Banco Santander, S.a. · BME:SAN
Banco Santander — Banco Santander Central Hispano — H1 2007 Earnings Presentation
50 slides from Banco Santander's earnings presentation, Jul 30, 2007
Slide 1: Activity and Results First Half 2007
ACTIVITY AND RESULTS First Half 2007 July 26th, 2007
Slide 2: Important information
Item 1 Important information Banco Santander Central Hispano, 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
Slide 3: Disclaimer continued and Index
deal in shares in Santander or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in these web pages in respect of any such investment activity. Note: Statements as to historical performance, historical
Slide 4: First Half 2007: the drivers of Q1'07 are maintained
First Half 2007: the drivers of Q1’07 are maintained
Slide 5: H1'07 Highlights: Strong EPS performance
H1’07 Highlights Strong EPS performance without capital gains in Q2’07 (+21% 1 over Q2’06 and +16% over Q1’07) ... Quarterly ESP without capital gains (*) Without capital gains and extraordinary allowances
Slide 6: H1'07 Highlights: record quarter in attributable profit
H1’07 Highlights 1 ... after a record quarter in attributable profit before capital gains ... Adding the capital gains from Intesa Sanpaolo (EUR 566 mill.), first half attributable profit reached EUR 4,458 million (*) Without capital gains
Slide 7: H1'07 Highlights: quality of the income statement
H1’07 Highlights 1 These results arise from the high “vertical” quality of the income statement ... TOTAL GROUP _____ Change o/ H1’06 EUR Million _____ H1’07 Amount _____ % Gross operating income 13,207 +2,367 +21.8 Operating expenses -5,980 -531 +9.7 Net operating income 7,193 +1,828 +34.1 Loan-los
Slide 8: H1'07 Highlights: Financial Management & Equity Stakes
H1’07 Highlights 1 ... and from the high “horizontal” quality... Financial Management & Equity Stakes: EUR -536 million of attributable profit without capital gains, versus EUR -123 million in H1’06
Slide 9: H1'07 Highlights: Revenues
H1’07 Highlights. Revenues 2 Strong increase of the most recurrent revenues improves commercial revenue growth over the first quarter ... Change o/ H1’06 EUR Mill. H1’07 Amount _____ % Net int. inc. w/o divd. 7,133 +1,329 +22.9 Dividends 284 +47 +19.8 Equity method results 160 -81 -33.7 Fees & commi
Slide 10: H1'07 Highlights: Revenues and customer business
H1’07 Highlights. Revenues 2 ... arising from increased customer business and price management (*) Excluding Drive: +19.0% Note: Negative impact from exchange rates: -2/-3 percentage points year-on-year growth
Slide 11: H1'07 Highlights: Efficiency
H1’07 Highlights. Efficiency 3 Further efficiency ratio improvement at Group level (for the first time below 45%) and in all business segments (*) Including amortizations
Slide 12: H1'07 Highlights: Expenses
H1’07 Highlights. Expenses 3 Continued selective growth in costs due to investment in commercial capacity* and global projects Change o/ H1’06 EUR Mill. % Santander Branch Network +64 +7 Banesto +20 +4 SCF +68 +21 Portugal +19 +8 Rest Europe +111 +40 Brazil** +49 +6 Mexico** +20 +5 Chile** +10 +3 Fi
Slide 13: H1'07 Highlights: Loan-loss provisions
H1’07 Highlights. Loan-loss provisions Good performance of revenues and costs allows the higher loan-4 loss provisions to be absorbed and to maintain strong growth of net operating income
Slide 14: Loan-loss provisions by geographic area
H1’07 Highlights. Loan-loss provisions 4 Increase over H1’06 due to greater lending and change of mix towards more profitable products, but with higher risk premium Loan-loss provisions* by geographic areas (*) Not including country-risk. Positive sign: allocation; negative sign: release (**) Specif
Slide 15: Maintaining high balance sheet strength
H1’07 Highlights 5 Maintaining high balance sheet strength (*) On a like-for-like basis with 2007 (criteria change in Portugal in Q1’07). Published NPL ratio in June ‘06: 0.83% and coverage: 186%.
Slide 16: Index
Index Grupo Santander basic ideas H1’07 Business areas’ performance H1’07 Offer for ABN AMRO Conclusions Appendix
Slide 17: Continental Europe
CONTINENTAL EUROPE @® Santander z
Slide 18: Continental Europe H1'07
Continental Europe H1’07 EUR 2,468 million of attributable profit for the first half, a new quarterly record in retail banking (*) Personnel + administrative expenses + depreciation and amortization
Slide 19: Europe: Main units H1'07
Europe: Main units H1’07 EUR Mill. and % o/ H1’06 Solid and diversified growth: net operating income and attributable profit around 25% or above in all units (*) Net profit from ordinary activity (**) Including Drive. Excluding Drive: gross operating income +12%; net operating income +13% and attrib
Slide 20: Santander Branch Network Key highlights
Santander Branch Network Key highlights Customer increase with special focus on linkage (+6% in twelve months) — Retention improvement and service quality (complaints: -63%) Activity increase with customer spreads improvement: net interest income: +21% Loan growth: mortgage deceleration and impact h
Slide 21: Banesto Key highlights
Banesto Key highlights Linked customers increase (from 42.0% of the total to 42.5% in 12 months) Activity increase with customer spreads improvement: net interest income : +18% Strong growth in SMEs and companies and mortgage deceleration Results Revenues acceleration with strong improvement in effi
Slide 22: Santander Consumer Finance Key highlights
Santander Consumer Finance Key highlights SANTANDER CONSUMER EUROPE Spreads still impacted by interest rates rises, although showing a better Q2 in revenues Activity: — Auto market performance in line with market — Impact of VAT increase in Germany — Strong growth of more profitable products Results
Slide 23: Portugal Key highlights
Portugal Key highlights Customer increase with focus on linkage (+5% in 12 months) — Conta Connosco Plan (“Zero Commissions”) Increase in commercial activity with spreads basically flat. Net interest income: +7% Loans: growth of target segments, lower corporate share Balances change o/ Jun ‘06 +20%
Slide 24: Abbey
24 ABBEY @ Santander re
Slide 25: United Kingdom — Abbey H1'07
United Kingdom — Abbey H1’07 £ Mill. Achieving objectives in both revenues and costs. Attributable profit to the Group: £ 406 mill. (EUR 602 mill.) Change H1’07 / H1’06 (*) Personnel + administrative expenses + depreciation and amortizations
Slide 26: Abbey Key Highlights
Abbey Key Highlights Strengthening product range in savings and mortgages Investment growth and cards launching (June) supported by the Group’s global units and IT New developments in Partenón: In H2’07, core applications for loans and payments A strategy well perceived by the market: — On a busines
Slide 27: Abbey. Business performance
Abbey. Business performance (*) API: Annual Premium Income measures the flows that impact revenue and commissions
Slide 28: Latin America
28 LATIN AMERICA @® Santander We
Slide 29: Total Latin America H1'07
Total Latin America H1’07 US$ Mill. Attributable profit of US$ 1,807 mill., after a new record quarter in retail banking and a very good market performance (*) Personnel + administrative expenses + depreciation and amortization
Slide 30: Latin America: Main countries H1'07
Latin America: Main countries H1’07 US$ Mill. and % o/ H1’06 Strong growth of revenues in all countries with costs under control. Increased LLPs due to greater lending and change of mix (*) Impact from normalisation of tax regulation. PBT: +35% (**) Net profit (before minority interests): +35%
Slide 31: Brazil. Key highlights of the quarter
Brazil. Key highlights of the quarter Macro and financial environment Solid macro fundamentals with sharp falls in average interest rates (-382 pb H1’07 / H1’06) and country-risk at minimum levels (160 pb) Loans: +20%; Savings: +20%* Key Highlights Customer increase in 12 months (total: +900,000 and
Slide 32: Mexico. Key highlights of the quarter
Mexico. Key highlights of the quarter Macro and financial environment Solid macro fundamentals and greater institutional stability (agreement to modify public workers pension plans and tax reform pending approval) Short term interest rates: +25 pb since April ‘07 Loans: +23%; Savings: +12%* Key High
Slide 33: Chile. Key highlights of the quarter
Chile. Key highlights of the quarter Macro and financial environment Macro: solid fundamentals In Q2’07: Inflation slightly positive and flat interest rates Loans: +18%; Savings: +21%* Key Highlights Customer increase in 12 months (total: +250,000 and linked: +115,000) Investing in commercial capaci
Slide 34: Secondary Segments
34 SECONDARY SEGMENTS @® Santander iE
Slide 35: Secondary Segments Results
Secondary Segments Results EUR Mill. (*) Personnel + administrative expenses + depreciation and amortizations
Slide 36: Retail Banking
Retail Banking EUR million Retail Banking: solid performance in all geographic areas Retail banking
Slide 37: Global Wholesale Banking
Global Wholesale Banking Strong increase in business with customers in a very active market, with good contribution from markets. The recovery of generic provisions continues Note. GTB: Global Transaction Banking (cash management, trade finance, custody and basic financing).
Slide 38: Asset Management and Insurance
Asset Management and Insurance Insurance: good performance in all geographic areas. Impact of tax changes on mutual funds in Spain and regulatory changes in pensions in Latin America (*) Insurance fees plus Insurance activity
Slide 39: Offer for ABN AMRO
Offer for ABN AMRO EUR 38.40 / ABN AMRO share _____ Cash percentage is increased up to 93% (approx.) Santander maintains its participation in the joint offer (EUR 19.9 bill.) Offer period: from 23 July 2007 to 5 October 2007 Initial proposal _____ Offer May 29th _____ July 20th Offer per one 30.40 e
Slide 40: Index
Index Grupo Santander basic ideas H1’07 Business areas’ performance H1’07 Offer for ABN AMRO Conclusions Appendix
Slide 41: An excellent first half for Santander
An excellent first half for Santander New record quarter in profit: EPS +21% More recurrent revenues and efficiency ratio were the growth drivers Profit diversification: the three principal segments growing at 20%* or more Strong increase in customer business, mainly in Latin America and Global Whol
Slide 42: Santander's EPS: growth above average
as we did in the first quarter Santander’s EPS: growth above average ... (*) Includes main American banks, Swiss banks and Eurozone Top 10 by market capitalisation. Excludes British banks which publish results every six months
Slide 43: Next quarters forecast
Next quarters forecast Maintaining high growth rate in customer activity Continuing active management of spreads by units / businesses. No significant changes at Group level are expected Maintaining solid revenue growth, supported by net interest income and fees Costs in line with our plans for comm
Slide 44: Index
Index Grupo Santander basic ideas H1’07 Business areas’ performance H1’07 Offer for ABN AMRO Conclusions Appendix
Slide 45: Continental Europe. Main units spreads
Continental Europe. Main units spreads (%)
Slide 46: Continental Europe. NPLs and coverage
Continental Europe. NPLs and coverage
Slide 47: Abbey. Spreads and NPLs ratio
Abbey. Spreads and NPLs ratio (%)
Slide 48: Latin America. Main countries spreads
Latin America. Main countries spreads (%)
Slide 49: Latin America. NPLs and coverage
Latin America. NPLs and coverage
Slide 50: Relations with Investors and Analysts
Relations with Investors and Analysts Ciudad Grupo Santander Edificio Pereda, 1 a planta Avda de Cantabria, s/n 28660 Boadilla del Monte, Madrid (España) Teléfonos: 91 259 65 14 — 91 259 65 20 Fax: 91 257 02 45 e-mail: investor@gruposantander.com www.gruposantander.com SIGNATURE Pursuant to the requ
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