Santander Brasil

Santander Cards BusinessSantander Cards Business

May 12, 2010

2

This presentation was prepared by Banco Santander (Brasil) S.A. It is provided forp p p y ( ) pinformational purposes only and does not constitute an offer to sell or a solicitationto buy any security. It may contain forecasts about future events. Thesepredictions/estimates evidently involve risks and uncertainties, whether foreseen ornot by the Company. Therefore, the future results of the Company may differ fromy p y p y ycurrent expectations. Past performance and/or these predictions are not guaranteeof future performance. The Company is not obliged to update the presentation/suchforecasts in light of new events or circumstances.© 2010 by Banco Santander (Brasil) S.A.. All Rights Reserved.y ( ) g

3

Agenda

Overview of Brazilian Cards Industry

Santander Cards IssuerSantander Cards Issuer

Santander Cards Acquirer

4Overview of Brazilian Cards IndustryCards industry continues to show substantial growth rates, even considering the competitive scenario consolidation and recent regulation changes

600

Total industry debit + credit cards and spend

400

500

200

30018.8% a.a.

23.7% a.a.

0

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

# cards (MM) Total Spend (R$ bn)

Source: ABECS. Prepared by Ferrés Consultoria.

5Overview of Brazilian Cards IndustryCards transactions have been strongly replacing checks transactions last 10 years

In billions transactions (cards include debit + credit)

7

4

5

6

21% a.a.

2

3

4

‐8.1% a.a.

0

1

2

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Cards Checks

Source: ABECS and BCB. Prepared by Ferrés Consultoria.

6Overview of Brazilian Cards IndustryLower income population’s tool as formal payment means and bank services inclusion

Total AB C DEEconomic classes

For classes D/E the ratio of card holder is higher than check account holders

Card holders (% of pop.)Cards 67% 81% 64% 36%Credit Cards 45% 61% 38% 20%Credit Cards 45% 61% 38% 20%Debit Cards 53% 70% 49% 19%

Check accounts holders (% of pop ) 67% 82% 64% 33%Check accounts holders (% of pop.) 67% 82% 64% 33%

Source: Researches Abecs. Survey on 11 metropolitan areas.

7Overview of Brazilian Cards IndustryThe relative lower participation as a mean of payment shows a relevant up side opportunity for Brazilian Cards Industry

(1)Higher utilization of cards in private consumption (1)

12.4% 14.0% 15.8% 17.1% 19.1% 21.4%

2003 2004 2005 2006 2007 2008

...but below developed countries (2)

2X

(1) Source : ABECS and IBGE

(2) Source: ABECS, Bank of International Settlements, United Nations, IBGE

8

Card penetration, average ticket and transactions per card are still low in BrazilOverview of Brazilian Cards Industry

628

Number of cards (MM)

~ 15 MM credit cards / year

104 124 136 153201 217 233 249147 173 196 225

453514 565

628

2007 2008 2009 2010 (e)

Spend (R$ Bn) Average Ticket (R$ per transaction)

Credit Debit Private Label Total

93 98 100 104

68 71 73 75215 256

309302375

444535

CAGR: 21.1% CAGR: 3.7%

48 51 53 5553 52 52 51

2007 2008 2009 2010 (e)

174 215

83 107 129 15845 53 60 68

2007 2008 2009 2010 (e)Credit Debit Private Label Total Credit Debit Private Label Total

Source: ABECS (Associação Brasileira das Empresas de Cartões de Crédito e Serviços)

99

Agenda

Overview of Brazilian Cards Industry

S t d C d ISantander Cards Issuer

Santander Cards Acquirerq

10Santander Cards Issuer – Role in the Value ChainSets rules for issuers and

Issues credit and

acquirers

Card Brands

Captures and processes transactions

Issues credit and debit cards

Issuers Acquirers

Use credit and debit cards

Merchants

cards

Clients

11Santander Cards Issuer – our approachTo be the world’s best integrated cards monoliner within a retail bank…

Retail BankMonoliner Retail Bank

Access to customers’ base

Product focus

Specialized

Monoliner

pcapabilities

Direct channels: Telemarketing / Mailings Brand

Traditional channels: branches / agents

Mailings

Global specialized systems

Economies of scale

Brand

… contributing to improving our local banks’ performance

12Santander Cards Issuer – our model Is based on managing all levers along the product lifecycle …

PORTFOLIO MANAGEMENTACQUISITION

Acquisition Activation RetentionSpending OutstandingsProduct innovation and…

Activation RetentionSpending

r rel

atio

nshi

p Outstandings

PlatinumUnlimited

h of

cus

tom

er

VALUE

Cancellation

Light

FreeReward

Mini Card

Time

Dep

th VALUELight

Flex

Mini Card

Launch strategies

Multichannel management

Specialized risk managementTime

Profitability

… supported by an end-to-end view of RISKS and TECHNOLOGY

13Santander Cards Issuer – our model The Business expansion will be held in two dimensions: Customer Base and Profitability per Account

Increase the profitability by using Card Accountsprofitability by using

the card’s platforms as a distribution channel

for other banking products and services 1Q10

e

Card Accounts

per A

ccou

nt

S i

Personal Loan

Insurance

1Q09

7%

Net

inco

me

Δ P

rofit

abilit

y

Payment Services

Savings Insurance

1Q09 1Q10

10%

Continuous product innovation as a growth

lever

(1) Source: Internal data

lever

14Santander Cards – market positionIn Brazil, where our model is already well established, our market share has improved significantly

Other Banks BANK “A”

Market Share end of 1Q10 increases to

Rev

BANK A

BANK “D”

increases to 9.9%25.30

15 107.10

23.40

3.6 9.4

volving Ba

BANK “C”

BANK “B”

15.10

19.70

9.4

3.52.3

3.6 9.4 alance %

2005 Organic Growth

Santander

Banco Real

Acquisition

Current Dec/2009

%

Note 1: Competitor data as of December, 09, source Competitor Quarter Reports, BCB and internal analysis. Santander´s current Market Share as of December, 09

Note 2: Include non interest bearing due to unpaid balances

15Santander Cards Issuer – continuous growthThe Credit market continues to show substantial growth rates, even considering the competitive scenario consolidation and recent regulation changes

C d (MM) Market SantanderCAGR (06 09)Cards (MM)

Key Observations

~80% of the Cards Market is

Market

136124104

826853

+21%+18%

(04~09)

SantanderCAGR (06~09)

Total Spend (R$ Bi)

~80% of the Cards Market is concentrated at the top 4 Banks (Banco do Brasil, Itaú, Bradesco and Santander)

10875

20090807060504

256

+22%

There is an important opportunity for cards revolving growth

R l t l ti h

256215

17414211595

33261914

+22%+22%

33%

(04~09)

Revolving Balance (R$ Bi)

Relevant regulation changes are being implemented, representing significant opportunities for issuers and

261914

0504 2009080706

25.722 1

+33%

new acquiring business players

22.117.2

13.411.38.22.42.11.71.2

+27% +24%

+26%

(04~09)

Note 1: Source Banco Central do Brasil, including +360 days balance

Note 2: Source ABECs – Brazilian Cards Association

20090807060504

16Santander Cards Issuer – 1Q10 performanceThe business growth is leveraged by Cards Accounts expansion…

Cards Accounts (MM) Key NotesCards (MM)

Cards Accounts has presented sustainable growth,

+13%

+16%

10 0427 890

+20%

+14%

year over year

Cards Accounts growth rate has continuously

9.7458.67410.0427.8907.5426.916

continuously increased quarter over last quarter, reflecting our strategy

1Q104Q091Q091Q104Q091Q09

strategy

YoY growth

Quarter annualized growth

17Santander Cards Issuer – 1Q10 performance… generating relevant revenue increase

Net Fee (R$ MM)

213+25% 213

171

+25%

1Q101Q09

Source: Santander Income Statement 1Q10

181818

Agenda

Overview of Brazilian Cards Industry

Santander Cards Issuer

Santander Cards AcquirerSantander Cards Acquirer

19Santander as Issuer and AcquirerSets rules for issuers and

Issues credit and

acquirers

Captures and processesCard Brand

Issues credit and debit cards

Captures and processes transactions

Issuers Acquirers

Uses credit and debit cards

Merchant

debit cards

Clients

20Santander’s Experience in Other Countries

Sovereign

Puerto RicoUK

Mexico

Colombia

Totta

S i

SantanderArgentina

SpainPortugal

Santander + Acquiring Partners

21New Model: Santander (Acquiring + Financial Services)

rs

Innovative value offerProducts and Services + Acquiring +

Acq

uire

r

Other POS Capturing Services

ACQUIRERSERVICES

FINANCIALSERVICESSERVICES SERVICES

Banks

FINANCIAL SERVICES + ACQUIRING - packaged in a suitable value offer to corporate clients

22Partnership Santander & GetNet

Creation of a Partnership leveraged by GetNet’s p g ytechnological expertise and POS network

Brand

MASTERCARDLicense

Investment in Capturing Network and

License

Integrated value offer – Acquiring and Banking

Business

gProcessing Platform

Other POS Capturing Ser ices

Partnership

Business

Commercial Model –Distribution/Pricing

Communication and

Services

165 POS (Capturing Terminals - 2009)Communication and

Media

Terminals 2009)“Time To Market”

23GetNet Tecnologia

Entrance in the Acquirer industry through a technologicalpartner - GetNet Tecnologia

Technological Platform for capturing, authorizing and the processing of

GETNET TECNOLOGIACampo Bom – RS

CORREA DA SILVA GROUP

transactions

165 thousand POS

Services at Capturing Terminals:

Domestic Capital

N&SP – Network and Service Provider

Customized solutions for capturing, authorization and processing of transactions and information Services at Capturing Terminals:

- Mobile Recharge- “Vale Transporte” (transportation ticket)Recharge - “PAT Alimentação e Refeição” (meal ticket)

transactions and information

Main Clients: Goodcard, Banco BNG, Serasa, Microsoft, Base Card, Wal-Mart, Brasil Telecom, Claro, Tim, Vivo, Telefonica, Oi, Embratel, CTBC, Amazonia Celular, Banco Matone, etc.

PAT Alimentação e Refeição (meal ticket)- “Cartão Convênio” / Private Label / CobrandOver 800 employees

Annual turnover of R$ 2,29 Bn (2009)

24Santander Conta Integrada: Innovative value proposeSantander (Acquiring + Financial Services) & Getnet = Capillarity Synergy and corporate client base + technological knowledge

SECUNDARY BENEFITS:A “Win-win” Relationship: the bank recognizes the

financial volume of the client in transactions made with

Synergy and corporate client base + technological knowledge

Competitive rates for prepayment of receivables

Prepayment of receivables through

financial volume of the client in transactions made with MASTERCARD brand credit card:

Reduction of up to 100% of checking account fee for financial transaction volume over R$ 3 Prepayment of receivables through

POS (pioneer in the market)

Call center support to merchants24hours / 7 days

thousand/month in each POS

5 days without interest rate charge by using overdraft

24hours / 7 days

Mobile Recharge

Guarateed Account or Working Capital limits based on financial transaction volume multiples

negotiated in the POS

SERASA / RECHEQUE* consultancy

Regional cards capture

Corporate current account with integrated bank domicile

POS connection using both dial-up and/or broadband.

* Credit Bureau

25Santander Conta Integrada: products offering engine for companies

Besides seizing the value of a high profitability business, it also provides:

Higher transaction financial volume from corporate clients.p

Loan portfolio growth mitigating the risks.

Increase of corporate client base and improvement of the competitive market position.

Improvement on the relationship with corporate customers and, consequently, increase

of number of products and services per clientof number of products and services per client.

Be the first bank of our corporate client.

GOALS FOR 2012150,000 new current accounts originated via the acquiring business

300,000 new affiliated merchants

A share of 10% in the financial transaction volume of the card market

26Conclusion

S t d i th i i l hi thi i i d l iSantander is the pioneer in launching this acquiring model in Brazil

fThe partnership provides the bank access to a network of more than 160,000 merchants and to GetNet’s know how

The credit card industry is expected to grow around ~20% p.y. and double its size in 4 years

This strategy focuses on strengthening the relationship with SME clients – main competitors are banks

Santander Conta Integrada – “Win-Win” relationship between the bank and small and middle market companies (SMEs)

Investor RelationsJuscelino Kubitschek Avenue 2,235 10th floor

São Paulo | SP | Brazil | 04543-011T l ( 11) 3 3 3300Tel. (55 11) 3553-3300

e-mail: ri@santander.com.br