Annual report 2009 - Santander

118Brazil• Integration process on schedule with implementation of bestbusiness practices: new products, services and functions.• Growth differential of 24 p.p. between gross income (+20%)and costs (-4%), backed by synergies.• Net operating income after loan-loss provisions increased23%.• Faster growth in profits: +27% for the whole year against+12% in the first half and +1% in the first quarter.• Capital increase through a new share offer in October of EUR5,092 million (BRL 13,182 million) in order to financeexpansion plans in the coming years.Grupo Santander Brazil is the country’s third largest privatesector bank, with a market share of 10% in overall bankingbusiness, 3,593 branches (including points of bankingattention), 18,094 ATMs and 22.5 million customers, of whichmore than 10 million have current accounts.Economic environmentThe economy continued to show signs of recovery. GDPexpanded 1.3% in the third quarter over the previous one, withstronger growth in investment (+6.5%) and householdconsumption (+2.0%). The figure was very positive, mainlybecause of the rise in investment, a necessary factor forsustainable growth in the coming years. The labour marketfigures were also better (unemployment rate of 8.1% at the endof 2009).As well as more positive figures, the granting by Moody’sRatings of investment grade status to Brazil and the holding ofthe 2014 FIFA World Cup and the olympic games in 2016confirm the expectations that the economy will entry a newcycle of growth.Gross income and expenses*% variation in euros 2009 / 2008Net operating incomeMillion euros5,4412008NPL ratio%+15.8Grossincome7,37620093.58Expenses-7.2* Excluding exchange rate impact: Gross income:+20.2%; expenses: -3.7%+35.6%*5.27Efficiency ratio(with amortisations)%46.22008 2009Attributable profitMillion euros1,76920082,1672009NPL coverage%102 99+22.5%** Excluding exchange rate impact: +40.7% * Excluding exchange rate impact: +27.1%37.0Inflation was 4.3%, below the central bank’s target (4.5%). Thekey rate was down to 8.75% by the end of the year, its lowestlevel since the series was started.The pace of lending by the whole financial system slowed to15%. Loans by state banks grew 31% and those by privatesector banks 6%. Credit to individuals increased 19% and thatto companies by only 1%, affected by the impact of the real’sappreciation on foreign currency operations and lower demand.Directed loans (including BNDES, rural and real estate) rose 28%.Savings grew 16%, with mutual funds up 22% compared to adecline of 1% in 2008 in an environment of low interest rates,while growth in time deposits continued to decelerate (+4%).Demand and savings deposits increased 15%.Strategy in 2009The strategic focus in 2009 of Grupo Santander Brazil was theintegration process, with the emphasis on greater efficiency,obtaining synergies and implementing the best operational andcommercial practices.200820092008 2009This process, begun at the end of 2008, continues to be onschedule. During 2009 the support areas and global andspecialist businesses were unified, except for some activitieswhich are still underway. The legal merger has been completedand headcounts unified and there is already a basic commonsystem available to the customers of both banks in all branchesand ATMs (Interoperability project) and common call centres.Of note among the measures taken were unification of thecards business and the broker-dealers and the launch ofprogrammes of common benefits and products for both banks’customers. They include:– Santander Master and Realmaster (“cheque especial”),combines two of the most successful features amongcustomers of Santander and Banco Real.Annual Report 2009Economic and Financial Review