Annual report 2009 - Santander

12Letter from the chief executive officerResults in 2009 and challengesin 2010 by business unitsAs we are facing two very different environments, the growthstrategies will also have to be very different:• In mature markets, only those banks with a solid businessmodel will be able to grow.– We will operate in an environment where the differencesbetween well and poorly managed banks will be moreevident.– The next few years will be tough because of the lack ofeconomic growth and the need to deleverage. However, thispresents opportunities for Grupo Santander to gain marketshare through organic growth and take advantage ofacquisition opportunities to grow in some markets.• In emerging markets, unlike mature ones, there is thepossibility of participating in structural growth. Only if there isGDP growth and higher levels of banking penetration, spurredby the expansion of the middle class, will there be growth inour business.Our priority in emerging markets is to build up a solid and topnotch business franchise, and this means we have to grow ata faster rate than the market.Retail banking in mature marketsSpain (Santander Branch Network and Banesto)Our retail banking profits in Spain grew 4%. These areparticularly good results compared to those of our competitors,whose profits fell by 21% on average.Both the Santander Branch Network and Banesto achievedgrowth in net interest income and attributable profit slightlyhigher than in 2008. Furthermore, our non-performing loanratios remained well below the banking system’s average.In 2010, we are suffering the double impact of low demand forloans and pressure on spreads associated with repricing ourmortgage portfolio at very low interest rates. We are continuingto apply defensive drivers to protect us in an environment ofeconomic downturn and increased non-performing loans. Theobjective now is to put more emphasis on growth drivers.Specifically, we have a great opportunity to gain market share,taking advantage of the profound restructuring that is beginningin the banking sector.PortugalSantander Totta again produced good results in 2009 in acomplicated environment of low demand for loans, pressureon the spreads of deposits and higher non-performing loans.Net interest income, gross income and net operating income allregistered single digit growth. Growth in net operating incomeabsorbed the higher provisions, from very low levels, andenabled attributable profit to be slightly higher than in 2008.Our priorities in 2010 will remain very similar: management ofspreads and control of costs, risk control and management ofloan-loss recoveries. We probably have an historic opportunityin Portugal to boost our market share, particularly in corporatebanking. Moreover, Santander Totta’s profits are the highest inthe country’s banking system, although in terms of businessshare it is the fourth largest player.Annual Report 2009