Annual report 2009 - Santander

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10“Despite the very complex environment,our attributable profit was higher thanin 2008 and we continued to improveour core capital ratio”Annual Report 2009
Letter from thechief executive officerAlfredo Sáenz11Results and Santander shareGrupo Santander once again achieved good results in 2009:• The Group’s attributable profit, excluding extraordinaryincome, was EUR 8,943 million, 0.7% higher than in 2008.• Earnings per share were EUR 1.05.• The core capital ratio improved by two percentage points intwo years, from 6.3% in 2007 to 8.6% in 2009.• In response to the economic crisis, we applied even morestrictly our management principles, with the followingpriorities:– Higher spreads, in order to meet the increased cost ofliquidity and the rise in non-performing loans (NPLs).– Gains in market share, particularly in customer funds.– Contained or lower costs in all our businesses.– Management of NPLs, with a recoveries model administeredas a business unit.• We are very satisfied with the quality of our income statement:– Net interest income rose 26%.– The jaws (the growth differential between gross incomeand operating costs) widened to eight points, enabling netoperating income to grow 24%.– Moreover, we were able to absorb the increase in provisionsand writedowns, thanks to the growth in net operatingincome, from EUR 18,540 million to EUR 22,960 million(from 3.1% to 3.4% of net loans). This improvement putsus in an exceptional position to exploit the cyclical upturn.A dual worldIf we analyse international banking trends for the next few yearswe see increasingly different dynamics in mature and emergingmarkets:• The mature markets, such as Spain, the UK and the US, haveentered a period of deleveraging. Although most countries arebeginning to overcome the cyclical moment of highprovisions, years of stagnant lending and structurally higherprovisions than in the previous cycle still await us.• The dynamics are very different in emerging markets. Ingeneral, neither the public nor the private sectors haveexcessive levels of indebtedness. These markets are thusrecovering more quickly and more solidly than the matureones. The combination of economic growth and greater“bankarisation” in coming years will create a very attractivebanking environment.In my view, emerging markets of quality are those which:– Do not produce macroeconomic bubbles which devastatethe economy.– Are institutionally predictable.– Have markets open to foreign banks.The main countries of Latin America, where Banco Santanderis present, comfortably meet these three parameters, and forthis reason I am convinced of the quality of our exposure tothese markets.In short, our disciplined management enabled us to get throughthe crisis and maintain our results intact, while many of ourcompetitors generated large losses.Annual Report 2009
Page 1 and 2: Annual report 2009
Page 3 and 4: Key figures 2Letter from the chairm
Page 5 and 6: Santander was the fourth bank inthe
Page 7 and 8: Letter from the chairmanEmilio Bot
Page 9 and 10: Just as important as being profitab
Page 11: The crisis has shown we are a solid
Page 15 and 16: 13Grupo Santander has shown it canp
Page 17 and 18: I believe we can be veryoptimistic
Page 19 and 20: 17Board of directors meeting room,
Page 21 and 22: 19Executive committeeRisk committee
Page 23 and 24: 21Annual General Meeting, June 19th
Page 25 and 26: 23Efficiencyis transforming cost sa
Page 27 and 28: 25Main countries.Other countries wh
Page 29 and 30: 27New visitors’ centre “El Faro
Page 31 and 32: 29Grupo Santander resultsGrupo Sant
Page 33 and 34: 31Santander Branch NetworkThe busin
Page 35 and 36: 33Santander Consumer Financecontrib
Page 37 and 38: 35Business dynamismThe good revenue
Page 39 and 40: 37Grupo Santander Brazil obtainedat
Page 41 and 42: 39Santander’s contact centre in Q
Page 43 and 44: 41Sovereign’s integration into Gr
Page 45 and 46: 43Treasury room, Grupo Santander Ci
Page 47 and 48: 45InsuranceSantander Insurance focu
Page 49 and 50: 47• Corporate sponsorship continu
Page 51 and 52: 49Banco Santander has a unique andl
Page 53 and 54: 51Thousand year-old olive trees in
Page 55 and 56: 53El consejo propondrá a la junta
Page 57 and 58: 551. Ownership structure1. Number o
Page 59 and 60: 574. Resolutions in effect regardin
Page 61 and 62: 59Mr Luis Alberto Salazar-Simpson B
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612. Powers and dutiesThe basic res
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Main activities of the board in 200
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654. Executive chairman and chief e
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6712. Appointment, re-election and
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6915. Committees of the boardGenera
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71Attendance at meetings of the boa
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73• Separate voting on matters su
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754. Banco Santander’s senior man
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774. WebsiteSince 2004, the Group
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79Finally, the board believes it is
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Consolidated Financial Report 82Inf
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83Summary of 2009 for Grupo Santand
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85- The UK: the Group remained focu
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87• Both in 2008 and 2009 the ext
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89Gross income and expenses% variat
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91Balance sheetMillion eurosAssetsV
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93Credit risk management*Million eu
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95Customer funds under managementBi
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97Total equity and capital with the
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991. Principal segments or geograph
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101Continental Europe• Revenue gr
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103Santander Branch Network• Grow
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105Gains on financial transactions,
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107Better evolution of Nordic count
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109ActivityAgainst a backdrop of a
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111United Kingdom• Double digit g
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Latin AmericaMillion eurosIncome st
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115In the countries where Santander
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Latin America. Main unitsMillion eu
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119- Banco Real’s customers have
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121As a result of this strategy, th
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123The pace of growth in savings in
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125• Creation of a solid structur
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127Corporate Activities• Reduced
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129Retail Banking. Income statement
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1312) Corporate FinanceThis area (i
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133Asset Management and Insurance
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135Continental Europe, which contri
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Executive Summary 138Corporate prin
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139Credit risk exposure in Spain(pa
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141• Limiting risks. The aim is t
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143• Ensure that the Group’s ac
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1453. Credit riskMain advances in 2
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147B. Evolution of the magnitudes i
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1493.3 Metrics and measurement tool
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151D. Distribution of EaD and expec
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1533.5 Credit risk cycleRisk manage
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155Analysis of the mortgage portfol
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157Acquisition of property assets (
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159In the case of Spain (Santander
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161This model operates in all phase
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163B. Credit risk by activities in
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165Notional OTC derivative products
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167The decline was largely due to B
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169They include analysis of scenari
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171C. Structural exchange-rate risk
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173Histogram of VaR by risk factor
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175Backtesting of business portfoli
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177b) Latin America(1) Quantitative
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179B3. Management of financing and
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181All of this enables the Group to
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183E. Exposures related to complex
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185The different phases of the tech
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187In addition to this risk profile
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189The global committee of new prod
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191Internal validation of internal
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193Continental Europe and Latin Ame
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Annual Report 2009195
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The compliance function 196Historic
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199Code of conduct in the securitie
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201are analysed on a centralised ba
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203without IFRS2004 2003 2002 2001
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Annual report 2009 - Santander

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