Banco Santander, S.a. · BME:SAN
Banco Santander — H1 2009 Earnings Presentation
61 slides from Banco Santander's earnings presentation, Jul 31, 2009
Slide 1: Results
Results The financial crisis and the economic slowdown have resulted in slower growth in activity and increased non-performing loans, which have required greater provisions. These effects have been offset by managing margins to adapt to the situation, enabling revenues to grow by 11% and costs to re
Slide 2: NPL rate and Visanet capital gain
The Group’s NPL rate stood at 2.82%, up 1.39 point from the year before. Coverage was 72%, compared to 120% in June 2008. Santander’s NPL rate is well below the average of all markets in which it operates. In Spain, Santander’s NPL rate amounted to 2.59% and Banesto’s to 2.32%. Moreover, the net inc
Slide 3: Comunicación Externa
Comunicación Externa. Ciudad Grupo Santander Edificio Arrecife Pl. 2 28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11 — Fax: 34 91 257 10 39
Slide 4: Net lending at end of first half
Santander net lending came to EUR 694,068 million at the end of the first half, an increase of 16% in euros or 3% before the exchange rate effect and excluding the incorporation of new units and exit of others. In Continental Europe, customer lending grew by 1% to EUR 330,430 million. In Spain, lend
Slide 5: Customer funds under management
In savings, customer funds under management rose by 9% in euros to EUR 884,425 million at the close of June, 2009, with no significant variation if exchange rate impact and changes in the accounting perimeter are excluded. Customer deposits, excluding securities repurchase agreements, rose by 36%, o
Slide 6: Santander share performance and dividend
The Santander share ended June at EUR 8.560, a rise of 26.8% during 2009’s first half. During July, the share price continued to improve, approaching EUR 10 a share, for a market capitalization of EUR 80,000 million, making Santander the world’s sixth largest bank by stock market value. The Board of
Slide 7: Activity and Results First Half 2009
ACTIVITY AND RESULTS First Half200929 July 2009
Slide 8: Important information
2 Important informationBanco Santander, S.A. (“Santander”) cautions that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are found in various places throughout this presentation and
Slide 9: Agenda
3 Agenda??Group highlights H1’09??Business areas performance H1’09 ??Conclusions??Appendix
Slide 10: In Q2'09 Santander maintains its model's soundness
4 In Q2’09 Santander maintains its model’s soundness Consistent resultsAmid the global recession we maintain our capacity to generate higher earnings than our competitors??Backed by the operating areas’performance ...??...the income statement shows strong underlying business ...Balance sheet strengt
Slide 11: Consistent, recurrent results
5 Grupo Santander maintained consistent results, all of them recurrent ...1 2,4232,0961,9412,2052,5242,206Q1’08Q2Q3Q4Q1’09Q2EUR MillionGroup’s attributable profit-4% 4,7304,1464,519H1’08H2’08H1’09Group’s attributable profit-4%+9%EUR Million ....with no impact on profit from recent disposals either m
Slide 12: Better operating areas performance
6 Better operating areas performance, partly thanks to the perimeter... Perimeter contribution: + EUR 144 mill. in H1’09 (+ EUR 46 mill. in Q1)2,7532,5682,2912,3832,3582,491Q1’08Q2Q3Q4Q1’09Q2Operating areas attributable profit+17%EUR Million4,8494,6745,322H1’08H2’08H1’09Operating areas attributable
Slide 13: Attributable profit diversification
7 (*)Over H1’09 operating areas attributable profit excluding EUR -26 million from Sovereign464542543596601679Q1’08Q2Q3Q4Q1’09Q2235250254252419372Q1’08Q2Q3Q4Q1’09*Q2*+67%Brazil+ 25%373361178104197253Q1’08Q2Q3Q4Q1’09Q2Continental Europe:GBM and othersAttributable profit diversification* 9958759111,02
Slide 14: Group results H1'09
8 Var. H1’09/H1’08Group resultsH1’09H1’08%excl. fx/EUR Million%perimeterNet interest income12,65610,192+24.2+18.1Fees4,5384,5390.0-4.5Trading gains, other*2,1742,206-1.5+6.5Gross income19,36816,937+14.3+10.5Operating expenses-8,054-7,436+8.3+0.3Net operating income11,3149,502+19.1+18.5Loan-loss prov
Slide 15: Revenues, costs and provisions
9 Soundness of the most basic revenues Cost management More provisions but decelerating With a better “recurrent snapshot”than that of Q1’09Var. Q1’09/Q1’08 %excluding fx/perimeterVar. H1’09/H1’08 %excluding fx/perimeterABC+18.8-7.7+10.5+1.8+17.5+67.8-1.7+18.1-4.5+10.5+0.3+18.5+51.2+4.3Net interest
Slide 16: Commercial revenues solid in the quarter
10 The most commercial revenues remained solid in the quarter, mainly backed by net interest income ...5.24.95.04.94.74.6Q1’08Q2Q3Q4Q1’09Q2Latam3.23.33.43.53.94.0Q1’08Q2Q3Q4Q1’09Q2Continental Europe6216256747311,0971,038Q1’08Q2Q3Q4Q1’09Q2United KingdomConstant US$billion EUR billion £Million 4.95.35
Slide 17: Net interest income growth and spreads
11 4.394.654.764.634.664.573.182.572.663.322.602.781.471.992.001.071.982.03Q1’08Q2Q3Q4Q1’09Q2+16.7%+9.9%+18.0%+42.9%+91.2%-0.5%-8.0%...resulting from spreads management in a scenario of falling interest rates and lower volume growthIn percentage Volumes. Group’s total AccountingExcl. perimeter and f
Slide 18: Strict cost control and synergies
12 (*) Including personnel + general expenses + amortisations Note: 2009 calculation of theoretical cost applying inflation (**) £70 mill. from A&L and approx. 25% B&B costs in direct distribution channels7,0221,0328,0547,436H1’08H1’09EUR millionOperating expenses*UK synergies (Abbey + A&L + B&B)(*)
Slide 19: Expenses flat and efficiency ratio improving
13 (*)Efficiency ratio with amortisations Expenses mainly flat in all units, with further improvement of the Group’s efficiency ratio35.4%66.1%37.3%41.0%SovereignLatinAmericaUnitedKingdomContinentalEuropeEfficiency ratio* Group total: 41.6% (-2.3 p.p.)Change o/ H1’08-3.0 p.p.-5.8 p.p.-5.5 p.p.[74.5%
Slide 20: Provisions continue increasing over 2008
14 Provisions continue increasing over 2008, although specific ones decelerate and there is less need for generic (*) Including country-risk ** Including release of EUR 380 mill. because of substandard -175-96-158-730-408-193Q108Q2Q3Q4Q1’09Q2Generic provisionsEUR million **1,3461,6312,0002,6822,6372
Slide 21: Loan-loss provisions by geographic area
15 (*) Excluding country-risk. Positive data: provision; negative data: release. (**) Specific loan-loss provisions are reduced by written-off assets recoveriesEurope2,196950+1,246-597120-717UK477 176+301-62-29-33LatAm2,3931,829+56471-410+481Other26422+242-1348-61Total5,3302,977+2,353-601-271-330Loa
Slide 22: Large on-balance sheet provisions
16 Large on-balance sheet provisions, strengthened by EUR 6.2 bill. of generic ones to face the coming quarters3C 4,7255,6676,0276,1816,2616,1633,1776,6828,9059,5647,9028,6279,30212,86315,16615,7272,9603,275Dec 05Dec 06Dec 07Dec 08Mar 09Jun 09On-balance sheet loan-loss provisionsSpain:3,000OtherEuro
Slide 23: Good levels of credit quality
17 In a sharp slowdown scenario, Santander maintains good levels ofcredit quality in all areas ...Balance sheet strength: credit quality4 NPL ratioCoverage ratioJune’09June’091.241.431.712.042.492.82Mar-08Jun-08Sep-08Dec-08Mar-09Jun-09NPLs and coverage ratios. GroupMoro134120105918072Mar-08Jun-08Sep
Slide 24: Credit quality compared with peers
18 (*) Average European banks included in our peer group (**) Data in local criteria, on a like-for-like basis with the sector’s sourcesBalance sheet strength: credit quality4Santander compares very well with its peers at Group level and in the main markets where we operate0.690.720.720.770.931.131.
Slide 25: Strong capital base
19 6.1%5.9%6.3%7.5%7.3%7.5%200520062007Dec’08Mar’09Jun’09Core capital performancePrevious target 6%Current target 7%Note:2008 and 2009 according to BIS II, previous data according to BIS I Strong capital base5Solvency “best in class”thanks to solid core capital and high capacity to generate free cap
Slide 26: Exchange of securities eligible as equity
20 Exchange of securities eligible as equity??Global exchange offer: 30 issues for a nominal amount of EUR 9.1billion??Amount attending the exchange offer until 22 July (Europe and the UK): 21 issues for a nominal amount of EUR 5,740 million??Acceptance percentage (Europe and the UK): 54%??Capital g
Slide 27: Agenda
21 Agenda??Group highlights H1’09 ??Business areas performance H1’09??Conclusions??Appendix
Slide 28: Continental Europe H1'09
22 Continental Europe H1’091,2101,1331,0891,2361,3681,289Q1’08Q2Q3Q4Q1’09Q2+9.0%+18.4%+13.4%+15.9%+24.3%AttributableprofitNet oper.inc. net ofLLPsNetoperatingincomeExpensesGrossincomeAttributable profitAttrib. profit: EUR 2,657 millionEUR MillionRecurrent revenues in retail, very good first-half in
Slide 29: Continental Europe main units H1'09
23 Continental Europe main units H1’09 EUR Mill. and % o/ H1’083685432853071,070(*) Attributable profit to the Group w/o extraordinary allowances1,2942,7762,073644997RestPortugal SantanderConsumerFinance Banesto SANbranchnetwork7787553791,5021,722+3.6%+4.8%+34.9%+4.9%+59.9%+5.7%+7.6%+35. 3%+9.2%+93.
Slide 30: Santander Branch Network H1'09
24 Santander Branch Network H1’09Management drivers+3.6+0.4RevenuesExpensesGross incomeBase 100: Q1’08ResultsEfficiency ratioNet operating income / Provisions10099103103104100Q1’08Q2Q3Q4Q1’09Q2EUR million % var. H1’09/H1’08 39.2%38.0%H1’08H1’09Net op. income net of LLPs+11.9%+6.0%Provisions2.83%3.35
Slide 31: Banesto H1'09
25 Banesto H1’09+9%+0%LoansDepositsVolume+4.8+0.9RevenuesExpensesGross incomeBase 100: Q1’08Efficiency ratioNet operating income / Provisions% var. H1’09/H1’08 41.4%39.9%H1’08H1’09+3.0%+8.7%103103101104108100Q1’08Q2Q3Q4Q1’09Q2Var. Q2’09/Q2’08??Spreads management vs. lower growth??Costs management: f
Slide 32: Santander Consumer Finance H1'09
26 Var. Jun’09 o/ Jun’08 Gross income3.49%4.18%5.14%86%90%90%Jun’08Dec’08Jun’09+42%+17%Loans*Deposits*Santander Consumer Finance H1’09Volumes(*) Excl. perimeter: +8%; +28%Net operating income / Provisions27.8%27.5%H1’08H1’09-17.7%**+27.5%*100111118125142142Q1’08Q2Q3Q4Q1’09Q2+34.9+33.6RevenuesExpense
Slide 33: United Kingdom H1'09
28 United Kingdom H1’09354374392422501373571322317595745686Q1’08Q2Q3Q4Q1’09Q2235250252254372419Q1’08Q2Q3Q4Q1’09Q2+47.6%+68.4%+62.8%+64.7%+86.8%AttributableprofitNet oper.inc. net ofLLPsNetoperatingincomeExpensesGrossincomeAttributable profitAttributable profit: £790 million(EUR 885 million)Var. H1’0
Slide 34: United Kingdom H1'09
29 United Kingdom H1’09Net operating income£Mill. Net operating income net of LLPsProvisionsSustainable resultsLending spreads improvement ...+68.4+47.6RevenuesExpenses“Jaws”% var. H1’09/H1’08 46.8%41.0%H1’08H1’09Percentage0.660.700.770.881.131.44Q108Q2Q3Q4Q1’09Q2...strong efficiency gains ...Effici
Slide 35: United Kingdom H1'09 balances
30 Note: Data in local criteria. A&L proforma data for Q1’08 (*) Including retail deposits of companies and investments United Kingdom H1’0910.110.29.09.519.719.1Jun’08Jun’09118.7124.140.537.1159.2161.2Jun’08Jun’09Corporate loans stock+5%-8%AbbeyA&L+3%Mortgage stock+0%+6%Balances in Bill. £Balances
Slide 36: Total Latin America
31 Total Latin America Note: 2008 proforma with Banco Real (*) Sale of 5.67% stake in Visanet. Not including additional capital gains from the greenshoesale (2%) in July (approx. EUR 95 million)1,1021,0371,1038201,1811,1251,1791,0421,1981,0971,2011,204Q1’08Q2Q3Q4Q1’09Q22,2812,3092,1722,1882,6272,765
Slide 37: Brazil H1'09
33 Note: 2008 proforma with Banco Real (*) Sale of 5.67% stake in Visanet. Not including additional capital gains from the greenshoesale (2%) in July (approx. EUR 95 million)1,2471,7101,6591,6201,6111,2551,6941,3061,3781,6722,2012,167Q1’08Q2Q3Q4Q1’09Q2679464542543596601Q1’08Q2Q3Q4Q1’09Q212.3%5.6%29.
Slide 38: Brazil H1'09
34 Brazil H1’09 Note.-2008 proforma with Banco Real45.0%37.9%H1’08H1’09Results*+14.8-3.3RevenuesExpensesGross incomeBase 100: Q1’08Efficiency ratioNet operating income / Provisions9999100114115100Q1’08Q2Q3Q4Q1’09Q2% var. H1’09/H1’08 +11.7%+32.7%Var.Q2’09/Q2’08* Data in constant US$Net op. income net
Slide 39: Mexico H1'09
35 Mexico H1’09 (**) Impact from swine flu in two months of recoveries. Data at June ‘09 on a quarter-on-quarter basis: 88 (1-30 days); 113 (30-60 days)Results*Management drivers-6%+2%LoansDep. excl.ReposVar. Jun’09 o/ Jun’08 in local currencyVolumes-0.2+1.5 RevenuesExpensesGross incomeBase 100: Q1’
Slide 40: Chile H1'09
36 Chile H1’09Results*Management drivers-3%+2%LoansDep. excl.ReposVolumes37.9%32.4%H1’08H1’09+18.8+1.6RevenuesExpensesGross incomeBase 100: Q1’08Efficiency ratioNet operating income / Provisions115132132127128100Q1’08Q2Q3Q4Q1’09Q2% var. H1’09/H1’08 +15.9%+19.3%Var. Q2’09/Q2’08??Revenues management:g
Slide 41: Corporate Activities
37 Corporate ActivitiesAttributable profit (EUR million)-330-473Q1’09Q2’09+143Quarter-on-quarter performanceMain effects:??Metrovacesacharge Q1’09+195??Other items and taxes-52Total impact on profit:+143-119-803H1’08H1’09-684Year-on-year performanceMain effects:??Equity method (Cepsa and Sovereign)-
Slide 42: Secondary Segments
SECONDARY SEGMENTS @& Santander
Slide 43: Retail Banking
39 Retail Banking1,9811,8441,8431,6431,8281,752Q1’08Q2Q3Q4Q1’09Q2*4,1534,2244,2514,0565,1424,822Q1’08Q2Q3Q4Q1’09Q2Net operating incomeAttributable profitEUR million EUR million -6.4%-5.4%+18.9%+10.5%+15.3%AttributableprofitNet oper.inc. net ofLLPsNetoperatingincomeExpensesGrossincomeRetail BankingVa
Slide 44: Global Wholesale Banking (GBM)
40 Global Wholesale Banking (GBM)394379435533879634Q1’08Q2Q3Q4Q1’09Q26286057159511,152975Q1’08Q2Q3Q4Q1’09Q2-13.2%+42.8%+72.4%+80.8%+95.7%AttributableprofitNet oper.inc. net ofLLPsNetoperatingincomeExpensesGrossincomeExcellent business performance backed by market share gains and higher spreads ...EU
Slide 45: Global Wholesale Banking revenues
41 (*) Includes: Global Transaction Banking and Credit8057999801,097149134611691681,2621,1481169549331,0411,2661,2641,430Q1’08Q2Q3Q4Q1’09Q2Global Wholesale Banking (GBM)...and the area’s management capacitiesGross income (EUR mill.)Generating solid revenues ...TotalTradingCustomers1??By customer rev
Slide 46: Asset Management and Insurance
43 Asset Management and InsuranceHigh contribution to the Group via revenues and profitGenerates revenues for retail networks (cross-selling)...1Attributable profit (EUR mill.)Asset Mgmt.Insurance...maintaining sustained results2??In H1’09: gross income of EUR 1,789 mill. from mutual funds and insur
Slide 47: Sovereign
SOVEREIGN @& Santander
Slide 48: Sovereign: contribution to Grupo Santander results
45 Sovereign: contribution to Grupo Santander results Note: data according to Group’s criteria (*) Adjusted to the same generation period (**) Data February-March on a quarter-on-quarter basis 238183Q1’09**Q2’09Contribution to Group (Feb-Jun’09)SOV% o/ Group*Gross income8784%Expenses5816%Net oper. i
Slide 49: Sovereign: main business highlights (lending)
46 Sovereign: main business highlights NPLs3.89%+88 b.p. Coverage 80%-12 p.p.Note: data according to US GAAP(*) Commercial and IndustrialUS$ billion Gross loans52.954.955.957.157.659.1Mar’08JunSepDecMar’09JunPortfolio performance Q2’09Companies30.257.1-2.7% • Commercial RE13.024.5-1.1% • C&I* and ot
Slide 50: Sovereign: main business highlights (deposits)
47 Sovereign: main business highlights Note: data according to US GAAP (*) Demand accounts, NOW (negotiable order of withdrawal) and savings accounts 49.350.548.443.147.349.0Mar’08JunSepDecMar’09JunUS$ billion On-balance sheet deposits“Fly to quality (SAN)”Focus on spreadsDeposits performance Q2’09R
Slide 51: Agenda
48 Agenda??Group highlights H1’09??Business areas performance H1’09 ??Conclusions??Appendix
Slide 52: Santander achieved consistent results in H1'09
49 ??Q2’09 recurrent profit: EUR 2,423 mill. ...??H1’09 recurrent profit of EUR 4,519 million. Extraordinary results allocated to strengthen the balance sheet ??Solid net operating income: 2.5 times theprovisions made??Taking advantage of our diversification: United Kingdom, GBM and Brazil, the main
Slide 53: Main focal points for H2'09
50 ??Revenues management: spreads management, volume, product mix and commissions amid a scenario of lower spreads and volumes??Expenses / synergiesmanagement??Integrationsmanagement??Risk / recoveriesmanagement??Efficient use of capital andliquidityMain focal points for H2’09:Should enable H2’09 to
Slide 54: Agenda
51 Agenda??Group highlights H1’09??Business areas performance H1’09 ??Conclusions??Appendix
Slide 55: Continental Europe. Main units spreads
52 Continental Europe. Main units spreads (%)3.823.873.953.863.403.152.211.381.392.261.431.701.192.442.480.892.522.16Q1’08Q2Q3Q4Q1’09Q2LoansDepositsTotalSAN Branch Network1.901.643.273.433.353.172.511.941.531.451.421.371.900.572.011.900.792.69Q1’08Q2Q3Q4Q1’09Q2LoansDepositsTotalBanesto Retail Bankin
Slide 56: Continental Europe. NPLs and coverage
53 Continental Europe. NPLs and coverage (*) The Santander Branch Network NPL ratio was 3.50% and coverage 57% at June 20093.49%4.18%5.14%86%90%90%Jun’08Dec’08Jun’09NPLsCoverageSantander Consumer1.53%2.13%1.72%65%93%77%Jun’08Dec’08Jun’09NPLsCoveragePortugalBanco Santander*96%169%69%1.93%2.59%1.06%Ju
Slide 57: United Kingdom. Spreads and NPL ratios
54 United Kingdom. Spreads and NPL ratios (%) Note: Including A&L since Q1’09 Note: Including A&L since Dec. 08 (*) UPLs coverage 100%0.770.881.241.142.001.952.012.022.042.221.440.700.661.130.781.251.340.91Q1’08Q2Q3Q4Q1’09Q2LoansDepositsTotalSpreads Retail Banking1.04%1.54%0.70%69%55%45%Jun’08Dec’08
Slide 58: Exchange rates. Latin America H1'09
55 Exchange rates. Latin America H1’09 (*) Positive sign: currency appreciation; negative sign: currency depreciationStrong depreciation of Latin American currencies against the dollar and euroAVERAGE RATESEUR / LOCAL CCY.US DOLLARBRAZILIAN REALNEW MEXICAN PESOCHILEAN PESOH1’09H1’08Var.1.3311.52915%
Slide 59: Spreads main countries Latin America
56 Spreads main countries Latin America (%)15.0015.5916.391.291.2816.7616.4416.2916.8717.0117.4315.2015.5115.941.041.241.251.07Q1’08Q2Q3Q4Q1’09Q2LoansDepositsTotal3.713.582.5814.7114.9014.7014.2714.1913.3510.8311.1911.4410.9910.6910.773.363.523.46Q1’08Q2Q3Q4Q1’09Q2LoansDepositsTotalMexico Retail Ban
Slide 60: Latin America. NPL and coverage ratios
57 Latin America. NPL and coverage ratiosMexicoChile4.64%3.58%3.24%92%116%102%Jun’08Dec’08Jun’09NPLsCoverageBrazil1.45%2.41%3.04%132%158%122%Jun’08Dec’08Jun’09NPLsCoverage2.64%3.30%2.28%102%111%94%Jun’08Dec’08Jun’09NPLsCoverage
Slide 61: Santander
SANTANDER Item 3