluding Cayman hedge 2. Net Profit / Average Assets 3. Excludes goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
31 Total Risk-Based Capital Ratio BIS Ratio % Santander x Major Banks (including Local Institutions) Source: Bloomberg – 01.27.2011
32 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
33 Financing Strategy: we are managing our balance sheet in a very PRUDENT / CONSERTIVE 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”)
34 Financing Strategy Decentralized…but coordinated…actions Each subsidiary has its own rating…and can access the market in different currencies, products and investor bases
35 Conservative Balance Sheet Management: Liquidity Balance sheet: liquidity ¹ Key principles Low Liquidity Risk  The local balance sheet should be self- Credits + 56% funded. Similars Deposits 58% raised by  No liquidity “carry trade”. business lines  Focus on retail and stable funding: stability and long tenor. 63%  Santander Brasil reliance in Other* 46% 5% international funding is not 14% Other** considerable (11,1% of the total Reserve balance sheet) 7% Debt issued Requirements + Others*** 21%  Liquidity buffer based on stress 16% Equity results. Government 7% Bonds  No refinancing “peaks”. Proforma Data *Defered tax assets, Plant, property and equipment;Investment in affiliates, Prepaid expenses ** Provision:Tax; Labour; Civil *** Data does not include double count which inflate assets and liabilities in the same proportion 1 – Managerial Balance Sheet used for liquidity management.
36 Liquidity Firewall The Brazilian Law It is forbidden 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. The Central Bank 95% of Profits (BR of Brazil has a GAAP). close and Santander: 80-85% rigorous (BR GAAP) and supervision. 50% (IFRS). Corporate Governance Decentralized Model There is a Policy for Independent Transactions with Related Parties subsidiaries in terms Bylaws are designed to of capital and liquidity. protect shareholders.
37 Santander Model Loans / Deposits Key principles 105% Low Liquidity Risk 98%  Metrics are used in order to control funding maturity concentration and/or funding providers. Dec-09 Dec-10  As long as market conditions / instruments allow, strive to match Short Term Funding (*) / Total Funding (*) assets and liabilities.  Santander has a formal contingency funding plan to be held as insurance % % against a range of liquidity stress scenarios. 15 %  Continuous and closer monitoring of 1% liquidity used by various business Dec-09 Dec-10 units. (*) Institutional Funding
38 Santander Brasil Capital Markets funding is carried out through a diversified approach by markets, tenor and instruments Short Term • EuroCD: 1 billion Programme (Reg. S Notes only) Medium and Long Term • Eurobond market: Senior transactions in all major currencies through a US$ 3,5 billion EMTN Programme (Reg S and 144-A). Structured and Private Placements are also issued under the Programme. • Securitization of Payment orders (future flows) – MT103 and MT202 through established programme. Debt Service Coverage Ratio is currently above 90 times. Rated A2 Moody’s / A- S&P / A Fitch.
39 Index Brazilian Economy and Financial System Santander Group Overview Santander Brasil Annex
40 Quarterly Managerial¹ Income Statement – IFRS US$ million Income Statements 4Q09 1Q10 2Q10 3Q10 4Q10 - Interest and Similar Income 5.596 5.276 5.595 6.030 6.363 - Interest Expense and Similar (2.270) (1.959) (2.260) (2.597) (2.746) Interest Income 3.327 3.317 3.335 3.433 3.617 Income from Equity Instruments 5 2 8 1 18 Income from Companies Accounted for by the Equity Method 3 6 7 6 6 Net Fee 947 922 972 1.010 982 - Fee and Commission Income 1.074 1.047 1.097 1.154 1.157 - Fee and Commission Expense (126) (125) (125) (144) (175) Gains/Losses on Financial Assets and Liabilities and Exchange Rate Diferences 174 346 165 268 133 Other Operating Income (Expenses) (34) (26) (34) (60) (78) Total Income 4.422 4.568 4.454 4.659 4.676 General Expenses (1.645) (1.510) (1.577) (1.620) (1.679) - Administrative Expenses (809) (739) (772) (781) (724) - Personnel espenses (836) (771) (806) (839) (954) Depreciation and Amortization (151) (163) (167) (176) (198) Provisions (net)² (274) (358) (165) (383) (217) Impairment Losses on Financial Assets (net) (1.208) (1.369) (1.259) (1.034) (1.033) - Allowance for Loan Losses³ (1.221) (1.367) (1.280) (1.030) (1.005) - Impairment Losses on Other Assets (net) 13 (2) 21 (4) (27) Net Gains on Disposal of Assets 19 67 27 20 (34) Net Profit before taxes 1.163 1.235 1.313 1.466 1.516 Income Taxes -258 -233 -309 -365 -425 Net Profit 905 1.003 1.004 1.100 1.091 1. Does not consider the fiscal effect of Cayman hedge 2. Includes provision for tax contingencies and legal obligations 3. Includes recovery of credits written off as losses 4. Exchange rate of 1,7585, Dec/11
41 Balance Sheet - Total Assets – IFRS US$¹ million Assets Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Cash and Balances w ith the Brazilian Central Bank 16.430 22.194 25.513 32.151 34.223 Financial Assets Held for Trading 12.120 13.938 21.632 14.303 14.955 Other Financial Assets at Fair Value Through Profit or Loss 9.817 9.564 9.769 10.041 10.809 Av ailable - for- Sale Financial Assets 27.960 22.403 25.655 24.479 28.442 Loans and Receiv ables 91.681 90.380 94.477 101.976 104.903 - Loans and adv ances to credit institutions 14.598 12.249 12.220 14.925 13.652 - Loans and adv ances to customers 83.151 84.159 88.153 92.784 96.789 - I mpairment losses -6.067 -6.028 -5.896 -5.733 -5.538 Hedging deriv ativ es 98 80 64 63 70 Non-current assets held for sale 103 25 56 52 40 I nv estments in associates 252 255 258 265 224 Tangible Assets 2.231 2.311 2.396 2.538 2.722 I ntangible Assets: 19.050 19.032 19.058 19.080 19.258 - Goodw ill 17.059 17.059 17.059 17.059 17.059 - Others 1.992 1.973 1.999 2.021 2.199 Tax Assets 9.507 8.938 9.188 9.193 8.943 Other Assets 1.128 1.307 1.156 1.339 1.153 Total Assets 190.379 190.425 209.222 215.479 225.741 1. Exchange rate of 1,6597, Dec/10.
42 Balance Sheet – Total Liabilities and Equity – IFRS US$¹ million Liabilities Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Financial Liabilities Held for Trading 2.672 2.714 2.813 3.021 2.883 Other Financial Liabilities at Fair Value Through Profit or Loss 1 1 1 - - Financial liabilities at amortized cost 122.653 122.612 140.009 143.314 152.643 - Deposits from the Brazilian Central Bank 145 70 - - - - Deposits from credit institutions 12.626 14.516 28.791 24.921 25.542 - Customer deposits 90.040 88.743 90.606 96.057 101.192 - Marketable debt securities 6.892 6.791 7.331 9.004 12.103 - Subordinated liabilities 6.811 5.938 6.075 5.683 5.841 - Other financial liabilities 6.138 6.554 7.207 7.650 7.964 Hedging deriv ativ es 6 22 25 10 - Liabilities for I nsurance Contracts 9.355 9.702 10.058 10.781 11.835 Prov isions² 5.712 5.953 5.822 5.971 5.661 Tax Liabilities 5.698 5.131 5.543 6.054 6.345 Other Liabilities 2.547 1.674 1.800 2.297 2.172 Total Liabilities 148.645 147.810 166.070 171.448 181.538 Shareholders' Equity 41.397 42.218 42.744 43.597 43.726 Minority I nterests 1 1 2 4 5 Valuation Adjustments 337 397 406 430 472 Total Equity 41.734 42.616 43.152 44.031 44.203 Total Liabilities and Equity 190.379 190.425 209.222 215.479 225.741 1. Exchange rate of 1,6597, Dec/10. 2. Includes provision for pension and contingencies
43 Quality of Loan Portfolio - BR GAAP Delinquency Over 90¹ (%) NPL Over 60² (%) Coverage Ratio Over 90³ 9.2 7.8 8.7 7.2 8.0 6.7 7.4 133% 137% 6.2 6.8 6.9 120% 128% 5.9 5.8 6.4 113% 5.4 4.7 5.6 4.2 5.0 3.9 4.7 4.2 4.7 3.7 4.4 3.0 3.6 2.5 2.2 2.9 2.7 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 Individuals Corporate Total Individuals Corporate Total 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)
44 Corporate Governance The Bank is managed by the Board of Directors and the Executive Board, supported by specialized committees  Banco Santander believes that a good corporate governance is a competitive advantage and strategic element supported by two pillars: shareholder rights and transparency  In line with the corporate governance best practices, Banco Santander’s units are listed in BM&FBOVESPA and in the NYSE Level 2 of BM&FBOVESPA with 100% of Tag Along Board of Directors¹ 3 Executive Board 3 Board Members of 3 Independent Board Members Grupo Santander Spain Members 1 Data as of December, 2010
45 Santander Brazil Ownership Structure  Santander Group Controls 81,6% of Santander Brazil  Santander Brazil’s shares are listed in NYSE and in the Brazilian stock, mercantile and futures exchange BM&FBOVESPA BANCO SANTANDER S.A. (SPAIN) 99.11% 99,99% 100% (V/T) (V/T) (V/T) GRUPO EMPRESARIAL SANTANDER STERREBEECK MINORITY SANTANDER S.L. SEGUROS S.A. B.V. SHAREHOLDERS 34.7%(T) 0.2%(T) 46.6%(T) 18.4%(T) 35,2%(V) 0,2%(V) 46,8%(V) 17,7%(V) BANCO SANTANDER (BRASIL) S.A. Date: As of 10/22/2010 Note: “V” denotes percentage of voting shares; “T” denotes percentage of total share capital
Investor Relations Juscelino Kubitscheck Avenue 2235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. (55 11) 3553-3300 e-mail: ri@santander.com.br

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Apresentacao renda fixa_final.v2

  • 1. Banco Santander (Brasil) S.A. FIXED INCOME INVESTOR PRESENTATION February 2011
  • 2. 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.
  • 3. 3 Index Brazilian Economy and Financial System Santander Group Santander Brasil Annexes
  • 4. 4 For the first time in a long period, we are living in a truly DUAL WORLD Need for PUBLIC SECTOR MATURE MARKETS to adjust large fiscal have started to deficits behave like mature markets… LOW HIGH i.e., not growing… Leverage HIGH MATURE MARKETS Need for PRIVATE …and EMERGING SECTOR to MARKETS have started to deleverage behave like emerging markets… i.e., delivering Balanced LOW DIFFERENTIAL GROWTH… EMERGING MARKETS
  • 5. 5 Solid macroeconomic fundamentals… International Reserves and External Debt Interest Rates vs. Inflation US$ billion 17.8% 18.0% 16.5% 13.3% 13.8% 289 External 11.3% 10.8% 215 239 9.3% debt¹ 201 207 7.6% 8.8% 169 173 180 247 5.7% 193 198 198 3.1% 86 5.9% Reserves 49 53 54 5.9% 4.5% 4.3% 2003 2004 2005 2006 2007 2008 2009 2010 2003 2004 2005 2006 2007 2008 2009 2010 Interest Rates (SELIC) Inflation (IPCA) Net Public Sector Debt / GDP % Real GDP Growth % 54.9% 50.6% 48.2% 7.7% 47.0% 45.1% 42.9% 40.4% 38.4% 2.5% 2.9% 1.1% 1.7% 0.7% 2003 2004 2005 2006 2007 2008 2009 2010 E 2003 2004 2005 2006 2007 2008 2009 2010E Brazil USA Euro Zone Source: Central Bank, IBGE and Santander Research 1. Last data available for external debt: Nov/10
  • 6. ... which led to less macroeconomic volatility 6 Duration in months of the Brazilian economic expansion and contraction periods Largest Most brief expansion contraction period Feb83 Dec91 Sep95 Feb99 Sep01 Jun03 Jan87 Nov94 Sep97 Nov00 Sep02 Jun08 48 8 36 25 22 13 61 21 28 20 30 9 16 9 8 6 Oct80 Feb87 Jun89 Dec94 Oct97 Dec00 Oct02 Jul08 Jan09 Jan83 Sep88 Nov91 Aug95 Jan99 Aug01 Mai03 Dec08 Oct10 Source: The Brazilian Central Bank
  • 7. 7 Social dynamics shows a favorable scenario for Brazil Favorable Demographic Dynamics1 Social Mobility Trends2 90% 200 ∆abc= 36 ∆abc= 29 Demographic 31 80% 20 Bonus 13 Millions of People 150 70% 66 95 113 +44.0% +19.0% 60% 100 47 50% 50 44 40 40% 49 29 16 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 0 2003 2009 2014* Population in Active Ages= 15-64 years Dependence Ratio E D C A/B Per capita Income – US$ thousand Annual Average Unemployment Rate(%) CAGR: 6,6% 12.3% 11.5% 8.9 8.5 7.4 9.8% 10.0% 9.3% 6.0 7.9% 8.1% 4.9 3.8 6.7% 3.5 2003 2004 2005 2006 2007 2008 2009 2010 1994 2000 2005 2006 2007 2008 2009 Sources: 1 – IBGE and Santander Research 2 - Ministry of Finance; * estimated
  • 8. 8 Sound Brazilian Financial System  Well-capitalized financial system: BIS Ratio: 17,4% Solid and Profitable  Coverage index: 109%  High Profitability - ROE: 17%  Concentration: The five largest banks account for 75% of the assets  Sizeable market: The four largest Brazilian banks rank the 30 largest banks of the world in market capitalization Highly regulated and sizeable financial  Conservative regulation and strict prudential rules: system  The minimum BIS ratio required is 11%  High Reserve requirements: average ratio¹ 33% Source: Central Bank of Brazil 1. Total System reserve requirement / Total system deposits
  • 9. 9 Increasing credit penetration but still low for international standards Total Credit / GDP* México 32% Credit Evolution in Brazil US$ Billion Y-o-Y Colômbia 41% 1,027 852 739 564 20.5% 366 441 252 300 Brasil 46% 8.8% Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Chile 83% USA 209% Source: Central Bank of Brazil and Santander Research *Last data available for Total Credit/GDP: Dec/08, except from US:Dec/07
  • 10. 10 Brazil: a country with great opportunities The banking sector has a big opportunity The triple Multiplier The triple Multiplier The triple Multiplier Differential GDP growth (not involved in the excesses of the past cycle) Increased bancarisation (development of middle class) Sound Financial System (Low leverage, conservative, good profitability, supervision)
  • 11. 11 Index Brazilian Economy and Financial System Santander Group Santander Brasil Annexes
  • 12. 12 Santander Group Today Santander is one of the largest financial groups worldwide Market cap.: EUR 66,033 mill. # 10 worldwide # 1 in the (# 12 in 2006) Eurozone 2010 profit: EUR 8,181 mill. # 4 worldwide (# 3 in 2008; # 5 in 2007) # 1 by international branch network: ~14,086 # 1 by number of shareholders: 3.2 million Note: Bloomberg Data as of December 30, 2010
  • 13. 13 Santander Group Main financial figures Sound credit ratings EUR MM 2010 Long term Outlook Assets 1.217.501 Standard & Poor’s AA Negative Loans 724.154 Moody’s Aa2 Negative Shareholders’ equity 75.273 Fitch AA Stable Assets Under Management 1.362.289 DBRS AA Stable 8.181 Net profit Profits by geographical area Assets by geographical area Other LatAm USA 4% Retail Spain USA 18% Other Continental 15% 4% LatAm Europe 9% 45% Other Retail Europe Brazil 11% 12% Brazil 25% United Kingdom 18% Global United Business Kingdom Europe 30% 9% Continental Europe: 37%
  • 14. Santander’s Model 14 Our strategy 1.Critical mass in our core markets 2.High diversification by geographies and businesses: focus on retail banking 3.Solid retail banking model. Commercial focus (expand the “front”), continue efficiency improvement (reduce the “back”) and a prudent risk policy. 4.Balance sheet strength: a distinguishing feature of Santander Group 5.Active management of business portfolio: improving our strategic positioning during the crisis
  • 15. Santander’s model 15 Critical mass in our core markets USA7 UK3  Branches: 722  Ranking1: 4th  Customers: 1.7 mill.  Mkt. share1: 12%  Branches: 1,328 Mexico  Customers: 26.4 mill.  Ranking1: 3rd  Mkt. share1: 15%  Branches: 1,093 Spain2  Customers: 9.0 mill.  Ranking1: 1st  Mkt. share1: 15% Brazil6  Branches: 4,780  Customers: 12.1  Ranking: 3rd mill.  Mkt. share: 10%  Branches: 3,696  Customers: +24 mill. Portugal2 Santander Chile Consumer4  Ranking1: 4th (5)  Ranking1: 1st  Mkt. share1: 10%  Branches: 523  Mkt. share1: 19%  Branches: 762  Dealers: 135,000  Branches: 500  Customers: 1.9 mill.  Customers: 13.7 mill.  Customers: 3.0 mill. (1) Loans + deposits (balance sheet funds) + mutual funds (2) Santander Consumer not included (in Spain: 2.7 million customers and 77 branches; Portugal: 0.3 million customers and 7 branches) (3) Ranking 3rd by retail deposits and second by mortgages portfolio (4) Present in 15 countries. Loyalty cards not included under customers (5) Third largest private bank in Portugal and first by profit in 2009 (6) Excluding public-sector banks. (7) Only data from Sovereign Bank. Customer-homes data.
  • 16. Santander’s model 16 Santander: Low risk business model Profit before tax Retail Banking (by business area) Loans/Assets (%) Top World Banks: Loan/ Assets (% ) Retail Global 70 Banking Banking& 60 Markets 50 40 30 72% 24% 20 10 4% 0 Wells Barclays RBS BNP UBS RBC HSBC Citi BBVA BoA SocGén Deutsche Santander JPM Unicredit Asset Management& Insurance Source: Banks' dat a 76% retail
  • 17. Santander’s model 17 Efficiency as a goal: we believe in improving our efficiency, year after year Group efficiency ratio* Efficiency ratio vs Peers** (%) In percentage C1 40.4 SAN C2 41.3 efficiency: 66.1 SAN 41.7 Global Model 64.1 Abbey’s C4 49.7 of entry Technology, C5 50.6 61.4 Operations 59.7 C6 52.1 and Costs B. Real’s C7 54.1 entry C8 55.3 56.3 54.7 54.1 C9 55.6 C10 55.8 SOV, A&L and C11 57.6 49.7 GE’s entry C12 57.8 C13 59.4 45.5 C14 59.6 44.6 Peers… 60.6 42.9 41.7 C15 64.8 C16 69.4 C17 69.9 C18 72.5 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 9M'10 C19 87.5 (*) Efficiency ratio with amortisations. Figures from 2004 on C20 98.4 according to IFRS (**) Note: Data as of December 2009. “Peer Group” are 19 large banks that because of their size, charateristic and/or degree of direct competition are the reference group to surpass: Banco Itaú, Bank of America, Barclays, BBVA, BNP Paribas, Citigroup, Credit Agricole, HSBC, Intesa Sanpaolo, JP Morgan, Lloyds, Mitsubishi, Nordea, Royal Bank of Canada, RBS, Societe Generale, UBS, Unicredito, Wells Fargo.
  • 18. 18 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
  • 19. 19 Santander Brasil Overview  The only international retail bank among the top 5 largest banks in  Acquisition of two large Brazil banks in Brazil (Banespa in  With 3,696 branches nationwide 2001, and Banco Real in  Over 24 million 2007) Solid franchise Customers in Brazil  Integration converted in  3rd largest Brazilian through a profitability Top universal successful private bank bank franchise process of in Brazil acquisition Focus on Risk and asset Commercial quality  Proven risk management banking management  Provide a broad range of commercial banking  Approvals, monitoring and products control of risks are coordinated worldwide within the Santander Group
  • 20. 20 Santander Brasil Overview Santander Brasil rank among the largest banks by market cap¹ in the world US$ Bi llion 24º 25º 26º 27º 28º 29º 30º 31º Profit before Tax 32º 33º 59.5 54.1 52.0 51.7 51.6 51.4 50.0 49.6 48.2 47.7 Deutsche Credit US Bancorp Barclays Bank Of National Sumitomo Santander Communic Banco do Australia Suisse Scotia Nova Bank Of Mitsui Bank Brasil ations Brasil Main financial figures Focus on Commercial banking US$ million 2010 Y-o-Y Assets 225.741 18,6% Profit before tax 2010 Loans 96.739 16,0% Commercial Funding ² from client 92.332 8,6% Banking Funding ² from client+ AUM 159.415 10,5% 64% Net profit 4.198 34,0% Global Wholesale Sound credit ratings Asset Banking Management Standard & Poor’s BBB- (stable) 28% & Insurance Moody’s* Baa3 (stable) 8% Fitch BBB (positive) * Long- term deposits rating 1. Source: Bloomberg – 12/31/2010 2. Demand Deposits + Time Deposits + Savings + Debentures + Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
  • 21. 21 Santander Brasil is a top universal bank franchise in Brazil Santander is the 3rd largest Brazilian private bank in total assets, with a market share¹ in loans of 11% Market share Number of branches Strong distribution platform… Total Country December/2010 Market Share: 12% North: 5% of GDP Bank with one of the highest numbers of point Market Share: 5% of sales in South/Southeast (73% of GDP) Northeast: 13% of GDP • 2,201 Branches Market Share: 7% • 1,495 Mini Branches Middle-west: 9% of GDP • 18,312 ATM’s Market Share: 6% Southeast: 56% of GDP +10.9 million current accounts², an Market Share: 16% increment of 661 thousand current accounts in 12 months South: 17% of GDP Opening of 110 new branches Market Share: 9% in 12 months Source: The Brazilian Central Bank and IBGE. GDP date: 2008 1. Santander’s market share in total loans of private sector: 17% (Dec/10) 2. Current accounts within 30 days, according to Central Bank as of dec/2010
  • 22. 22 Construction of a franchise which is within the largest Brazilian banks
  • 23. 23 Integration Process - Status 1st and 2nd Stages concluded 3rd Stage Aug/08 Jun/10 Dec/10 1H11 1 Senior Management Integrated 2 Centralized areas integrated  Risk Management, Human Resources, Marketing Auditing financial Control, Compliance, etc. 3 Wholesale, Private & Asset integrated Re-branding  GB&M, Corporate and Middle 4 Credit card system 5 ATMs integrated VI 8 Re-branding  ATMs platform  Upgrade on branches infrastructure 9 Unified Customer Services 6 Insurance System  95% of volume 7 New commercial model Technology migration 10 Tests and Simulations
  • 24. 24 Santander Loan Portfolio Total Loan Portfolio (US$) Credit Portfolio Concentration¹ – – Risk (%) Credit Portfolio Concentration¹ Risk (%) Dec/10 Total Credit Dec/10 Total: US$ 96,7 bi 100 largest 29.8% Corporate Individuals¹ 50 largest 23.8% 27% 32% 20 largest 16.0% Consumer SMEs finance 24% 10 largest 11.5% 17% Largest debtor 2.8% 2010 Loan Portfolio Breakdown by Segment (US$ Billion) – Dec/10 Individuals Corporate + SMEs Consumer Finance³ Total: US$ 30,7 billion Total: US$ 49,8 billion Leasing / Total: US$ 16,2 billion Other Leasing/Auto Auto Loans Consumer Credit 0,4% Loans¹ 3.7% Large 7,2% 4.5% Construction 8,6% Loans Personal Credit Card 6.5% Loans/Others 19.5% Trade Finance Working 33.8% 24.0% capital / Payroll Others Vehicles & Loans² 53.5% On-lending Motorcycles Mortgages 25.0% 9.8% 83,8% 12.1% Agricultural Agricultural Loans Loans 5.1% 2.5% 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.
  • 25. 25 Business - Portfolio Evolution – IFRS US$ billion US$ million Y-o-Y Q-o-Q 2010 2009 Variation Variation 16.0% Individuals 30,717 26,029 18.0% 5.6% 4.3% Consumer Finance 16,249 15,124 7.4% 1.9% 92.8 96.8 100.0 83.4 84.3 88.3 8.5% SMEs 23,080 18,948 21.8% 7.1% 80.0 4.7% 5.1% 6.5% 4.1% 4.3% Corporate 26,693 23,284 14.6% 1.9% 60.0 4.5% 40.0 Total IFRS 96,739 83,385 16.0% 4.3% 1.1% 2.5% 20.0 0.5% Others Credit Risk 4,624 1,946 137.6% 38.5% dec.09 mar.10 jun.10 sep.10 dec.10 -1.5% Transactions¹ - Q-o-Q Var. Expanded Credit 101,363 85,331 17.2% 4.0% portfolio¹ Expanded Credit portfolio¹ including 103,893 86,669 19.9% 5.2% acquired portfolio² 1. Loans for the year 2009 have been reclassified for comparison purposes with the current period, due to re-segmentation of clients occurred in 2010 2. Portfolio acquired from other banks
  • 26. 26 Profitability and asset quality levels Delinquency IFRS³ (%) Coverage Ratio IFRS² 9.3 101.7% 102.8% 101.7% 101.4% 8.8 98.3% 8.2 7.9 7.6 7.2 7.0 6.6 6.1 5.8 5.3 5.3 5.1 4.5 4.3 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 Individuals Corporate Total Net Interest Margin¹ 8.8% 7.9% 2009 2010 1) Net interest income (including dividends on equity securities) divided by average interest earning assets. 2) Allowance for Loan Losses / nonperforming loans for over 90 days + performing loans with high delinquency risk 3) Nonperforming loans for over 90 days + performing loans with high delinquency risk / total managerial loans
  • 27. 27 Deposits and Assets Under Management (AUM) US$ billion 10.5% 4.5% 152.5 159.4 Y-o-Y Q-o-Q 144.3 144.8 147.8 US$ million 2010 2009 Variation Variation 64.7 67.1 59.3 64.2 66.0 Demand 9,719 9,122 6.5% 8.8% 92.3 Savings 18,259 15,194 20.2% 8.6% 85.0 80.6 81.8 87.8 Time 41,523 45,653 -9.0% 4.5% dec.09 mar.10 jun.10 sep.10 dec.10 AUM Funding from Clients Others¹ 22,831 15,040 51.8% 2.1% Funding from 92,332 85,009 8.6% 5.1% Demand Clients 6% Savings AUM 67,083 59,292 13.1% 3.8% 11% AUM Total 159,415 144,301 10.5% 4.5% 42% Time 26% Others¹ 14% 1. Debentures repurchase agreement, Real Estate Credit Notes (LCI) and Agribusiness Credit Notes (LCA)
  • 28. 28 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
  • 29. 29 Income Statement – IFRS US$ Billion 2010 2009 Y-o-Y Net Interest Income 13.702 12.606 8,7% Net Fee 3.886 3.547 9,6% Other Operating Income 768 983 -21,8% Total Income 18.356 17.136 7,1% General expenses¹ (7.090) (6.935) 2,2% Allowance for loan losses (4.682) (5.677) -17,5% Net Provisions/Others (1.055) (548) 92,7% Net profit before tax 5.530 3.976 39,1% Income tax (1.332) (843) 57,9% Net profit 4.198 3.132 34,0% 1. Includes depreciation and amortization.
  • 30. 30 Santander Brazil Performance Ratios - IFRS Efficiency Ratio¹ (%) ROAA²(%) -1.5 p.p. 0.4 p.p. 2.2% 36.3 34.8 1.8% 2009 2010 2009 2010 ROAE (adjusted)³ (%) BIS³ (%) -2.4 p.p. -3.5 p.p. 19.3 25.6% 16.9 22.1% Average Peers* 15,1% Current Minimum Requirement 11,0% 2009 2010 2009 2010 Average Banco do Brasil, Itaú Unibanco Bradesco (sep-10) 1. General Expenses excluding amortization / Total Revenue excluding Cayman hedge 2. Net Profit / Average Assets 3. Excludes goodwill on acquired companies (Banco Real and Real Seguros Vida e Previdência)
  • 31. 31 Total Risk-Based Capital Ratio BIS Ratio % Santander x Major Banks (including Local Institutions) Source: Bloomberg – 01.27.2011
  • 32. 32 Index Brazilian Economy and Financial System Santander Group Santander Brasil -Overview -Results - Liquidity and Funding Annexes
  • 33. 33 Financing Strategy: we are managing our balance sheet in a very PRUDENT / CONSERTIVE 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”)
  • 34. 34 Financing Strategy Decentralized…but coordinated…actions Each subsidiary has its own rating…and can access the market in different currencies, products and investor bases
  • 35. 35 Conservative Balance Sheet Management: Liquidity Balance sheet: liquidity ¹ Key principles Low Liquidity Risk  The local balance sheet should be self- Credits + 56% funded. Similars Deposits 58% raised by  No liquidity “carry trade”. business lines  Focus on retail and stable funding: stability and long tenor. 63%  Santander Brasil reliance in Other* 46% 5% international funding is not 14% Other** considerable (11,1% of the total Reserve balance sheet) 7% Debt issued Requirements + Others*** 21%  Liquidity buffer based on stress 16% Equity results. Government 7% Bonds  No refinancing “peaks”. Proforma Data *Defered tax assets, Plant, property and equipment;Investment in affiliates, Prepaid expenses ** Provision:Tax; Labour; Civil *** Data does not include double count which inflate assets and liabilities in the same proportion 1 – Managerial Balance Sheet used for liquidity management.
  • 36. 36 Liquidity Firewall The Brazilian Law It is forbidden 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. The Central Bank 95% of Profits (BR of Brazil has a GAAP). close and Santander: 80-85% rigorous (BR GAAP) and supervision. 50% (IFRS). Corporate Governance Decentralized Model There is a Policy for Independent Transactions with Related Parties subsidiaries in terms Bylaws are designed to of capital and liquidity. protect shareholders.
  • 37. 37 Santander Model Loans / Deposits Key principles 105% Low Liquidity Risk 98%  Metrics are used in order to control funding maturity concentration and/or funding providers. Dec-09 Dec-10  As long as market conditions / instruments allow, strive to match Short Term Funding (*) / Total Funding (*) assets and liabilities.  Santander has a formal contingency funding plan to be held as insurance % % against a range of liquidity stress scenarios. 15 %  Continuous and closer monitoring of 1% liquidity used by various business Dec-09 Dec-10 units. (*) Institutional Funding
  • 38. 38 Santander Brasil Capital Markets funding is carried out through a diversified approach by markets, tenor and instruments Short Term • EuroCD: 1 billion Programme (Reg. S Notes only) Medium and Long Term • Eurobond market: Senior transactions in all major currencies through a US$ 3,5 billion EMTN Programme (Reg S and 144-A). Structured and Private Placements are also issued under the Programme. • Securitization of Payment orders (future flows) – MT103 and MT202 through established programme. Debt Service Coverage Ratio is currently above 90 times. Rated A2 Moody’s / A- S&P / A Fitch.
  • 39. 39 Index Brazilian Economy and Financial System Santander Group Overview Santander Brasil Annex
  • 40. 40 Quarterly Managerial¹ Income Statement – IFRS US$ million Income Statements 4Q09 1Q10 2Q10 3Q10 4Q10 - Interest and Similar Income 5.596 5.276 5.595 6.030 6.363 - Interest Expense and Similar (2.270) (1.959) (2.260) (2.597) (2.746) Interest Income 3.327 3.317 3.335 3.433 3.617 Income from Equity Instruments 5 2 8 1 18 Income from Companies Accounted for by the Equity Method 3 6 7 6 6 Net Fee 947 922 972 1.010 982 - Fee and Commission Income 1.074 1.047 1.097 1.154 1.157 - Fee and Commission Expense (126) (125) (125) (144) (175) Gains/Losses on Financial Assets and Liabilities and Exchange Rate Diferences 174 346 165 268 133 Other Operating Income (Expenses) (34) (26) (34) (60) (78) Total Income 4.422 4.568 4.454 4.659 4.676 General Expenses (1.645) (1.510) (1.577) (1.620) (1.679) - Administrative Expenses (809) (739) (772) (781) (724) - Personnel espenses (836) (771) (806) (839) (954) Depreciation and Amortization (151) (163) (167) (176) (198) Provisions (net)² (274) (358) (165) (383) (217) Impairment Losses on Financial Assets (net) (1.208) (1.369) (1.259) (1.034) (1.033) - Allowance for Loan Losses³ (1.221) (1.367) (1.280) (1.030) (1.005) - Impairment Losses on Other Assets (net) 13 (2) 21 (4) (27) Net Gains on Disposal of Assets 19 67 27 20 (34) Net Profit before taxes 1.163 1.235 1.313 1.466 1.516 Income Taxes -258 -233 -309 -365 -425 Net Profit 905 1.003 1.004 1.100 1.091 1. Does not consider the fiscal effect of Cayman hedge 2. Includes provision for tax contingencies and legal obligations 3. Includes recovery of credits written off as losses 4. Exchange rate of 1,7585, Dec/11
  • 41. 41 Balance Sheet - Total Assets – IFRS US$¹ million Assets Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Cash and Balances w ith the Brazilian Central Bank 16.430 22.194 25.513 32.151 34.223 Financial Assets Held for Trading 12.120 13.938 21.632 14.303 14.955 Other Financial Assets at Fair Value Through Profit or Loss 9.817 9.564 9.769 10.041 10.809 Av ailable - for- Sale Financial Assets 27.960 22.403 25.655 24.479 28.442 Loans and Receiv ables 91.681 90.380 94.477 101.976 104.903 - Loans and adv ances to credit institutions 14.598 12.249 12.220 14.925 13.652 - Loans and adv ances to customers 83.151 84.159 88.153 92.784 96.789 - I mpairment losses -6.067 -6.028 -5.896 -5.733 -5.538 Hedging deriv ativ es 98 80 64 63 70 Non-current assets held for sale 103 25 56 52 40 I nv estments in associates 252 255 258 265 224 Tangible Assets 2.231 2.311 2.396 2.538 2.722 I ntangible Assets: 19.050 19.032 19.058 19.080 19.258 - Goodw ill 17.059 17.059 17.059 17.059 17.059 - Others 1.992 1.973 1.999 2.021 2.199 Tax Assets 9.507 8.938 9.188 9.193 8.943 Other Assets 1.128 1.307 1.156 1.339 1.153 Total Assets 190.379 190.425 209.222 215.479 225.741 1. Exchange rate of 1,6597, Dec/10.
  • 42. 42 Balance Sheet – Total Liabilities and Equity – IFRS US$¹ million Liabilities Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Financial Liabilities Held for Trading 2.672 2.714 2.813 3.021 2.883 Other Financial Liabilities at Fair Value Through Profit or Loss 1 1 1 - - Financial liabilities at amortized cost 122.653 122.612 140.009 143.314 152.643 - Deposits from the Brazilian Central Bank 145 70 - - - - Deposits from credit institutions 12.626 14.516 28.791 24.921 25.542 - Customer deposits 90.040 88.743 90.606 96.057 101.192 - Marketable debt securities 6.892 6.791 7.331 9.004 12.103 - Subordinated liabilities 6.811 5.938 6.075 5.683 5.841 - Other financial liabilities 6.138 6.554 7.207 7.650 7.964 Hedging deriv ativ es 6 22 25 10 - Liabilities for I nsurance Contracts 9.355 9.702 10.058 10.781 11.835 Prov isions² 5.712 5.953 5.822 5.971 5.661 Tax Liabilities 5.698 5.131 5.543 6.054 6.345 Other Liabilities 2.547 1.674 1.800 2.297 2.172 Total Liabilities 148.645 147.810 166.070 171.448 181.538 Shareholders' Equity 41.397 42.218 42.744 43.597 43.726 Minority I nterests 1 1 2 4 5 Valuation Adjustments 337 397 406 430 472 Total Equity 41.734 42.616 43.152 44.031 44.203 Total Liabilities and Equity 190.379 190.425 209.222 215.479 225.741 1. Exchange rate of 1,6597, Dec/10. 2. Includes provision for pension and contingencies
  • 43. 43 Quality of Loan Portfolio - BR GAAP Delinquency Over 90¹ (%) NPL Over 60² (%) Coverage Ratio Over 90³ 9.2 7.8 8.7 7.2 8.0 6.7 7.4 133% 137% 6.2 6.8 6.9 120% 128% 5.9 5.8 6.4 113% 5.4 4.7 5.6 4.2 5.0 3.9 4.7 4.2 4.7 3.7 4.4 3.0 3.6 2.5 2.2 2.9 2.7 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 4Q09 1Q10 2Q10 3Q10 4Q10 Individuals Corporate Total Individuals Corporate Total 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)
  • 44. 44 Corporate Governance The Bank is managed by the Board of Directors and the Executive Board, supported by specialized committees  Banco Santander believes that a good corporate governance is a competitive advantage and strategic element supported by two pillars: shareholder rights and transparency  In line with the corporate governance best practices, Banco Santander’s units are listed in BM&FBOVESPA and in the NYSE Level 2 of BM&FBOVESPA with 100% of Tag Along Board of Directors¹ 3 Executive Board 3 Board Members of 3 Independent Board Members Grupo Santander Spain Members 1 Data as of December, 2010
  • 45. 45 Santander Brazil Ownership Structure  Santander Group Controls 81,6% of Santander Brazil  Santander Brazil’s shares are listed in NYSE and in the Brazilian stock, mercantile and futures exchange BM&FBOVESPA BANCO SANTANDER S.A. (SPAIN) 99.11% 99,99% 100% (V/T) (V/T) (V/T) GRUPO EMPRESARIAL SANTANDER STERREBEECK MINORITY SANTANDER S.L. SEGUROS S.A. B.V. SHAREHOLDERS 34.7%(T) 0.2%(T) 46.6%(T) 18.4%(T) 35,2%(V) 0,2%(V) 46,8%(V) 17,7%(V) BANCO SANTANDER (BRASIL) S.A. Date: As of 10/22/2010 Note: “V” denotes percentage of voting shares; “T” denotes percentage of total share capital
  • 46. Investor Relations Juscelino Kubitscheck Avenue 2235 10th floor São Paulo | SP | Brazil | 04543-011 Tel. (55 11) 3553-3300 e-mail: ri@santander.com.br