Banco Santander, S.a. · BME:SAN
Banco Santander — Investor Presentation (January 2008)
40 slides from Banco Santander's investor presentation, Jan 18, 2008
Slide 1: Important information
Important information Banco 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 i
Slide 2: Agenda
Agenda Santander Retail Banking in Grupo Santander 2007 Strategy 2007 Results 2008 Lines of action
Slide 3: Retail Banking: the main activity of Grupo Santander
RETAIL BANKING: the main activity of Grupo Santander ... Profit before taxes Distribution by business segments (Total: EUR 9,182 mill.) Mill. euros _____ SAN Retail (7,003) GB&M (1,632) 76% 18% 6% Asset Mgmt. & Insurance (546) 82% retail Data 9M’07
Slide 4: Among the world leaders in retail and consumer banking
... placing us among the world leaders in retail and consumer banking Leader by number of branches among international banks** By profit Santander* 13,000 7 th HSBC 10,100 bank worldwide Citigroup 8,300 in 2006 BoA 5,700 BNP Paribas 5,200 Wachovia 4,200 RBS 4,156 By market cap. Barclays 3,600 8 th J
Slide 5: Santander Retail Banking continues to be a key player in the Group's retail strategy
Santander Retail Banking continues to be a key player in the Group’s retail banking strategy ... 1 Contributes to the Leader in one of the most attractive banking Group’s size in Spain markets in the European Union 2 Contributes to the High, solid and sustained Group’s growth 3 Strengthens the Custo
Slide 6: Santander Retail contributes to the Group's size in Spain
1 Santander Retail contributes to the Group’s size in Spain Preferential positioning in the Spanish market Customers: Leading the Spanish 8.4 million Size Banking Group** Employees: 16,696 (Sep.’07) Loans 1º Branches: 2,975* Customer funds 1º Mutual funds 1º Activity: 228,315 mill. Individual pensio
Slide 7: Santander Retail contributes to the Group's growth
8 2 Santander Retail contributes to the Group’s growth Sustained contribution to activity and results growth Loans Net operating income EUR Mill. EUR Mill. CAGR: +15.5% 109,706 117,432 CAGR: +15.5% (*) 93,892 82,364 2,429 69,586 2,101 2,132 57,234 1,793 1,658 1,384 2002 2003 2004 2005 2006 Sep-07 20
Slide 8: Santander Retail strengthens the Group's business model
3 Santander Retail strengthens the Group’s business model Santander business model Locally focused with a global vision Supported by a large customer base: distribution capacity Organic growth by linkage and quality Proven business model, exportable and _____ generator of best practices _____ Santan
Slide 9: Santander Retail is the unit making the biggest contribution to the Group
In short, Santander Retail is the business unit making the biggest contribution to the Group ... Profit as of September 2007 (%) GB&M 18 SAN Retail Asset Mgmt. & 21 Insurance 6 Other 3 8 Banesto 5 8 Other Retail Latam Retail e Chil Co Banking Banking: 7 5 ns o u m 21% ic 6 P e r Continental x B.C. o
Slide 10: Agenda
Agenda Santander Retail Banking in Grupo Santander 2007 Strategy 2007 Results 2008 Lines of action
Slide 11: In 2007 Santander Retail took a step further on the path started in 2006
In 2007 Santander Retail took a step further on the path started in 2006, ... ... our new strategy for banking with customers 2003/04 2005 2006 2007 CUSTOMER MANAGEMENT Spread Profitable improvement growth Launching of “We Plan’s extension New business Branch want to be your opportunities openings B
Slide 12: Five pillars of our management model
Specifically, we acted on the five pillars of our 13 management model ... Focus on individual customers: Strategic Plan “We want to be your Bank” n Customer Extended to new customer segments (stores, self-employed, Management immigrants, students and shareholders) Personalised service for Private Ba
Slide 13: Keeping focus on costs and risks
... while keeping focus on costs and risks “Wider jaws” due to revenue generation: “We want to be your · Efficiency Bank” Plan and activity’s profitable growth ratio Selective cost growth due to strengthening of retail banking and I-09 projects (consumer, means of payment, business) Risk quality: ca
Slide 14: Customer Management: We want to be your Bank accelerates
1. In Customer Management, “We want to be your Bank” is, in second year, again a strong accelerator of Santander Retail ... Today 3.8 mill. beneficiary customers vs. the initial 2.4 mill. (Jan.06) Total new captured customers* (thousands) Capturing 466 513 almost x2 the rate prior 315 to the plan 20
Slide 15: I-09 projects strengthen position in 16 key products
1. ... contributing with I-09 projects to strengthen our position in 16 key products ... +89% Capturing customers 407 363 with payrolls 192 2005 2006 2007 Almost doubling _____ the capturing rate +92% before the Plan ... Capturing customers 121 82 with pensions 63 2005 2006 2007 +3% Capturing custom
Slide 16: Cross-selling products
1. ... and in cross-selling products ... Debit cards Credit cards Thousands of customers Thousands of customers +41% +58% 570 543 384 244 259 164 2005 2006 2007 Consolidating 2005 2006 2007 solid capturing Personal financing rates well above Life insurance those before Thousands of customers Thousan
Slide 17: Structural change in the mass market segment
2. In the Retail Banking model, structural change in the mass 18 market segment via four routes CAPTURING AND DEVELOPMENT AND RETENTION LINKAGE Design of value proposals Premium 5% by segment customers Commercial “Choosing the portfolios customers with the greater potential _____ ....” ... Mass Bran
Slide 18: Service Quality: improvements driven by the Plan
3. In Service Quality, “We want to be your Bank” was the 19 driving force to achieve significant improvements Customer satisfaction Number of customer complaints* % SATISFIED customers 1,6 29 1,503 1,416 1,410 1,3251,482 1, 388 1,335 2005 Beneficiary 94.3% 1,256 customers 1,148 1,045 1,049 2006 720
Slide 19: Three pillars strengthen revenue-generating capacity
These three pillars helped to strengthen our revenue- generating capacity ... ... the basis of our sustained results _____ Customer management Sustained activity growth Growth diversification Sales culture Better revenue structure Service quality Greater productivity
Slide 20: Improving productivity
... and to improve productivity Activity* per employee Productivity** per employee EUR million EUR thousands 287 +5% 13.6 +14% +14% 12.9 +11% 251 11.3 225 9M’05 9M’06 9M’07 9M’05 9M’06 9M’07 Activity* per branch Productivity** per branch EUR million EUR thousands 1,654 79.0 76.4 +3% +10% +7% 1,507 7
Slide 21: Costs: active management to absorb investment in distribution
4. In Costs, active management to absorb the significant 22 investment made in commercial distribution in recent years ... Boost branch network ... Operating expenses Net branch increase in 12 months EUR Mill. 163 CAGR: +2.7% 120 120 1,417 1,307 1,293 1,311 32 +11% o/Dec’04 2004 2005 2006 Sep’07 9M’
Slide 22: Strict risk management is part of Santander Retail's DNA
5. Strict risk management is part of Santander Retail’s DNA 23 Management keys NPLs ratio at the lowest levels ever and in line with the market ... Boost management of risk/return by products and customers Total banking system OSR* Reduced exposure to products / 0.84% 0.80% segments of greater risk
Slide 23: Loan-loss provisions reflect credit quality
5. Loan-loss provisions performance reflects credit quality 24 and the creation of generic funds Credit cost* vs. spread Loan-loss provisions 1.43% 1.32% 1.25% EUR million CAGR: +8% Credit Spread 288 237 0.08% 0.06% 0.08%Credit 205 cost Total 2005 2006 9M’07 260 168 159 Generic Generic funds Specifi
Slide 24: Agenda
Agenda Santander Retail Banking in Grupo Santander 2007 Strategy 2007 Results 2008 Lines of action
Slide 25: Focus on consumer and companies on assets, on-balance funds on liabilities
... and more focused on consumer and companies on the asset side and on on-balance funds on the liabilities side Loans Customer funds _____ Change Sep’07 / Sep’06 Change Sep’07 / Sep’06 Average monthly balances Average monthly balances +14% +12% +9% +10% +6% +6% +5% -5% Demand Time Mutual Pension __
Slide 26: Strong growth of net interest income
All of it contributing to the strong growth of net interest income ... Net interest income EUR million x 1.5 2,096 1,729 +21% 1,540 1,409 +12% +9% 9M’04 9M’05 9M’06 9M’07
Slide 27: Net interest income setting new records quarter after quarter
... setting new records quarter after quarter Net interest income _____ EUR million year-on-year % change 742 705 650 609 635 583 537 +9% +13% +14% +17% +21% +21% +22% Q1’06 Q2 Q3 Q4 Q1’07 Q2 Q3
Slide 28: Fees and commissions growth
Fees and commissions growth due to greater activity absorbs the “investment” made in “We want to be your Bank” ... Fees and commissions Total 1,337 +8% 1,444 EUR Mill. Services 237 -5% 225 Savings- 666 Investment 595 +12% Insurance 103 +41% 145 Risk 230 +5% 242 Trading gains (*) 172 166 -4% 9M’06 9M
Slide 29: Service fees
... feeding through to service fees _____ Service fees Total 237 -5% 225 EUR Mill. % Share Means of payment 129 -5% 123 54 Admin. and maintenance 47 -11% 42 19 Transfers 34 +3% 35 16 Cheques 17 -7% 16 7 Other(*) 10 9 4 -2% 9M’06 9M’07 (*) Security Boxes and issuance of receipts
Slide 30: Higher revenues and balanced growth
All of it contributing to higher revenues and balanced growth ... Revenues Gross op. 2,833 +8% 3,066 +15% 3,540 income EUR million 225 -5% -23% 237 Service fees 307 1,219 1,100 +11% Business fees 986 +12% 2,096 Net interest income 1,540 1,729 +21% +12% 9M’05 9M’06 9M’07
Slide 31: Revenues by segments and products
... with suitable distribution by segments and products 33 Revenues By segments By products Trading Personal Banking and gains 6% Mortgages Private Banking SMEs and 9% 13% Mutual funds _____ businesses fees 17% Other loans 29% and assets 20% Other fees 20% Companies and Deposits Individual 28% Insti
Slide 32: Jaws and efficiency ratio
... which absorbs the strong investment, to keep the 34 “jaws” wide open and improve efficiency “Jaws” Efficiency ratio* (%) % Year-on-year change +15.5 +7.4 p.p. 44.8 41.5 +8.2 +8.1 39.0 With +6.8 p.p. amortisations 38.5 +1.4 35.9 W/out 34.1 amortis. Revenues Expenses Revenues Expenses 9M’06 9M’07
Slide 33: Healthy growth with reduced loan-loss provisions
Also, it is a “healthy growth”, with reduced loan-loss provisions 35 due to the quality of the loan portfolio and the funds established ... Net operating income “gross” and “net” of loan-loss provisions Loan-loss provisions EUR million EUR million CAGR: +17% 2,132 CAGR: +8% 288 1,760 Net op. income
Slide 34: Quarterly net operating income before and after LLPs
... producing an excellent net operating income quarterly 36 performance before and after LLPs Net operating income after loan-loss Net operating income provisions EUR million EUR million +21% 727 +29% 714 691 669 639 641 615 612 619 615 533 528 468 476 Q1’06 Q2 Q3 Q4 Q1’07 Q2 Q3 Q1’06 Q2 Q3 Q4 Q1’0
Slide 35: Quality earnings pointing to new record in 2007
In short, quality earnings pointing to a new record in all revenue items and profits in 2007 Net operating income Attributable profit _____ Var.% 9M’07 / 9M’06 EUR million Gross +29% 1,357 operating +15% income 1,050 Expenses* +8% Net _____ operating +21% income 9M’06 9M’07 (*) Personnel + general c
Slide 36: Acceleration trend in attributable profit
38 ... continuing the acceleration trend of recent years _____ Attributable profit EUR million CAGR (02-07): +22%* 1,505 1,357 1,285 891 793 681 2002** 2003** 2004 2005 2006 9M’07 (*) 2007 data annualised (**) Estimated data including IFRS’s impact
Slide 37: Agenda
Agenda Santander Retail Banking in Grupo Santander 2007 Strategy 2007 Results 2008 Lines of action
Slide 38: Santander Retail Banking starts 2008 with a clear focus
Santander Retail Banking starts 2008 with a clear focus in order to face a tougher environment Products / Segments Distribution Mortgages: acting on an adjusting market Branch expansion completed Potential in: Commercial capacity increase — Mass market with variable costs — Private Banking / Persona
Slide 39: Commitments for 2008 within the Investors' Day outlook
Our commitments for 2008 are framed within the outlook 41 announced at the last Investors’ Day (*) Financial targets (2006-2009) Gross Operating Income Efficiency ratio (%) Including amortisations 41.0 CAGR>12% -700 b.p. <34.0 2006 2009 2006 2009 Risk quality Risk Premium normalising (*) September 2
Slide 40: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Banco Santander, S.A. Date: January 18, 2008 By: /s/ José Antonio Álvarez Name: José Antonio Álvarez Tit
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