Santander Bank Activity and Results 2011
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Transcript of Santander Bank Activity and Results 2011
1 1
31 January 2012
2 2
Important information
Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the ―SEC‖) could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.
Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.
Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.
3 3
Agenda
■ Group performance 2011
— Highlights
— Results
■ Business areas performance 2011
■ Conclusions
■ Appendix
4 4 2011 Highlights
In a year of mounting complexity, priority was given to balance sheet strengthening, backed by high profit generation
Note: Provisions and extraordinary capital gains are net of tax
Solid generation of recurring results
Pre-provision profit: € 24,373 mill.
Profit before extraord.: € 7,021 mill.
1
Balance sheet strengthening
Real estate coverage: 50%
Core capital (BIS II): 10.02%
3
Extraord. provisions (-3,183 mill.) doubled capital gains (1,513 mill.)
Attributable profit: € 5,351 mill.
2
Shareholder return above market
Total shareholders return (TSR):
SAN > Euro Stoxx Banks
4
5 5
Revenues and expenses
In 2011 Santander maintained an excellent track record in pre-provision profit, fuelled by solid revenues ...
EUR Billion
33.5
15.0
39.4
16.4
42.1
18.2
44.3
19.9
2009 2010 2011
Gross income Expenses
Pre-provision profit
2008 2009 2010 2011
18.5
23.0 23.9 24.4
EUR Billion
2008
1 Solid generation of recurring results
... placing us among the small group of banks generating pre-provision profit of around EUR 25 bn.
Net operating income
6 6 Solid generation of recurring results
EUR 7,021 million of recurring profit, absorbed the market's impact on trading gains and the larger provisions made in the year
Group's quarterly
RECURRING attributable profit
EUR Million
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
2,215 2,230
1,635
2,101 2,108
1,393
1,803 1,717
Group's RECURRING
attributable profit
EUR Million
2010 2011
8,181
7,021 -14%
1
7 7
Sale of Insurance
Holding Latam
SCF USA transaction
Capital gains and extraordinary provisions 2
Impact on 2011 results net of tax
Furthermore, strong effort in extraordinary provisions, well above the capital gains obtained
(*) Not including capital gains from agreement to sell the bank in Colombia, which are to be registered in 2012
872 -620
641 -893
-1,670
1,513
-3,183
Amortisation of intangibles,
pensions and other
Not required
Portfolio writedowns
Spain real estate 1,812
Portugal goodwill 600
Funds established before tax
Extraordinary* capital gains
Extraordinary provisions
EUR million
8 8
7,021
8,534
5,351
+1,513
-3,183
After the effort made in provisions, accounting profit was EUR 5,351 million
2
Capital gains* RECURRING attributable profit
TOTAL Provisions Attributable profit
Capital gains and extraordinary provisions
(*) Not including capital gains from agreement to sell the bank in Colombia, which are to be registered in 2012
EUR million
9 9
2008 2009 2010 2011
10%
31% 31%
50%
Foreclosed real estate Dec. 2011
3
Balance Coverage
8,552
4,278
Coverage ratio: 50%
Coverage ratio evolution
Balance sheet strengthening: Real estate coverage
The provisions established at the end of the year put foreclosed real estate coverage in Spain at 50%
EUR million
10 10
7.53%
9.01%
+0.12% +0.34%
+0.29% +0.25%
+0.20% +0.28%
Balance sheet strengthening: Capital ratio
September 2011 adjusted to EBA criteria
(*)
4th scrip dividend
Exchange preferred
shares
Q4 generation
Current with EBA criteria
(*)
The Group shows its financial strength and flexibility, by anticipating compliance with EBA requirements, which are to be met by June 2012
Core capital evolution (EBA criteria)
(*) Including Valores Santander (compulsorily convertible bonds)
Brazil (4.41%)
3
Disposals Provisions and other
11 11
Core capital evolution
Note: Dec'06 and Dec’07 according to BIS I
The effort made in the quarter resulted in a greater acceleration of Core capital under Basel II criteria
Balance sheet strengthening: Capital 3
Dec'06 Dec'07 Dec'08 Dec'09 Dec'10 Dec'11
5.91% 6.25%
7.58%
8.61% 8.80%
10.02%
12 12
Balance sheet strengthening: Liquidity
Good liquidity position after a stressed year
High structural liquidity surplus (> EUR 120 bn.)
2011 Key aspects
3
Note: Liquidity balance sheet in terms of management (trading derivatives, interbank balances and fixed assets are netted) (*) Including retail commercial paper (**) Including FHLB lines in the US to Sovereign
Liquidity balance sheet Grupo Santander (Dec'11, provisional) Liquidity ratios at comfortable levels:
Approx. EUR 100 bn.
Loans/ Deposits* 117%
Reduced recourse to short
term wholesale funding
High discounting capacity at Central Banks
High issuance capacity in stressful situations
– Moreover, EUR 25 bn. in securitisations placed in
the market
Dep.* + M/LT Funding / Loans > 114%
Assets Liabilities
139
11
750
24
174
40
639
Loans
Deposits*
Funding M/L term**
Financial Assets
Equity / other (net of Fixed Assets)
Funding ST
Securitisation bonds in market
M/LT issues EUR 40 bn.
Maturities EUR 32 bn.
< 2% balance sheet
13 13
Parent bank, Banesto and Portugal
Reduction of commercial gap and lower demand from SCF
… within a different strategy by unit
No need for recourse to wholesale markets in 2012
In 2012 few maturities and favourable commercial dynamics …
3
EUR Billion
2011
40
2012 2013 2014
32 30 24
Group issues* Group maturities
SCF, UK and SOV
SCF: moving towards self-financing
UK: self-financing of commercial activity and good access to markets
SOV.: surplus liquidity
Emerging markets
LatAm: greater focus on deposit
capturing and access to
developing wholesale markets
BZ WBK: surplus liquidity
(*) Excluding securitisations
Balance sheet strengthening: Liquidity
14 14
3.55 3.61 3.78 3.86 3.89
Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
The Group's NPLs continue slightly sliding upwards, because of Spain. SCF, Sovereign and Latam ex-Brazil improved all quarters
%
United Kingdom and USA
%
1.76 1.75 1.82 1.88 1.86
D'10 M'11 J'11 S'11 D'11
UK Sovereign
4.61
4.15 3.76
3.22 2.85
D'10 M'11 J'11 S'11 D'11
Latin America
%
4.91 4.85 5.05 5.05 5.38
D'10 M'11 J'11 S'11 D'11
Brazil
3.07 2.94 2.87 2.84 2.82
D'10 M'11 J'11** S'11** D'11**
Continental Europe
%
4.24 4.57 4.81
5.15 5.49
D'10 M'11 J'11 S'11 D'11
Spain SCF
4.95
4.63 4.42
4.29
3.77
D'10 M'11 J'11 S'11 D'11*
3
(*) In December SC USA began to consolidate by the equity accounted method
(**) On a like-for-like basis, deducting the acquired GE portfolio in Mexico. Including it, 3.08% in June 2011; 2.91% in September 2011 and 2.89% in December 2011
Balance sheet strengthening: Credit quality
Group's Total
Latam Ex-Brazil
15 15
0.66 1.03
1.41 1.41 1.44 1.42
1.10
1.88
2.38 2.11 2.07 2.05
Dec'07 Dec'08 Dec'09 Dec'10 Jun'11 Sep'11
Latest available data for the sector obtained from Central Banks and Council Mortgage Lenders (UK)
0.64 1.95
3.41 4.24
5.15 5.49
0.92
3.37
5.08 5.81
7.16 7.51
Dec'07 Dec'08 Dec'09 Dec'10 Sep'11 Dec'11
1.6 2.1
2.7 2.6 2.6 2.5
2.3
3.2
4.6
3.6 3.3 3.3
Dec'07 Dec'08 Dec'09 Dec'10 Jun'11 Sep'11
2.9
3.4
5.9
3.9 4.3 4.5
3.2
3.2
4.3
3.2 3.5
3.6
3.5 3.8
5.4
4.0
4.5 4.8
Dec'07 Dec'08 Dec'09 Dec'10 Sep'11 Dec'11
Santander
Private Banks
Financial System
Our ratios still compare very well in the main markets where we operate
(Nov)
3
Spain United Kingdom
Brazil Latin America ex Brazil
Balance sheet strengthening: Credit quality
%
% %
%
16 16
Percentage points
(1) Drawn up based on Bloomberg data as of 31-12-2011
TSR: cumulative difference1 with Euro Stoxx Banks Index
Total return above market in short, medium and long term
4 Total shareholder return (TSR)
1 year 3 years 5 years 10 years
+13 p.p.
+29 p.p. +32 p.p.
+54 p.p.
17 17
Agenda
■ Group performance 2011
— Highlights
— Results
■ Business areas performance 2011
■ Conclusions
■ Appendix
18 18 Grupo Santander Results
Solid results in the upper part of the P&L not feeding through to profit because of larger provisions
Net interest income + fees 41,293 +2,334 +6.0 +4.7
Trading gains and other1 2,969 -121 -3.9 -4.9
Gross income 44,262 +2,213 +5.3 +4.0
Operating expenses -19,889 -1,694 +9.3 +6.8
Net operating income 24,373 +519 +2.2 +1.8
Loan-loss provisions -10,562 -304 +3.0 +2.8
Net operating income after provisions 13,811 +215 +1.6 +1.1
Other results and provions2 -2,994 -1,451 +94.0 +92.9
Profit before tax 10,817 -1,235 -10.2 -10.6
Tax and minority interest -3,796 +75 -1.9 -2.0
Profit before extraordinary results 7,021 -1,160 -14.2 -14.7
Net capital gains and extr. provisions -1,670 -1,670 -- --
Attributable profit 5,351 -2,830 -34.6 -35.1
1
2
3
Var. / 2010 % excl. FX EUR Mill. 2011 Amount % and perimeter
(1) Including dividends, equity accounted income and other operating expenses
(2) Including provision for PPI in Q2’11 in the UK (EUR 842 mill. before tax)
19 19 Revenues
Solid basic revenues as the driver of profits
Group's Gross income
1
(1) Basic revenues: Net interest income + fees + insurance activity (2) Trading gains + dividends + equity accounted income + other operating expenses
Basic revenues1
2011/2010:
+EUR 2,349 mill.; +6%
SCF (organic and
inorganic growth)
BZ WBK entry
Latam's dynamism +2,160
Mature markets
+672
+619
-1,102
2011/2010
2008 2009 2010 2011
30,249 35,718 39,336 41,685
3,240
3,663 2,713
2,577
33,489
39,381 42,049 44,262
Other revenues2
+32%
Basic revenues1
EUR Million
20 20 Expenses
Different management by units and businesses
Group's expenses
EUR Million
2
Expenses
2011/2010:
+ EUR 1,694 mill.; +9%
Develop franchises and businesses in mature ones (Germany, UK, USA, GBM)
Investments to capture growth in emerging markets
Latam: +938
BZ WBK: +324
+493
2011/2010
Reduction in retail units in Spain and Portugal
-61
2008 2009 2010 2011
14,949 16,421
18,196 19,889
+33%
21 21
Loan-loss provisions
Provisions still high at the current moment of the cycle …
3
Net loan-loss provisions1
EUR Million
(1) Including country-risk
… with performance impacted by the lower use of generic ones
Specific provisions
EUR Million
Use of generic provisions
EUR Million
2008 2009 2010 2011
7,659
11,760 12,342 11,137
2008 2009 2010 2011
6,601
9,484 10,258 10,562
+60%
2008 2009 2010 2011
-1,159
-2,159 -2,086
-569
22 22
GrupoSantander
Peersaverage
Europeanpeers avg.
3.6% 2.9%
2.4%
+5.3%
-0.1% -0.2%
Grupo Santander
Peers average
European peers avg.
Comparison vs. competitors*
Better performance in revenues and efficiency, and not yet taking
advantage of the normalisation of provisions as done by our peers
Var. 2011/2010
% / ATAs 2011
(*) According to the latest available information from each entity. “Peer Group” are large banks that because of their size, characteristics and /or degree of direct competition are the reference ones to surpass: Banco Itaú, BBVA, BNP Paribas, Credit Suisse, HSBC, ING Group, Intesa Sanpaolo, JP Morgan, Mitsubishi, Nordea, Royal Bank of Canada, Societe Generale, Standard Chartered, UBS, Unicredito and Wells Fargo.
C16
C15
C14
C13
C12
C11
C10
Peers avg.
C9
C8
C7
C6
C5
C4
C3
C2
C1
Grupo SAN
77.6
77.6
64.7 64.0
61.0 61.0 60.0
59.7 59.4 59.2
56.8 54.9 54.1
53.2 52.2
48.5
46.7
44.9
Data 2011 in %
C16
C15
C14
C13
C12
C11
C10
C9
Peers avg.
C8
C7
C6
C5
C4
C3
C2
Grupo SAN
C1
-0.05
0.03 0.19 0.22 0.27 0.30 0.33
0.74 0.79 0.97 1.00 1.01 1.02 1.10 1.12 1.13
1.41 4.66 -0.08
0.00
-0.31
0.00
-0.31
-0.14
-1.25
0.33
-0.94
-0.24
-0.04
-0.12
-0.09
-0.06
-0.07
-0.29
0.08
-0.09
Y-o-Y var. Data 2011 in %
Efficiency Revenues Net provisions/loans
Gross income
Gross income / Assets
23 23
■ Group performance 2011
— Highlights
— Results
■ Business areas performance 2011
■ Conclusions
■ Appendix
Agenda
24 24
2010 2011
404 526
3%
28%
10%
7% 6% 6%
12%
9%
4%
2% 13%
Sovereign
UK
Portugal
Global Europe
SCF Poland
(BZ WBK)
Brazil
(1) Over operating areas 2011 attributable profit
Continental Europe
2010 2011
3,355 2,849
EUR Million
-15%
Constant EUR Million
LatAm Ex-Brazil
Constant US$ million
2011 Attributable profit1
UK and Sovereign
Mexico
Brazil
Profit distribution by geographic area
Results are underpinned by the Group’s diversification and by managing the different growth stages in each market
2010 2011
1,941
1,145
-41%
UK Sovereign
+30%
2010 2011
2,578 2,856
+11%
2010 2011
3,915 3,629
Other
Latam
Chile
SAN network + Banesto
Constant US$ million
-7%
25 25
Continental Europe 2011
Networks and wholesale business impacted by macroeconomic environment and market's evolution. SCF growing strongly and Poland's incorporation
Attributable profit: EUR 2,849 mill.
Var. 2011 / 2010 (%)
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+8%
+4%
+12%
-2%
-6%
-15%
Unit's profit
Var. / 2010 EUR Million
-22%
-69%
-62%
+52%
-48%
SAN network
Banesto
Portugal
Poland (BZ WBK)*
SCF
Other (GBM, Asset Mgmt., ...)
660
130
174
232
1,228
424
Basic revenues
EUR Million
2010 2011
13,713
14,867
+8%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
3,568 3,432 3,406 3,306 3,554
3,884 3,773 3,656
+11%
+22%
(*) Corresponds to the Group's attributable profit (9 months). Proforma growth in local criteria year 2011/2010
26 26 Santander Branch Network 2011
Activity
Net interest income return
Basic revenues
Net operating income / provisions
EUR Million
EUR Million
Loans Deposits*
Var. in EUR billion
Loans / deposits ratio*
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
691 576
497 462 588 639 588 538
2010 2011
4,220 4,334
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
1,184 1,060 1,002 974
1,072 1,136 1,094 1,031
2010 2011
1,136 916
2,227 2,353
+6%
-19%
+16%
+6%
(*) Including retail commercial paper
1.43% 1.15%
1.36%
2.92% 3.26%
3.65%
Q4'10 Q2'11 Q4'11
Return / Cost
Return
Cost
Net interest inc. / ATAs
2010 2011
2.70%
2.95%
+3%
Improved net operating income fuelled by higher revenues (impacted in last quarters by deposit competition). Larger provisions due to end of generic ones
Prov.
Net op. income after LLPs
Net op. income
-3.9 -8.7
+13.2
-1.8
2010 2011 2010 2011
159
130 122
2009 2010 2011
27 27
2010 2011
666 451
1,376 1,112
2010 2011
2,187 2,017
Banesto 2011
Banesto's trends are similar to those of the Santander Branch Network. Profit impacted by provisions to increase coverage of foreclosed real estate
Activity
Net interest income return
Basic revenues
Net operating income / provisions
1.94% 1.66% 1.70%
2.92% 3.21%
3.61%
Q4'10 Q2'11 Q4'11
EUR Million
EUR Million
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
384 362 317 312
273 324
280 235
-8%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
601 570 535 481 489 525 516 486
-24%
+1%
-19%
-32%
Net operating income
(*) Excluding Repo's. Including retail commercial paper (**) Retail Banking
Return / Cost Net interest inc. / ATAs**
Loans Deposits*
Var. in EUR billion
Loans / deposits ratio*
Prov.
Net op. income after LLPs
Return
Cost
+0.2
-6.8
+7.1
-6.2
2010 2011 2010 2011
136 127 134
2009 2010 2011
2010 2011
2.22%
2.44%
Net op. income
28 28
Spain1. Customer lending and NPLs
Gross loans
Dec'09 Dec'10 Dec'11
31 27 23
108 105 105
31 30 26
64 61
59
10 12
12
245 236
225
TOTAL
-12% -14%
NPL ratio
3.4 4.2
5.5
2.5
2.2 2.7 2.4
3.1 3.5
11.1
17.0
28.6
Dec'09 Dec'10 Dec'11
%
Of note in lending was the drop in loans with real estate purposes (-14%) and the maintaining of balances with other companies
EUR Billion
Companies w/o construc. and real estate
Real estate purpose
Household mortgages
Public sector
Other loans to individuals
With real estate
purpose
Total portfolio
Spain
Other portfolio
Household
mortgages
(1) Including Santander Branch Network, Banesto, GBM Spain, Santander Consumer Finance Spain and Banif
29 29
LOANS. Real estate purpose
EUR million
Dec'08 Dec'09 Dec'10 Dec'11
37,688 31,127
27,334 23,442
- €14,246 mill.; -38%
Loans with real estate purpose. Evolution and coverage
-14%
EUR million
Q1 Q2 Q3 Q4
-1,229
-758 -978
-849
2011 quarterly evolution
NPLs and substandard
Active management focusing on balances reduction and coverage increase
Amount Coverage
6,722
2,211
2010 2011
29%
33%
Coverage NPLs Dec'11
2010 2011
12% 16%
Coverage Substandard Dec'11
(*) 100% are up to date with payments
EUR million
Amount* Coverage
3,916
613
EUR million
30 30 Real estate coverage. Evolution and coverage
Foreclosed REAL ESTATE (gross amount)
Quarterly evolution in 2011
Foreclosed real estate. Coverage
2008 2009 2010 2011
10%
31% 31%
50%
Coverage evolution
Good quarterly performance and big effort in coverage, anticipating future regulatory requirements
EUR million EUR million
Dec'08 Dec'09 Dec'10 Dec'11
4,765 6,521 7,509 8,552
Balance Coverage
8,552
4,278
Coverage: 50%
Q1 Q2 Q3 Q4
+373 +453
+225
-7
EUR million
31 31
-2.0
-3.4
2011 Plan
Achieved in the year
Dec'10 Dec'11
49 45
-6%
+8%
Deposits Loans
Portugal 2011
Managing a “bail-out” scenario and deleveraging
Deleveraging process
continues
Balance sheet
reduction
Reduction of
commercial GAP
Total Assets (€ Bn.)
Activity
% var. Dec’11/Dec’10
-10%
Basic revenues
Net operating income / provisions
EUR Million
EUR Million
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
192 188
138 132 151
112 93 88
2010 2011
1,118 959
-14%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
293 289 273 262 273 242 225 219
2010 2011
540
237
650
443
-32% -33%
-16%
-56%
EUR billion Prov.
Net op. income after LLPs
Net op. income
32 32 Portugal. Troika inspection results
Without provisions deficit (-EUR 838 mill. in the sector) …
Outstanding results of Santander Totta after the "Special Program Inspection" carried out by the Troika
… and improved Tier I, after RWA's review
Deficit in million
San. Totta
C1
C2
C3
C4
C5
C6
0
-125
0
-381
-153
-90
-43
Tier I Improvement / Loss
San. Totta
C1
C2
C3
C4
C5
C6
+0.1%
-0.3%
-0.2%
-0.8%
+0.1%
+0.0%
+0.0%
Note: Competitors: BES, BPI, Millenium, Caixa Geral de Depositos, B. Funchal and Caixa Economica Montepio Geral
33 33
Santander Consumer Finance 2011
Sharp profit increase, fuelled by the main units and excellent credit management
2.75%
1.98%
4.99% 5.05%
2010 2011
2.24 3.07
Loans* Deposits
+16%
+28%
Var. Dec’11 / Dec’10
Total portfolio = EUR 63 billion
EUR billion
Germany
Italy
Spain
Nordic countries
Other Eurozone
UK
Poland
30
8
7
7
4
4
3
+39%
Var. Dec’11 / Dec’10
-4%
-11%
+10%
+1%
+9%
-10%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
786 825 890 860 920 917 900 866
2010 2011
4,618
5,290
+15%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
1,068 1,114 1,218 1,217
1,324 1,322 1,320 1,325
2010 2011
1,344 1,972
3,361 3,604
+47%
+9%
+7%
+1%
Note: In December SC USA began to consolidate by the equity accounted method (*) Before impact from consolidated by the equity accounted method from SC USA. Considering impact: -7%
Activity Basic revenues
Net operating income / provisions
EUR Million
EUR Million
Net operating income
Prov.
Net op. income after LLPs
Net op. income
Net int. inc. /provisions (o/ATAs) Volumes
Provisions
Net interest income
34 34 Poland (BZ WBK) 2011 Data in local criteria. Constant EUR million
(*) 2010 proforma information.
Loans and deposits growth since its incorporation to the Group
Results* show sharp growth over 2010
Mar'11 Dec'11
2,578 2,820
5,148 6,025
7,726 8,845
Total
Loans
+14%
+17%
+9%
Mar'11 Dec'11
5,711 6,082
3,516 4,423
9,227 10,505 Total
Deposits
+14%
+26%
+6%
Basic revenues
Provisions
2010 2011
770 834
+8%
Expenses
2010 2011
429 468
+9%
2010 2011
102 89
-13%
2010 2011
237
288 +22%
Attributable profit
Companies
Individuals
Companies
Individuals
35 35
36 36
United Kingdom 2011
Results affected by sluggish activity, regulatory impacts and PPI1 provision
(1) After provision of sterling 538 million (net of tax) in Q2’11 for possible claims related to payment protection insurance (PPI).
(2) Loans to SMEs: +25% (3) Excluding GBM and other deposits amounts of £13 bn. as of December 2011
Attributable profit1: £ 993 mill. (EUR 1,145 million)
Var. 2011 / 2010 in £ (%)
Activity
Dec'10 Dec'11
166 166
Dec'10 Dec'11
153 149
£ Bill. Local criteria
+0% -3%
Core Non core
2010 2011
2,404 2,202
3,201
2,710
Net operating income / provisions
£ Mill.
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
830 825 805 741 729 728 666 586
-21%
-15%
-8%
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
-9%
+1%
-15%
-8%
-41%
Prov.
Net op. income after LLPs
Net op. income
Mortgages Companies' loans Deposits3
Dec'10 Dec'11
27 31 +16%2
37 37
38 38
Brazil 2011
Continue growth of basic revenues underpinned by larger volumes. Profit impacted from lower trading gains, larger provisions and minority interests
Attributable profit: US$ 3,629 mill. (EUR 2,610 million)
Var. 2011 / 2010 in constant US$ (%)
(1) Local currency (2) Including "letras financeiras"
Activity1
Net int. inc. /provisions (o/ATAs)
Loans Deposits
+20%
+12%
Var. Dec’11 / Dec’10
Volumes
Provisions
Net interest income
Basic revenues
Net operating income / provisions
Constant US$ million
Constant US$ million
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
3,058 3,031 3,148 3,295 3,375 3,522 3,497 3,458
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
4,586 4,662 4,733 4,912 5,177 5,296 5,362
5,655
+5%
+15%
2010 2011
18,893
21,490
2010 2011
7,372 7,585
12,533 13,852
+11%
+3%
+14%
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+14%
+11%
+12%
+11%
+3%
-7%
Prov.
Net op. income after LLPs
Net op. income
2.67% 2.79%
7.53% 7.47%
2010 2011
4.68 4.86
2
39 39
40 40
Latin America Ex-Brazil 2011
Profit increase spurred by retail banking: faster growing basic revenues and lower cost of credit. Negative impact from trading gains in Q4'11
+46%
Var. o/ 2010
-9%
+8%
+46%
-6%
-70%
-17%
Attributable profit by country
Mexico
Chile
Argentina
Colombia
P. Rico
Uruguay
Other
1,301
849
399
81
47
28
151
Attributable profit: US$ 2,856 mill. (EUR 2,054 million)
Activity1
Loans Deposits
+16% +13%
Var. Dec’11 / Dec'10
2010 2011
8,056 8,701
+8%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
1,938 2,030 2,013 2,075 2,058 2,152 2,213 2,278
+10%
Basic revenues
(1) Constant currency (2) Excluding New York branch (3) Excluding minority interests: Mexico +22%; Total area: +4%
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+8%
+6%
+14%
0%
+0%
+11%
Net int. inc. /provisions (o/ATAs) Volumes2
Provisions
Net interest income
Constant US$ million
Constant US$ million Var. 2011 / 2010 in constant US$ (%)
3
0.91% 0.80%
3.90% 3.76%
2010 2011
2.96 2.99
3
41 41
2010 2011
2,985 3,241
Mexico 2011
Profit fuelled by strong basic revenues and lower provisions needs. Moreover, positive impact from minority interests
(1) Local currency (2) Excluding perimeter: +22%
Attributable profit: US$ 1,301 mill. (EUR 936 million)
Activity1
Loans Deposits
+31%
+11%
Var. Dec’11 / Dec’10
2
Basic revenues
Net operating income / provisions
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
515 491 501 422
509 523 464 433
+9%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
744 757 743 741 768 780 847 846
+3%
+14%
2010 2011
1,299 1,459
1,930 1,928
0%
+12%
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+9%
+4%
+12%
0%
+12%
+46%
Prov.
Net op. income after LLPs
Net op. income
Net int. inc. /provisions (o/ATAs) Volumes
Provisions
Net interest income
Constant US$ million
Constant US$ million
Var. 2011 / 2010 in constant US$ (%)
1.16% 0.77%
3.98% 3.81%
2010 2011
3.04 2.82
42 42
Chile 2011
Activity continued to grow strongly, focused on deposits. In Q4’11 recovered revenues in UF portfolio and normalisation in provisions
(1) Local currency
Attributable profit: US$ 849 mill. (EUR 611 million)
Activity1
Loans Deposits
+7%
+20%
Var. Dec’11 / Dec’10
0.94% 0.98%
4.35% 3.99%
2010 2011
3.01 3.41
2010 2011
2,725 2,798
Basic revenues
Net operating income / provisions
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
463 456 456 431 442 487 385
444
+3%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
646 706 686 687 666
730 675
726
+3%
+6%
2010 2011
1,356 1,229
1,806 1,757
-3%
-9%
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+3%
+2%
+10%
-3%
-9%
-9%
Prov.
Net op. income after LLPs
Net op. income
Net int. inc. /provisions (o/ATAs) Volumes
Provisions
Net interest income
Constant US$ million
Constant US$ million
Var. 2011 / 2010 in constant US$ (%)
43 43
44 44 Sovereign 2011
Larger revenues, increased commercial activity and sharp improvement in credit quality. In 2012 conversion to National Bank Association
Attributable profit: US$ 732 mill. (EUR 526 million)
Activity and return1
Var. 2011 / 2010 in US$ (%)
(1) Local currency
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+9%
+10%
+9%
+34%
+30%
-12%
-1%
+5%
-8% -4%
+13%
Dec’09 Dec’10 Dec’11 Dec’09 Dec’10 Dec’11
0.97% 0.71%
3.30% 3.21%
2010 2011
Provisions
2010 2011
872 1,165
1,547 1,685
Net operating income / provisions
US$ Mill.
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
385 382 401 378 422 418 432 413
+9%
+9%
+34%
Net operating income
Prov.
Net op. income after LLPs
Net op. income
Y-o-Y change. US$
Loans Deposits Net interest income /
provisions (% / ATAs)
Net interest income
2.50 2.33
Note: Loans data (excl. securitisations) and deposits under US GAAP
45 45
46 46
Corporate Activities
Larger trading gains (fx hedging) offset the negative impact from funding costs and lower tax returns
Attributable profit
(Change 2011 vs. 2010)
Main effects:
Net interest income -344
Trading gains +746
Other results and taxes -274
Impact on profit: +128
Net capital gains and extraord. provisions -1,670
Total impact on profit: -1,542
EUR Million
47 47
■ Group performance 2011
— Highlights
— Results
■ Business areas performance 2011
■ Conclusions
■ Appendix
Agenda
48 48
2012 Outlook
Santander is facing the year from a solid starting point
High capacity to generate
results
EUR 24 bn. Pre-provision
profit
Quality balance sheet
50% coverage of
foreclosed real estate in Spain
High capital levels
9% Core capital
EBA
49 49 Santander 2012 outlook
In 2012 Santander will maintain a differentiated management by areas
Markets being adjusted
Spain and Portugal:
Deleveraging process continues
Managing liabilities spreads
Balance sheet strengthening
Growing markets
Latin America: focus on revenues, maintaining investment effort, taking advantage of good macroeconomic trends
Poland: full integration and delivery of announced targets
Developing markets / business
UK: continue to develop franchise (mainly companies)
USA: the new platform and the change from charter will enable a wider range of products and customer profiles
SCF: consolidate reached position and maintain profitability above competitors
50 50
■ Group performance 2011
— Highlights
— Results
■ Business areas performance 2011
■ Conclusions
■ Appendix
Agenda
51 51
Group's balance sheet
52 52
Assets Liabilities
750
99
96
214
58
639
76 37
112 120
160 143
1,252 1,252
Main trends of the Group’s balance sheet
Retail balance sheet, appropriate for the business nature of low risk, liquid and well capitalised
(*) Other assets: Goodwill EUR 25 bn., tangible and intangible assets 17 bn., other capital instruments at fair value 1 bn., accruals and other accounts 53 bn.
(**) Including retail commercial paper
Balance sheet at December 2011
EUR billion
1
6
5
4
3
2
Lending: 60% of balance sheet
Derivatives (with counterpart on the liabilities side): 9% of balance sheet
Cash, Central Banks and credit institutions: 13%
Other (goodwill, fixed assets, accruals): 8%
Available for sale portfolio (AFS): 6%
Trading portfolio: 4%
1
3
2
4
5
6
Loans to
customers
Derivatives
Cash and credit institutions
Other*
AFS Portfolio
Trading portfolio
Customer Deposits**
Issues and subordinated
liabilities
Shareholders’ equity & fixed liabilities
Credit institutions
Other
Derivatives
53 53
Secondary segments results
54 54 Retail Banking
Single-digit growth in net operating income after provisions due to recovered basic revenues and flat provisions
Attributable profit: EUR 6,893 million
Activity
EUR Billion
Basic revenues
Gross income
Expenses
Net operating income
Net op. income afterprovisions
Attributable profit
+7%
+6%
+10%
+3%
+3%
-9%
Deposits2 Loans
+2% +5%
(1) Net interest income + fees + insurance activity (2) Including retail commercial paper
2010 2011
36,549 39,206
Basic revenues1
Net operating income / provisions
EUR Million
EUR Million
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
5,448 5,640 5,621 5,380 5,685 5,980 5,675 5,476
+7%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
8,837 9,239 9,357 9,115 9,556 9,857 9,870 9,923
+2%
+9%
2010 2011
11,944 12,358
22,088 22,817
+3%
+3%
Var. 2011 / 2010 in euros
Prov.
Net op. income after LLPs
Net op. income
Dec'10 Dec'11
650 666
Dec'10 Dec'11
513 538
55 55
Global Wholesale Banking (GBM)
Customer revenues resilient to the environment. Impact from markets on revenues and from investments on costs
Gross income
EUR Million
2010 2011
4,414 4,056
5,150 4,675
-9% -17%
Gross income
Net operating income / provisions
EUR Million
2,309 2,351
1,387 1,293
78 56
640 356
736
619
2010 2011
-9%
-29%
+2%
Customer revenues
-44%
-16%
TOTAL
Trading
-7%
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
1,082 1,199 1,042 1,090 1,127 1,053 976 900
282 104 188 162 210
148 122
140
1,364 1,303 1,230 1,252 1,337 1,201 1,098
1,040
Total
Trading
Customers
Total
Trading
Customers
(1) Including Global Transaction Banking and Credit
EUR Million
Net operating income
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
1,023 922 848 865 943
782 680 627
-28%
2010 2011
3,656 2,891
3,658
3,032
-17%
-21%
-8%
5,150
4,675
Prov.
Net op. income after LLPs
Net op. income
Investment banking
Corporate banking1
Hedging of interest /
exchange rates
Equities
56 56
Asset Management and Insurance
High contribution to the Group via revenues and profits: 9% of the operating areas total revenues (+9% / 2010)
Group total revenues
EUR Million
2010 2011
739 754
EUR Million
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
169 196 187 186 202 216
190 147
-21%
+2%
Net operating income 2010 2011
3,966 4,334
Insurance Asset Management
2010 2011
1,278 1,251
2010 2011
2,688 3,083
+15%
+9%
-2%
2010 2011
1,081 1,088
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
243 276 272 291 288 302 275 222
(*) Impact from sale of Latam insurance companies (-€ 64 mill.)
Gross income
EUR Million +1%
-23%
(*) Impact from sale of Latam insurance companies (-€ 53 mill.)
*
*
57 57
Summary Group coverage ratios
58 58
%
%
46 45 41 40 38
D'10 M'11 J'11 S'11 D'11
UK Sovereign
75 82 85
93 96
D'10 M'11 J'11 S'11 D'11
%
101 104 102 100 95
D'10 M'11 J'11 S'11 D'11
110 114 114 111 104
D'10 M'11 J'11** S'11** D'11**
%
58 53 49 46 45
D'10 M'11 J'11 S'11 D'11
SCF
128 122 128 132
113
D'10 M'11 J'11 S'11 D'11*
Summary Group coverage ratios
73 71 69 66 61
Dec'10 Mar'11 Jun'11 Sep'11 Dec'11
United Kingdom and USA Latin America
Continental Europe Group's Total
Brazil
Spain
Latam Ex-Brazil
(*) In December, SC USA began to consolidate by the equity accounted method
(**) On a like-for-like basis, deducting the acquired GE portfolio in Mexico. Including it: 110% in June 2011 and 108% in September and 102% in December 2011.
59 59
Main units spreads and NPL ratios
60 60 Continental Europe. Main units spreads (%)
2.10 1.94 1.83 1.83 1.90 1.97 2.03 2.01
0.50 0.10 0.04 0.06 0.05
0.56 0.65 0.53
2.60 2.04 1.87 1.89 1.95
2.53 2.68 2.54
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
2.02
2.00 1.92 1.99 2.03
2.08 2.12 2.16
0.18 -0.35 -0.51 -0.52 -0.36
0.12 0.42 0.36
2.20
1.65 1.41 1.47 1.67
2.20 2.54 2.52
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
1.76 1.82 1.82 1.88 1.96
2.06 2.15 2.23
0.09 0.10 0.21 0.23 0.12 -0.31 -0.47 -0.78
1.85 1.92 2.03 2.11 2.08
1.75 1.68 1.45
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
5.90 6.19 6.72 6.94 6.69 5.99 5.98 6.06
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans
SAN Branch Network Banesto Retail Banking
Santander Consumer Lending Portugal Retail Banking
61 61 Continental Europe. NPLs and coverage ratios
(1) Santander Branch Network's NPL ratio was 8.47% and coverage ratio 40% as of Dec'11
(2) In December, SC USA began to consolidate by the equity accounted method
Banco Santander1
3.61% 3.65% 3.79% 4.24% 4.68% 5.08% 5.63% 5.99%
66% 61% 61% 54% 49% 44% 39% 39%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
Banesto
Santander Consumer2
Portugal
2.32% 2.40% 2.43% 2.90% 3.03% 3.25% 3.78% 4.06%
64% 65% 69% 60% 62% 62%
53% 55%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
5.12% 5.23% 5.13% 4.95% 4.63% 4.42% 4.29% 3.77%
108% 111% 122% 128% 122% 128% 132%
113%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
3.13% 3.49% 3.83% 4.11% 4.31% 4.54% 4.69% 5.01%
61% 58% 60% 54% 52% 52% 53% 53%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
62 62
LOANS with real estate purpose
Foreclosed REAL ESTATE (gross amount)
EUR Million
Dec’11 Dec’10 Var.
Finished buildings 11,805 12,709 -904
Buildings under constr. 1,985 2,548 -563
Developed land 3,118 3,678 -560
Building land 1,553 2,023 -470
Other land 244 252 -8
Non mortgage guarantee 4,737 6,124 -1,387
Total 23,442 27,334 -3,892
EUR Million
Gross amount
Coverage Net amount
Loans with real estate purpose and foreclosed real estate in Spain
Finished buildings 3,753 25% 2,826
Buildings under constr. 521 25% 391
Developed land 2,661 39% 1,615
Building land 1,339 40% 798
Other land 279 42% 162
Sub Total 8,552 32% 5,792
Fund pending
distribution 18%
Total 8,552 50% 4,275
63 63 United Kingdom. Spreads and NPL ratios
(%)
2.05 2.13 2.20 2.28 2.34 2.35 2.42 2.49
-0.06 -0.14 -0.17 -0.25 -0.30 -0.38 -0.46 -0.50
1.99 1.99 2.03 2.03 2.04 1.97 1.96 1.99
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
1.88% 1.85% 1.77% 1.76% 1.75% 1.82% 1.88% 1.86%
46% 46% 48% 46% 45% 41% 40% 38%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
Spreads Retail Banking NPL and coverage
64 64 Spreads main countries Latin America (%)
15.26 15.29 14.73 14.29 14.72 15.05 14.23 14.44
0.87 0.94 1.08 1.13 1.12 1.12 1.18 1.00
16.13 16.23 15.81 15.42 15.84 16.17 15.41 15.44
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
10.03 9.50 9.20 8.93 8.58 8.40 8.27 8.36
2.05 1.92 2.03 2.05 2.09 2.04 1.99 1.96
12.08 11.42 11.23 10.98 10.67 10.44 10.26 10.32
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
5.24 5.03 4.76 4.52 4.38 4.14 4.18 4.35
2.25 2.30 2.27 2.17 3.09 2.90 2.65 2.52
7.49 7.33 7.03 6.69 7.47 7.04 6.83 6.87
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
Retail Banking Brazil Retail Banking Mexico
Retail Banking Chile
65 65 Latin America. NPLs and coverage ratios
(1) On a like-for-like basis, deducting the GE acquired portfolio. Including it, NPL ratio: June 2.45%; September: 1.78%; December: 1.82% and
coverage ratio: June: 165%, September: 176%, December: 176%
Brazil
5.04% 5.01% 4.97% 4.91% 4.85% 5.05% 5.05% 5.38%
100% 98% 98% 101% 104% 102% 100% 95%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
Mexico1
Chile
1.86% 1.77% 2.20%
1.84% 1.58% 1.63% 1.45% 1.48%
268% 257%
199% 215% 234% 222% 217% 218%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
3.36% 3.31% 3.58% 3.74% 3.80% 3.65% 3.63% 3.85%
99% 97% 94% 89% 89% 89% 88% 73%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
66 66 Sovereign. Spreads and NPL and coverage ratios
(%)
1.94 1.96 2.04 2.08 2.16 2.24 2.22 2.29
0.94 0.99 0.62 0.53
0.78 0.66 0.40 0.46
2.88 2.95 2.66 2.61
2.94 2.90 2.62 2.75
Q1'10 Q2 Q3 Q4 Q1'11 Q2 Q3 Q4
Loans Deposits Total
5.14% 5.11% 4.80% 4.61% 4.15% 3.76% 3.22% 2.85%
64% 67% 72% 75% 82% 85%
93% 96%
Mar'10 Jun Sep Dec Mar'11 Jun Sep Dec
NPLs Coverage
Spreads Retail Banking NPLs and coverage
67 67