Annual report 2009 - Santander

129Retail Banking. Income statementMillion eurosGross Net operating Attributableincome income profit to the Group2009 Var (%) 2009 Var (%) 2009 Var (%)Continental Europe 13,864 11.5 8,663 12.8 3,844 1.6o/w: Spain 8,754 1.5 5,273 2.2 2,749 (1.3)Portugal 1,077 2.8 570 3.3 418 (4.1)United Kingdom 4,832 46.9 2,766 60.8 1,335 34.0Latin America 14,591 7.0 8,637 18.6 2,242 (12.8)o/w: Brazil 9,834 15.5 5,837 36.5 1,219 5.1Mexico 1,876 (20.6) 1,168 (22.3) 229 (47.1)Chile 1,474 0.1 949 0.4 358 (5.7)Sovereign1,463 582 (25)Total Retail Banking 34,751 18.3 20,649 23.8 7,397 0.7Total lending rose 11% and customer deposits 23%, bothbenefiting from the latest acquisitions.• Retail Banking in Continental Europe increased its net interestincome by 23.3%, net operating income 12.8% andattributable profit 1.6%.The main drivers were moderate business volumes, goodmanagement of spreads in an environment of lower interestrates and control of costs (flat on a like-for-like basis). Theefficiency ratio improved from 38.2% to 37.5%.• The profit of Retail Banking in the United Kingdom was 50.1%higher in sterling, due to the good performance of Abbey andthe incorporation of A&L and B&B. The drivers were the sameas for other units: higher revenues spurred by net interestincome, lower growth in costs, which enabled the efficiencyratio to improve by 5 p.p. to 42.8%, and higher loan-lossprovisions.• The results of Retail Banking in Latin America came fromgrowth in customer business, the good performance of netinterest income, within the region’s environment of lowereconomic growth, and control of expenses compatible withbusiness development and benefiting from savings fromsynergies in Brazil. Net interest income rose 10.2%, grossincome was 12.6% higher and operating expenses dropped1.8% (all without the exchange-rate impact).As a result, the efficiency ratio (with amortizations) improvedfrom 46.6% in 2008 to 40.8% and net operating income was25.2% higher. However, as a result of the big rise in net loanlossprovisions, attributable profit was 9.3% lower, althoughon an improving trend.Global Private Banking includes institutions that specialise infinancial advice and asset management for high income clients(Banif in Spain, Santander Private Banking UK and AbbeyInternational in the UK and Santander Private Banking in LatinAmerica and Italy), as well as the units of domestic privatebanking in Portugal and Latin America, jointly managed withlocal retail banks. Allfunds Bank, the leader in distributing thefunds of third parties, is also present in Spain, Italy, the UK andLatin America.Net operating incomeMillion euros16,685200820,6492009+23.8%*Attributable profitMillion euros7,349 7,39720082009+0.7%** Excluding exchange rate impact: +27.8% * Excluding exchange rate impact: +3.5%Private banking activity was lower in the first half of 2009because of the developments in the second half of 2008. Grossincome declined 6.9%, due to the reduction in average volumesmanaged and the shift in customer preferences towards a moreconservative mix of products. This was mitigated to some extentby the 9.9% decline in personnel and general costs. Attributableprofit was 1.6% higher at EUR 330 million.Although average balances were lower than in 2008, thebalances at the end of 2009 were 5% higher at EUR 96,873million, as a result of the increase in the second half.The division continued to deepen and adapt its business modelto the various units and paid particular attention to thecommercial processes of advice, training, homogenisation ofinvestment strategies and discretional investment, unification ofproducts and the common IT platform for customermanagement. Santander Private Banking Italy is already usingthe same platform as Banco Banif in Spain and the rest of unitswill gradually be incorporated (Mexico in 2010). This will boostthe levels of customer service quality, maintain a constant watchon portfolios to ensure they are in line with objectives, align thevalue offer of all units and obtain significant synergies.Economic and Financial ReviewAnnual Report 2009