Banco Santander (Brasil)

Banco Santander (Brasil)
JP Morgan Field Trip
Mar, 2012.
Santander Financiamentos
Felix Cardamone
Head of Consumer Finance Brazil
Mar, 2012.
Agenda
3
I. Vehicles Market Overview
II. Santander Financiamentos

Loan Portfolio & Restructuring Plan

WebMotors

Risk Management
Vehicles Market
2011
4
Top 10 on Vehicles Industry
New Car Sales
Source:ANFAVEA
Millions
China
12,668
USA
11,535
Japan
3,825
Germany
3,137
Brazil
3,096
India
2,567
France
2,406
Russia
2,402
United Kingdom
2,064
Italy
1,794
Vehicles Market in Brazil
5
Vehicles Sales
(Units Sold - Million)
+23%
+17%
Sourcee: FENABRAVE/CETIP
+5%
Vehicles Sales
Used Cars
(Units - Thousand)
-2%
-20%
New Cars
0%
-23%
Motorcycles
+1%
-20%
Sourcee: FENABRAVE/CETIP
6
Agenda
7
I. Vehicles Market Overview
II. Santander Financiamentos

Loan Portfolio & Restructuring Plan

WebMotors

Risk Management
Santander Loan Portfolio – Consumer Finance (BR GAAP)
Total Loan Portfolio – Consumer Finance
Part. (%) – Consumer Finance / Total Loans
R$ billion
22.4%
8.8%
29,1
29,8
30,2
30,8
32,7
18%
35,6
82%
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
Consumer Finance - Breakdown Dec/11
Consumer Credit
Trucks
Vehicles & Motorcycles
Source: CFO Financeira (dec/11).
BR GAP: 100% Renault Portfolio
8
Santander
Financiamentos
Restructuring Plan
9
2008
2009
2010
2011
Integration of Banco
Real and Santander:
Aymoré+Olé =
Restructuring Plan
End of the restructuring
process
Evolution of
Management
+
and launch of new brand
Aymoré
competitive
Focus on
Profitability
Market Share
Growth with
Profitability
Strategic Pillars
Commercial
Strategy
 Commercial structure
focused on high
productivity
Risk
Management
Products &
Operations
 Automatic credit
analysis response
 Products portfolio
and operational
processes review,
operations and
collected vehicles
management
 Redirection of
collection to
the ​Bank Risks
Institucional
 New management
model and
creation of
committees to
manage the
business
Loans Portfolio Market Share – Individuals (BR GAAP)
10
Bank 1
Bank 2
Bank 3
Santander: 100% Renault and Branches Channel
Source: - Brazil Central Bank
- Competition: Investors Relationship sites
10
Agenda
11
I. Vehicles Market Overview
II. Santander Financiamentos

Loan Portfolio & Restructuring Plan

WebMotors

Risk Management
Santander Financiamentos – Internet Business
“93% of Brazilian research online before buying a car”
www.webmotors.com.br
 Website Leader at Brazilian Internet
Automotive Sector:
– More than 4 thousand dealers with
active packs and, at least, one
classified ad published in a month
– 13 million unique visitors per month
Top of mind
First Choice
Usage
Source: WebMotors BI and 2010 Research
Magazines “Quatro Rodas” and “Exame”
12
WebMotors.com.br
13
Unique visitors per month
New and used car dealers as client
(#)
(# Millions)
4.208
13
2.683
8
Jan/10
Dec/11 Jan/10
(# Thousand)
Dec/11
Active auto adds
159
108
Jan/10
Source: WebMotors.
Dec/11
Agenda
14
I. Vehicles Market Overview
II. Santander Financiamentos

Loan Portfolio & Restructuring Plan

WebMotors

Risk Management
Auto Loan Business – Delinquency Rates
15
Over 90 dpd - Santander vrs Market
 Santander presents growth but
below market
nov/11
dec/11
jan/12
Santander Financiamentos
Market (Bacen)
Vintages Evolution – Santander
Over 30 - mob 3
 The new admission process
generates vintages with better
quality
New Admission Policy
Reference: Febraban
Não inclui canal interno.
Santander15
inclui Renault 100%, demais Instituições contemplam (Banco Ford, Banco Fiat).
Portfolio Growth with good quality
Increase of almost 40% of the
commercial staff
… Even with more conservative Credit
Policy
The improve of credit response time and
automatic decision, impacted positively
the dealer’s satisfaction…
Decreasing the Cost of Credit
2009
Reference: Pesquisa anual IBOPE de satisfação intermediário.
16
2010
1S11
2S11
(%)
Santander Brasil
Santander Cards Business
March, 2012
18
Agenda
 Overview of Brazilian Cards Industry
 Santander Cards Issuer
 Santander Cards Acquirer
18
Overview of Brazilian Cards Industry
19
Cards industry continues to show substantial growth rates, even considering the competitive
scenario consolidation and recent regulation changes
Transactiosn Growth
Transactions, # Billion
3,5
3,0
2,5
Cards Penetration Growth
CAGR
Credito
# Cards/Active Economic Population
+ 17%
Debit
CAGR
+ 21%
CAGR
+11%
2,0
4,93
1,5
1,0
Check
3,75
5,51
5,93
6,31
4,28
- 10%
0,5
0,0
2005 2006 2007 2008 2009 2010
2005
2006
2007
2008
2009
Cards transactions have been strongly replacing checks transactions last 10 years
Source: BACEN.
2010
Overview of Brazilian
Cards Industry
Evolución
de la Industria
de Meios de Pago en Brasil
20
Card
penetration,
average ticket
andintensivos
transactions de
per crecimiento
card are still low
in Brazil
La
industria
ha logrado
ritmos
desde
2005, tanto en
base de tarjetas Number
cuanto
en facturación
of Cards
Total Revenues (R$ Bi)
# Millones
R$, Billones
CAGR
+13%
336
Credit
68
Debit 171
P. Label
388
82
187
514
453
124
104
217
201
668
CAGR
565
628
153
136
249
233
686
173
444
375
266
Credit
225
97
118
147
173
196
2005
2006
2007
2008
2009
2010
535
+22%
247
200
115
Debit
2005
256
174
142
2006
309
215
83
56 29 67 36
45
P.Label
2011
245
302
2007
197
107
53
129
158
60
68
85
2008
2009
2010
2011
Average Ticket (R$, Transaction)
+4%
201
206
216
181
194
228
189
86
91
93
98
100
107
113
Credit
Debit
45
46
48
51
53
56
58
P. Label
50
53
53
52
52
54
57
2005
2006
2007
2008
2009
2010
2011
Source: ABECS – Associação Brasileira de Cartões – 2011: Estimated values
386
21
Agenda
 Overview of Brazilian Cards Industry
 Santander Cards Issuer
 Santander Cards Acquirer
21
Santander Cards Issuer – our approach
22
Our approach continues to be the world’s best integrated cards specialist within a retail
bank (since 2002)…
Cards Specialist
Retail Bank
Product focus
Customers
Specialized
Traditional
capabilities: risk,
marketing
Direct channels:
Telemkt / Mailings
Specialized
systems
… Contributing to improve our local banks’ performance
Channels: branches/
agents, call-center,
web pages
Brand
Economies of scale
Santander Cards Issuer – our model
23
Is based on managing all levers along the product lifecycle …
Portfolio Management
Acquisition
Depth of cardholder relationship
Activation
Spending
Balance Building
Retention
VALUE
CHURN
TIME
RISK MANAGEMENT
ANALYTICS
SERVICING
TECHNOLOGY
MULTI-CHANNEL
Santander Cards Issuer – our model
24
Card
s
Card
…in a absolutely integrated global business model metlhodoly….
Knowledge
Homogeneous Business Model
Common methodologies
Similar organizational structures
across countries
True best practices sharing
Global specialists and knowledge
initiatives (Forums, Campaigns
Library, Benchmarking, etc.)
Scale Economies
Talent Management: global
opportunities, specialist trainings
Global relationships with key industry
players (Amex, Visa, MasterCard,
Diners)
Global Products and Alliances
(Elavon, FDI, Ferrari, etc.)
Value added to the Group
Santander Cards Issuer – our model
25
The Business expansion will be held in two dimensions: Customer Base and Profitability
per Account
Savings
2011
Net income
Personal Loan
Card Accounts
Δ Profitability per Account
Increase the
profitability by using
the card’s platforms as
a distribution channel
for other banking
products and services
20%
2010
Insurance
2010
2011
12%
Payment Services
Continuous product
innovation as a growth
lever
(1) Source: Internal data
Santander Cards Issuer – continuous growth
26
The Credit market continues to show substantial growth rates, even considering the competitive
scenario consolidation and recent regulation changes
Cards (MM)
124,0
104,0
153,0
136,0
Key Observations
173,0
7%
8,5
6,8
9,7
+14%
12,4
11,5

Focus on increase credit card
penetration in client base with
new commercial agreements
(Raizen / Telefonica).

Growth of the customer
relationship stimulate Spend

Financial orientation to
revolving – offering financing
credit card bills (lower rate,
but with longer term)
+16
07
08
09
10
11
Total Spend (R$ Bi)
256,0
215,0
174,0
313,7
364,3
14%
18,8
26,5
33,3
+20%
50,9
39,9
+28%
07
08
09
10
11
Revolving Balance (R$ Bi)
+19%
17,2
1,7
07
22,1
25,7
29,2
35,7
+20%
12%
2,1
08
2,5
09
3,0
4,3
+25%
10
11
Note 1: Source Banco Central do Brasil, including +360 days balance
Note 2: Source ABECs – Brazilian Cards Association
Market
Santander
Santander Cards Issuer –performance
27
… generating relevant revenue increase
Net Fee (R$ MM)
CAGR
+29%
+34%
1.298
19%
969
785
2009
Source: Santander Income Statement – Net Fees IFRS
2010
2011
28
Agenda
 Overview of Brazilian Cards Industry
 Santander Cards Issuer
 Santander Cards Acquirer
28
Merchant Acquiring - Market Potential
» More than 2 million
establishments
» 50% of all trade
sales
» R$ 560 billion in
sales in 2011; volume
is expected to double
in 5 years
» 22% annual
growth
» Duopoly until
April, 2010
» Large
profitability
margins
29
Merchant Acquiring - Innovative Value Proposition
30
The 1st bank to combine acquirer and
financial services
REDECARD
AND
CIELO
BANKS
ACQUIRING
SERVICES
FINANCIAL
SERVICES
Definition of Merchant Acquiring - Santander Integrated Account
Credit Limits Up to 8 x Trx volume
» No checking account
fees
» Centralized domicile
» 5 days with no interest
Cheque Empresa Plus
(corporate overdraft
checks)
» Broad Band POS
terminal
» Other Services
» 24 x 7 service
» Anticipation at the POS
31
Merchant Acquiring Main Numbers
32
Total Merchant
New Merchant
Thousand
Thousand
248
147
104
104
2010
2011
2010
2011
Merchant Acquiring Revenue: marketing share
33
Market Share
55,8%
56,9%
56,3%
56,5%
57,0%
43,1%
41,8%
42,0%
41,4%
40,4%
1,0%
1,3%
1,7%
2,1%
2,6%
4Q10
1Q11
2Q11
3Q11
4Q11
ACQ 1
ACQ 2
Santander