Presentation Santander Brasil

RNS Number : 1978H

Banco Santander S.A.

31 October 2008

 

Press Release                    

Emilio Botín: 'Our goal is to become the 

number one private bank in Brazil'

The Chairman of Banco Santander presented in Sao Paulo 

Grupo Santander's 2008-2010 Strategic Plan for Brazil 

• 'The Santander-Real integration is not a restructuring. Quite the contrary: it is a plan for growth and expansion' 

• 'In the next two years we will add 400 branches and will invest 2,558 million reais'

• 'Integration synergies will amount to 2,700 million reais'

• 'The Bank's profit in Brazil will amount to 4,800 million reais in 2008, 6,100 million in 2009 and 7,900 million in 2010'

• 'Brazil's macroeconomic situation is the best in decades and it is prepared to face a less favourable international environment'

• Second Vice-Chairman and Chief Executive Alfredo Sáenz said that 'Brazil will be one of the Group's main motors of growth.'

• Fabio Barbosa, Head of Grupo Santander Brazil, said: 'We intend to grow by more than the market in earnings and by less in costs, at the same time as we enhance employee and customer satisfaction.'

Sao Paulo, October 31, 2008 -  Banco Santander Chairman Emilio Botín presented Grupo Santander's Strategic Plan for Brazil for the next two years, affirming that the plan 'is a crucial step in our goal of becoming the leading private bank in the country.' 

'I have no doubt we will become the best bank in Brazil: that is our aspiration,' Botín said. He added, 'With the integration of Santander and Banco Real, we have a unique opportunity to achieve this. Moreover, it is a unique opportunity to play a leading role in the strengthening of the Brazilian financial system.' 

The Santander Chairman explained that 'from the beginning, we knew Banco Real was the best opportunity Santander could have to continue growing in Brazil.' 'The Santander-Real transaction is a perfect strategic fit. First, because it is contributing to our earnings per share from the first year. Moreover, the expected return on investment is 19%. But not only for that. Also, because both banks are absolutely complementary: geographically, with Banco Real present in states and cities where Banco Santander's presence is scarce and, by business, because Real is stronger in the mass market and in small businesses, while Santander is stronger in high net worth individuals and business banking.' 

The Banco Santander Chairman detailed the key elements of the Group's strategy for the next two years: 'We'll invest 2,558 million reais and we expect to raise our income and business volume by 15%.' He added that in the next three years, Santander estimates it will realize synergies of 2,700 million reais in the integration, well above the initial forecast.

'It will be a unique experience because this is not a restructuring. Quite the contrary: We will not reduce our sales; we will increase them. In the next three years we will add 400 branches. We will not lose market share, we are going to grow it. We will not lose customers; we can't afford that in a country where so many millions of people still need to be brought into the banking system. This is a plan for growth and expansion,' he said.

Botín announced that the Bank's profit in Brazil will amount to 4,800 million reais in 2008, 6,100 million in 2009 and 7,900 million in 2010. 'Santander Brazil is one of the most important units of the Group and today contributes 20% of the total profit. It has a great future. We aspire to be the bank with the best quality of customer service, to generate growing and sustainable earnings, to offer an incomparable working environment and to contribute to the development and improvement of society. We'll be the best bank in Brazil,' he said. 

Botín highlighted the strengths that have enabled Banco Santander to become a leading international financial institution. He recalled that the Group is present in over 40 countries, serving more than 80 million customers and that Santander has 2.7 million shareholders. 'Our business model has been successfully exported to very diverse markets. It is focused on retail banking. We have the largest branch network in international banking (over 14,000 branches). Of our profit, 83% comes from retail banking, giving great recurrence and soundness to our earnings,' Botín said. 

He said the Bank's liquidity and capital positions 'reflect Banco Santander's great strength in the light of the sudden changes in financial markets. In terms of liquidity, the Group is backed by a strong retail deposit base, which is our main source of resources. Our ability to look ahead enabled us to take advantage of the favourable market conditions of the last few years, building up considerable amounts of financing through long-term issues. In any case, we have diverse sources of liquidity, both in terms of markets and instruments, and a considerable portfolio of liquid assets on our balance sheet. Our core capital ratio is 6.31%, which is strong for our kind of business. Moreover, we have the capacity to generate 50 basis points of free capital a year through retained earnings, even as we maintain our dividend policy. In short, we are a retail bank, well diversified, with a solid business model, efficient and competitive and able to prove its strength in the current financial crisis,' he added. 

The Banco Santander Chairman reiterated the Bank's commitment to Latin America, which dates from more than 60 years ago. The bank is now the leading financial institution by profit in the region (US$3,648 million in 2007). 'We are a European bank as well as a Latin American bank. This region is the main focus of Banco Santander's international investment: including Banco Real, we have invested USD 36,000 million in Latin America in the last ten years. Of this, 75% has been invested in Brazil. It is very clear that Brazil is a priority in our international strategy.'

He pointed out that Brazil is weathering the crisis better than most countries. 'Brazil has been able to take advantage of the favourable international situation of the last years to pave the way for sustainable future growth. It is inevitable that the impact of the international financial crisis is being felt. It has been one of the last countries to be affected, but the length and magnitude of the crisis is producing strong declines in economic activity around the world. In a globalized world, no country can be immune to these events. However, Brazil's macroeconomic situation is the best in decades and it is prepared to face a less favourable international environment.'

Botín also pointed out that the Group registered a profit of EUR 6,935 million during the third quarter. Ordinary profit grew by 15.8%, while earnings per share increased 8.3%. 'They are wonderful results, not only for the figures we achieved but also because they are recurrent, high quality results, based on customer revenues and the contribution of all the business areas. Our excellent results should enable us, at the end of the year, to be one of the top three international banks in the world by profits.'

Alfredo Sáenz: 'Brazil will be one of the Group's main motors of growth'

Alfredo Sáenz, Chief Executive Officer, explained his view of the Brazilian economy and, in particular, about the banking sector in the country. 'We are living important changes in the economy and in the banking sector. During the next years, many mature markets will suffer a process of deleveraging. In this scenario, the emerging markets represent an 'islet' of growth. It is essential, in times like these, to have a business portfolio with a good balance between mature and emerging markets. Obviously, not every emerging market is equally prepared, but Brazil represents definitely one of the examples of a well-prepared emerging market, ' he said.

Sáenz highlighted the potential of the Brazilian economy and described it as 'very balanced, with very strong fundamentals, entering a virtuous circle of growth.' He also showed confidence in the development potential of the financial system in the country. 

Santander's Chief Executive based his optimism on the outlook for a continued significant increase in banking intermediation in Brazil. He highlighted that the conditions needed to generate it are present: greater economic stability, development of local capital markets, and, in the medium term, a gradual decline in interest rates. 'This is a very favourable environment to carry out banking business, which means a strong potential creation of value for the shareholder.

Sáenz explained some of the key levers of Group's business model to create value:

Commercial excellence. 'We are clearly a retail bank, diversified, with a stable and growing business and customer base. We know that, in the medium term, the only way to generate sustainable growth is through our relationships with our customers.'

Focus on efficiency. 'The second strength is the good level of Group's efficiency and, basically, the dynamic of working constantly to manage and improve our jaws (the difference between increase of earnings and costs), one of the basic priorities in Santander's management.' 

Global synergies. 'Being part of the Group makes each unit more competitive and enables it to accelerate its business and earnings growth.'

Risk management discipline. 'We maintain a predictable, medium-to-low risk profile, which enables us to generate stable, high-quality profit growth.'

'We can create value in Brazil with our business model. Moreover, we are well prepared to carry out a 'textbook' integration,' continued Sáenz, who highlighted the complementarity of Santander and Real. 'The risk of loss in earnings during the integration is low. We've got a very clear and defined plan. We have teams who have successfully executed these types of integrations, so we clearly know how to carry them out. We have a strong operational centre in Brazil and a scalable technological platform which is fully adaptable to the country's needs.' 'Our goal as a Group is to generate medium-term, high-quality, recurrent and well-balanced earnings growth. The Brazil effect will be one of Santander's main levers, enabling us to grow ahead of our competitors,' he concluded. 

Fabio Barbosa: 'We hope to grow by more than the market in earnings and by less in costs.'

Fabio Barbosa, head of the Santander Group in Brazil, said that, after the integration, the bank has a significant critical mass, becoming one of the three top private banks in the country with a 10% market share in deposits and 12% in lending; 3,551 offices (branches and customer attention points) in the most important regions, and eight million active customers. This is combined with a balanced business portfolio and good risk and liquidity management. 'Our goal is to build the most recognized and attractive brand in Brazil. We want to be the leading bank in Brazil in terms of value creation for shareholders; the best bank in customer satisfaction; the best bank to work for, serving as an example of a leading organization in sustainability in Brazil and in the world.

Barbosa outlined the plans of Santander-Real, which will have a single network once the technological operations and central services are integrated. 'The integration plan is compatible with profitable commercial growth,' he said, and added that the goal is to raise efficiency, productivity and sales capacity. 'The reduction of the back-office will enable us to increase the sales capabilities in the branches and reduce costs.' Within two years, employees in the commercial network will represent 85% of total staff, compared to the current 76%. He also pointed to improved service in alternative channels as another priority. 'We hope to grow by more than the market in earnings and by less in costs, while at the same time enhancing employee and customer satisfaction.'

Fabio Barbosa highlighted that 'the strength of the Santander brand will contribute to achieve our goal: to build the best bank in the country. We want to make of Santander the most admired and attractive brand in Brazil's banking scenario. Our business model prioritizes our relationship with people, customers, suppliers and the broader community, as well as with the environment.'

'We are going to maximize our earnings in the short term, without jeopardizing our future performance.' According to Barbosa, 'Our actions are focused on people's satisfaction. A satisfied employee will serve our customers better and satisfied customers, our surveys show, direct their entire relationship to the Bank.' 

 

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