Annual Report 2007 - Santander

CONTINENTAL EUROPESANTANDER GENERATED IN CONTINENTAL EUROPEATTRIBUTABLE PROFIT OF EUR 4,423 MILLION ANDCONSOLIDATED ITSELF AS THE LARGEST BANK INTHE EURO ZONE BY MARKET CAPITALISATIONIn Continental Europe, Banco Santander has almost 23 million customers in 16 europeancountries. It conducts business through 5,976 branches. Its results in 2007 were of highquality, the fruit of strong growth in customer business and gains in efficiency andproductivity in its commercial networks.Banco Santander is the leadingcommercial and private bank in Spain andthe third- largest private sector commercialbank in Portugal on the basis of profits.It also conducts wholesale banking,asset management and insurance activitiesin Continental Europe, and SantanderConsumer Finance has businesses in 16countries.Continental Europe’s attributable profitof EUR 4,423 million was 27.4% morethan in 2006. The four big business units(Santander branch network, Banesto,Santander Totta and Santander ConsumerFinance) achieved double-digit profitgrowth. These results were driven by asharp rise in commercial revenues and bycost control. The cost/income (efficiency)ratio, in a year when the number ofbranches rose by 204, was 2 p.p. better at38.8%. Also noteworthy was the rise inROE (excluding capital gains) to 21.3%.RETAIL BANKING IN SPAINSantander has two retail bankingnetworks in Spain: the Santander branchnetwork and Banesto.SANTANDER BRANCH NETWORKThis network has 2,887 branches and19,392 employees. It focuses on providingits more than 8 million customers withhigh-quality commercial management,maximum service quality and the mostinnovative products. This is combined withprudent management of credit risks andstrict control of costs. With a cost/incomeratio of 38.7%, the Santander branchnetwork is one of the main benchmarks inefficiency in the Spanish banking sector.Its attributable profit in 2007 was19.9% higher at EUR 1,806 million.The “We Want to be your Bank”strategic plan continues to be the maingrowth driver in business with individualcustomers. This plan was broadened in2007 to include shareholders, shops,professionals, the self-employed, universitystudents and immigrants. Service fees havebeen eliminated for the 4 millioncustomers benefiting from the Plan, whoare also offered a wide range of productsand associated services.Thanks to “We Want to be your Bank”,the number of customers captureddoubled, customer defection was halvedand customer linkage increased fourfold.At the same time, customer satisfactionand operating margin per customer roseand the number of complaints declined.The Santander Branch Network alsohas an ambitious strategy for thespecialised segments of companies andprivate and personal banking, two marketswith very strong growth potential.With regard to funds, the Santanderbranch network carried out anunprecedented operation in the Spanishbanking sector. It distributed EUR 7,000million of “Valores Santander” (SantanderSecurities), to 129,000 investors, whichwere used to finance in part the acquisitionof ABN AMRO.GOALS• Increase the number of customersto 10 million in 2010.• Step up customer linkage throughcross-selling to achieve in 2010more than 5 million beneficiaries ofthe “We Want to be your Bank”plan.• Improve the quality of service.• Faster revenue growth than themarket’s.• Maintain risk quality and boostefficiency.22