Professional Documents
Culture Documents
RESULTS
2009
4 February 2010
2
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 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 and other key 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.
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 or
any advice or recommendation with respect to such securities.
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.
Nothing contained in this presentation is an offer of securities for sale into the United States or in any other jurisdiction. 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. In making this presentation available, Santander makes no
recommendation to buy, sell or otherwise 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 this presentation in respect of any such investment activity.
Note: Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, historical
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
Agenda
2009 Summary
2009 Results
Group
Business areas
2010 Outlook
Appendix
4
2009 Summary
In the most complex year of the last three, Santanders results were
underpinned by its diversification and business model in order to ...
1 maintain 2 strengthen 3 generate
high profit the value for
generation balance sheet shareholders
EUR 8,943 million of Larger loan-loss High remuneration
recurring profit provisions 2009: 4,919 mill. (+2%)
underpinned by a high 0.60/ share. Yield 5.9%*
with lower NPLs
diversification than expected and
Consistent increase of
Top 3 worldwide than competitors
book value per share
(estimated) by profit Better capitalised:
core capital = 8.6% 2009 TSR: 85%. Higher
Moreover, extraordinary
than market and peers
capital gains (EUR 2,587 With adequate
mill.) allocated to financing structure Larger trading effective
strengthen balance sheet value in the Stoxx 50
+9% +1%
2,524 8,876 8,943
2,423
8,111
2,206 2,205 2,221 2,202
2,096
1,941
which allowed
+13.5%
us to meet the
+0.7% target announced
for 2009
-4.0%
-5.0%
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
2007 2008 2009
(*) Over operating areas 2009 attributable profit excluding EUR 25 million from Sovereign
1 High profit generation in 2009 7
Top 3 worldwide (e) in 2009 and the only one remaining in the Top 7
since 2006
Wfargo+
GS 7.5 ICBC 7.8 HSBC 3.9
Wachovia
5.7
Larger provisions and capital gains allocation added EUR 5.6 bill. to loan-
loss provisions, bringing generic ones to EUR 6.7 billion ...
Loan-loss provisions
EUR million
Spain: Generic provisions
+1,500
12,863
11,770
Dec'08 Capital Ordinary Dec09 Better risk Substandard, Dec'09
gains consump. ordinary profile internal criteria
Total 9,302
funds 8,627 6,682
3,275
Specific 2,960
Spain: 2,907
Other
6,027 6,181 6,727
Generic 5,667 Europe: 1,386
America: 2,434
Spain UK Latam
Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09
Coverage ratio
134 Dec.09
120 105%
105
91 80 72 73 75 73%
44%
and improved our outlook for 2009 at the beginning of the year,
particularly in Spain and the UK
2 Balance sheet strength. Credit quality 11
Our ratios compare well with those of our peers at Group level and also
in the main markets where we operate
Group ratios (Sep.09) Spain
NPLs in % 5.00 (Nov.)
NPLs Coverage
Banks + Savings banks
4.78% 3.32 1.59
73%
3.03% 58% 1.37
3.41
0.83
0.19
1.95 Grupo SAN
0.64
SAN European peers* SAN European peers* Dec'07 Dec'08 Dec'09
Sector Source: Banco de Espaa
0.95
Peers
1.38 0.78
1.39
1.03
0.45
LLPs / 0.63
0.51
loans
2006 2007 2008 2009 2006 2007 2008 2009
Note: Peer Group are large banks that because of their size, characteristics
and/or degree of direct competition are the reference group to surpass.
7.5%
7.9% 7.7%
7.4%
6.1% 6.3%
5.9%
2005 2006 2007 2008 2009 2005 2006 2007 2008 2009
Note: 2008 under BIS II, previous data under BIS I Note: 2008 under BIS II, previous data under BIS I
(*) (Deposits + M/L term wholesale financing + capital) / (total assets excluding trading derivatives)
Note: Breakdown of funding structure on page 59
3 Generating value for shareholders 15
and offer a total shareholder return (TSR) well above that of the market
and peers, being the most liquid share in the Stoxx50
Difference in p.p. with DJ Stoxx Banks Difference in p.p. with our peers
Note: Peer Group are 19 large banks that because of their size, charateristic and/or degree of direct
competition are the reference group to surpass: Banco Ita, Bank of America, Barclays, BBVA, BNP Paribas,
Citigroup, Credit Agricole, HSBC, Intesa Sanpaolo, JP Morgan, Lloyds, Mitsubishi, Nordea, Royal Bank of
Canada, RBS, Societe Generale, UBS, Unicredito, Wells Fargo.
4 Santander strengthened its positioning during the crisis 16
Germany: Acquisitions
and integration
Venezuela:
bank disposal
Brazil:
Integration
IPO
17
Agenda
2009 Summary
2009 Results
Group
Business areas
2010 Outlook
Appendix
18
The P&L highlights the resilience of the underlying business
and the management focus for the year
Var. 2009/2008
Group ordinary* results % excl. fx
EUR Mill. 2009 2008 % and perimeter
(*) With no impact from extraordinary capital gains, allocated to strengthening balance sheet
(**) Including dividends, equity method and other opeating results. Trading gains o/2008: +31.8%
A better recurring picture than in previous quarters 19
-2.9 p.p.
44.6%
41.7%
Q1'09 H1'09 9M '09 12M '09
B Management of expenses
% var. o/ same period of previous year 2008 2009
SCF +2.7%
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Portugal +1.5%
Cont. Europe UK LatAm
EUR billion billion Constant US$ billion UK (in sterling) +0.4%
1.1 1.1 5.7 5.8
3.8 3.7 5.4 -3.7%
3.5 Brazil (in reales)
0.7
Mexico (in pesos) -3.4%
Group +0.4%
Q4'08 Q3'09 Q4'09 Q4'08 Q3'09 Q4'09 Q4'08 Q3'09 Q4'09
21
C Increased provisions in all geographic areas, but
mitigated in Spain thanks to the use of generic ones
Specific provisions**
Loan-loss provisions. EUR billion Var. 09/08
( bill.)
Groups total* 11.8
0.6 SOV: +0.6
EUR billion
Total 7.7 5.1 Brazil: +1.0
3.6
Other 0.1
LatAm 4.0 1.0 A&L: +0.2
2.8
2.7
2.7 2.6 UK 0.4 SAN+BTO. +0.9
5.1
Europe 3.2 SCF: +0.6
2.0
1.6 2008 2009
Specific 1.3
provisions**
2.4 2.6
2.2 2.3
1.6 1.8 1.9 Use of generic provisions
Total net 1.3 +18%
provisions EUR billion
Var. 09/08
( bill.)
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4 -2.2
-0.2
Total -1.2
Use of generic provisions Other -0.5 -2.0 SAN+BTO. -1.0
GBM: -0.3
Europe -0.7
2008 2009
Real estate activity in Spain, published figures (T-13 report based on CNAE):
EUR 324,000 million Not all are loans to real estate developers
Dec'08 FX rate Perimeter Business Dec'09 Dec'08 FX rate Perimeter Business Dec'09
(*) Other: goodwill for EUR 23 bill., tangible and intangible assets: 12 bill., equities: 15 bill. accruals and
other accounts: 37 bill.
26
Agenda
2009 Summary
2009 Results
Group
Business areas
2010 Outlook
Appendix
Continental Europe 2009 27
Profit increase due to: resilient retail revenues and GBMs very
good year, cost control and active risk management
Results
Var. 2009 / 2008 (%)
Excl.
perimeter
Attributable profit
Gross
+11.4% +5%
EUR million income
+7%
5,031
4,705 Expenses +8.2% +1%
4,423
Net
operating +13.3% +8%
income
Net oper.
2007 2008 2009 inc. net of +8.6% +6%
LLPs
Attributable
+6.9% +5%
profit
Continental Europe main units 2009 28
EUR mill. and % o/ 2008
The three large retail units and GBM increased their recurring profit.
Consumer, harder hit by environment and perimeter, improved trend
SAN
5,363 -0.3% 3,252 -1.5% 2,012 +5.5%
network
Other 1,846 2,867 +31.6% 1,344 1,809 +40.5% 1,000 1,118 +33.1%
GBM GBM GBM
29
Santander Branch Network 2009
Management drivers Results
Revenues: Improved assets spreads, defended
those on liabilities. Selective increase on loans and Gross income Efficiency ratio
strong deposit growth Base 100: Q108 % var. 2009/2008
Volumes (Var. 2009 / 2008) Net interest inc. /
ATAs
Savings: +4% 103 103 104 38.7%
3.35% 100 100 99
2.90% 97 96
+22% 39.4%
+5% +1.5
-13% -0.3
-5% 2008 2009 Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Revenues Expenses 2008 2009
Loans Demand Term+ Mutual f.
dep. insuran. +pensions
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Banesto 2009 30
Risks: NPLs and coverage improve forecasts Net operating income / Provisions
87% 86% 89% 90% 92% 97% Var.Q409/Q408
Coverage EUR million
Q4'08 Q1'09 Q2 Q3 Q4 Q4'08 Q1'09 Q2 Q3 Q4 (*) Excl. perimeter: -4% (**) Excl. perimeter: +15%
Portugal 2009 32
Results
Var. 2009 / 2008 in (%)
Excl.
perimeter
Attributable profit
Sterling million
Gross
+57.4% +19%
income
+55% 1,536
Expenses +41.9% +0%
991
822
Net
operating +70.2% +35%
income
Net oper.
2007 2008 2009 inc. net of +57.6% +29%
LLPs
Attributable
+55.1% +27%
profit
United Kingdom 2009 34
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
501
Including A&L since Q109 422
374 392
+46%
and improved efficiency 570 505
497 520 522
Jaws Efficiency ratio 314 334 334 345
% var. 2009/2008
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
+57.4 45.3%
Net operating income after provisions
+41.9 Provisions
40.8%
Net operating income 2009:
Revenues Expenses 2008 2009
3.7 times the provisions
United Kingdom 2009 35
Dec'08 Dec'09
Non-core loans
Dec'08 Dec'09 Dec'08 Dec'09
Core loans
Results
Var. 2009 / 2008 in US$ (%)
Excl.
f.x.
Attributable profit
Gross
Constant US$ million +3.8% +15%
income
+11%
5,331 Expenses -11.7% -3%
4,800
Net
3,368
operating +15.9% +28%
income
Net oper.
2007 2008 2009 inc. net of +7.9% +19%
LLPs
Ordinary
attributable +0.9% +11%
profit
Venezuela
(discontinued 125 -73%
operations)
38
Brazil 2009
Solid revenues and cost cuts offset the larger provisions.
Impact on Q409 from minority interests
Ordinary
attributable +27.1%
profit
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Expenses
Var. o/ same period of previous year Net operating income / Provisions
+3.0%
Constant US$ million Var.Q409/Q408
-2.5% -3.1%
-4.0% -5.3% 2,775 2,657 +49.3%
2008 Q1'09 Q2 Q3 Q4 2,394 2,431
Risks: reduced entries and stable share of Net op.
income 1,889 1,833 1,790 1,780
provisions o/ net interest income
Provisions
Net entries LLPs / net interest inc. +66.5%
Base 100: Q408 Net op. 1,369 1,373
1,373
income net 1,318 1,162 1.048 1,319 1,298
109 54% 824
45% 47% 51% 48%
100 of LLPs
70 85 69
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Q4'08 Q1'09 Q2 Q3 Q4 Q4'08 Q1'09 Q2 Q3 Q4
-2.9%
-12.0% 633 601
Net op. 539 559 531
2008 Q1'09 Q2 Q3 Q4 483 458
income 454
Risks: less entries and lower provisions Provisions
-1.0%
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Q4'08 Q1'09 Q2 Q3 Q4 Q4'08 Q1'09 Q2 Q3 Q4
Chile 2009 41
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Q4'08 Q1'09 Q2 Q3 Q4 Q4'08 Q1'09 Q2 Q3 Q4
Other Latin American units 2009 42
Attributable profit
321
Attributable profit
332 -3% 323 -1%
Expenses 374 -11% US$ million
Commercial
Coverage
19% & Industrial 5.0% ratio
62%
22% Residential 5.5%
Individuals
and SMEs Moreover,
36% 74% of
14% Home equity 0.7%
Dec'08 Mar Jun Sep Dec'09 portfolio is
Auto
Run-off 11% indirect 2.0% guaranteed
and other*
Run-off non-basic segments:
Auto: -37% o/Dec.08 Total loans
Other (*): -27% o/Dec.08
Note: data under US GAAP, except total portfolios NPL and coverage ratios (under Groups criteria)
(*) Some businesses from the Commercial and Industrial segment
45
Sovereign: main business highlights
Deposits: focus on core deposits and reduction of the most expensive
ones significantly improved the cost of deposits
+15%
29.6 -35%
28.3 27.7 1.79
27.2
25.8 22.6 23.3
21.0
18.5 1.45
14.8
1.20
0.88
Dec'08 Mar Jun Sep Dec'09 Dec'08 Mar Jun Sep Dec'09
Q1'09 Q2'09 Q3'09 Q4'09
(*) Wholesale (demand and time deposits), government and repos (**) Calculated quarterly
Attributable profit
(Change 2009 vs. 2008)
EUR mill.
Main impacts
SECONDARY SEGMENTS
48
Retail Banking
Strong resilience of retail banking to the environment,
maintaining results sustainability
Attributable
profit
+0.8% -2%
Q1'08 Q2 Q3 Q4 Q1'09* Q2* Q3 Q4
* Venezuela impact registered under discontinued operations.
In Q109: 81 mill.; Q209: 1 mill.
Global Wholesale Banking (GBM) 49
Expenses -7.1%
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Net
operating +32.8% Attributable profit
income
EUR million
Net oper. 879
inc. net of +48.9%
634 672
LLPs 579
533
394 379 435
Attributable
profit
+58.8%
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Global Wholesale Banking (GBM) 50
+48% 2,184
Corporate
in our core markets Banking*
1,471
2009 Summary
2009 Results
Group
Business areas
2010 Outlook
Appendix
2010 Outlook: macroeconomic environment 53
+
Synergies from
65.0%
63.0%
60.3%
Abbey
integrations 58.6%
55.2%
52.8% 52.9% B. Real
allow us to
48.6%
45.5%
44.6%
(*) Efficiency ratio with amortisations. 2004 onwards under IFRS criteria
57
Santander in 2010. Risk management
In 2010, we still face part of the cycle demanding in provisions
NPLs: 2009 evolution and 2010 outlook Active risk management in 2010
4.5% 3.4% < 4%
Extend Spains recovery model to
Spain other markets
Outlook Real 2010 outlook
beginning year
Continue to reduce purchased
properties
2.0% ~ 2%
1.7%
Portfolio peak: EUR 4.1 bill.
UK
Outlook Real 2010 outlook
Year-end 2009: portfolio EUR 2.9 bill.
beginning year
Coverage: 32%
SCF
5.5%-6% 5.4% 6%-6.5%
6%
+
Outlook Real 2010 outlook Available
beginning year
generic provisions
5.3% ~ 5%
Brazil n.a.
Strong presence in
3 emerging markets
More solid macroeconomics; could grow
Generic provisions and low Generic provisions: EUR 6.7 bill.; loan
6 risk profile portfolio highly guaranteed
59
Agenda
2009 Summary
2009 Results
Group
Business areas
2010 Outlook
Appendix
Funding 60
96% 78% 69% 63% 73% 106% 85% 73% 70% 64%
1.93% 2.35% 2.59% 2.82% 3.41% 1.64% 1.96% 2.32% 2.62% 2.97%
Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09
NPLs Coverage NPLs Coverage
Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09
NPLs Coverage NPLs Coverage
(*) Santander Branch Network NPL ratio was 4.38% and coverage 65%
63
United Kingdom. Spreads and NPL ratios
(%)
Note: Including A&L since Q109 Note: Including A&L (*) UPLs coverage >100%
64
Exchange rates. Latin America 2009
Depreciation of Latin American currencies
against the dollar and euro
AVERAGE RATES
EUR / LOCAL CCY.
2009 2008 Var.
US DOLLAR 1.391 1.464 5%
BRAZILIAN REAL 2.758 2.657 -4%
NEW MEXICAN PESO 18.776 16.260 -13%
CHILEAN PESO 775.266 757.306 -2%
AVERAGE RATES
US$ / LOCAL CCY.
2009 2008 Var.
BRAZILIAN REAL 1.983 1.815 -8%
NEW MEXICAN PESO 13.502 11.107 -18%
CHILEAN PESO 557.504 517.310 -7%
(*) Positive sign: currency appreciation; negative sign: currency depreciation
65
Spreads main countries Latin America
(%)
Q1'08 Q2 Q3 Q4 Q1'09 Q2 Q3 Q4
Loans Deposits Total
66
Latin America. NPL and coverage ratios
Brazil Mexico
102% 107% 92% 95% 99% 221% 264%
132% 128% 122%
Dec'08 Mar'09 Jun'09 Sep'09 Dec'09 Dec'08 Mar'09 Jun'09 Sep'09 Dec'09
NPLs Coverage NPLs Coverage
Chile