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Banco Santander (Brasil) S.A. (BSBR) |
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WIKI ANALYSIS
Banco Santander Brasil NYSE:BSBR.K BOVESPA:SANB11, SANB3, SANB4 is the Brazilian arm of Banco Santander with corporate and wholesale banking operations that have a global reach. Private for the first 14 years of existence, it went public on the New York Stock Exchange October 7, 2010 when it raised $8.1 billion (19% more than the bank expected due to a higher number of shares) in the world's largest IPO that year and the biggest for a Brazilian company (the offering in New York and Brazil was concurrent).[1] Like its two main domestic competitors (Itau Unibanco Holding SA (ITUB) and Bradesco are the only 2 banks with more assets, revenue and market cap) Banco Santander Brazil offers a full spectrum of banking products and services designed to meet the needs of a diverse clientele base. Individuals are provided with demand deposits in the form of checking and savings accounts, home and vehicle financing/leasing, retirement plans, credit cards and other loans and insurance; corporations are also offered these however theirs is on a much larger scale and structured differently (for example loans are payroll loans). Also included within Commercial Banking is foreign exchange financing, private banking and related services. Although division Wholesale Global Banking appears to serve foreign customers many of its clients are actually multinational companies based in Brazil (they account for nearly all loans in total and within the division). Public securities (issued by the Brazilian government) make up 61.2% (3qfy10) of securities (R80.47/US$45 billion) with financial instruments at 6.3%. In 3qfy10 staff totalled 52,702 1.8% more than the previous quarter, 3.4% more than 3qfy09.[2]
Helping the bank are risk reducing policies regarding loans that have gotten tougher more recently (credit risk management process involves ensuring that borrowers have substantial collateral as high as 67-100% in some cases, though even with that the bank more recently (2010) performed slightly worse than competitors in terms of non performing loans (5% in September 2010). Brazil's allowance for bad loans covers 120% to 140% of Itau and Bradesco's non performing loans but only 80% for Banco Santander Brazil.[3] On the national scale it has a Aaa long term rating from Moody's.
Loans which totalled 153.998 billion Reis (US$86.5 billion) in September 2010 are spread evenly between 4 different groups; Individuals (31.4%), Corporate (28.2%), Small and Medium Sized Enterprises (23.2%), Consumer Finance (17.2%).[2] In September 2010 the bank had 24 million customers served at over 3,600 outlets, 10.6 million accounts and $107 billion in investment funds[4]
Company Overview
With a 10.2% market share it is the third biggest player in the retail private banking sector.[1] Loans and investment activities are sizeable (investment securities particularly those issued by the government of Brazil (over 70% of all securities), make up almost a quarter of all assets (total assets were over $200 billion in early 2010). Most borrowers are midsize companies demanding loans (provided as a single payment or monthly, bi annually) to buy or lease equipment and other business related capital. Other than the two most important subsidiaries Commercial Banking and Corporate Banking there is
Global Wholesale Banking (more than 700 large corporate clients) - Among loans provided are construction and mortgage real estate loans. Also deals in derivatives.
Products - includes deposits, credit facilities of various kinds, derivatives, treasury and global transactions.
- Deposits - (interest and non interest paying) Demand deposits, savings accounts, time deposits (which pay interest and mature after at least 1.5 years).
Banco Santander Brazil also owns interest in some other banks, the most recent interest acquisition being ABN AMRO a leading Dutch financial institution with retail, corporate and private banking operations in 15 countries. ABN employs over 150,000 people and has assets worth over US$1.3 trillion.
Business and Financials incl revenue, assets, net interest income, loans
Loans which totalled 153.998 billion Reis (US$86.5 billion) in September 2010 were 15.83% higher than in September 2009. The corporate sector experienced the largest growth in aggragete and percentage terms hitting R$43.466 billion (24.2% growth over 12 months) going from being 17.27% smaller than the largest segment Individuals to 11.1%. None of the clientele groups declined however Consumer Financing showed some weakness. In September 2010 loans were spread fairly evenly among Individuals (31.4%), Corporate (28.2%), Small and Medium Sized Enterprises (23.2%), Consumer Finance (17.2%).[2] One of the only indicators that was down in the first nine months of 2010 were banking fees (by 2.9% down to R1.781 billion) which was surprising considering total net fees jumped 28.3% year on year.
3QFY10 Net fees grew 3.9% but the efficiency ratio (income/expenses) dropped to 1.6 basis points (to 34.4%). Net interest income was reached a record high of over 6 billion Reis in the quarter (6.7% higher than the third quarter of 2009 and 2.9% growth quarter on quarter). Although administrative and personnel expenses rose 2.7% quarter on quarter to about US$1.55 billion net income grew 9.6% to R1.935 billion (about US$1 billion) the biggest quarter on quarter increase in the last 4 quarters. Market Capitalization reached R$ 86.5 billion (US$ 51.1 billion) on September 30, 2010 6.3 times the bank's IPO in October 2009. Helping the bank during the period was economic growth in Brazil particularly the industrial sector (which makes up a significant amount of loans). Corporate loans were 7.4% higher in the quarter compared to the corresponding period in 2009. The delinquency ratio stood was 6.1% overall, 7.9% for individuals (lowered each quarter over the last year). Total net fees increased by more than 28% led by Insurance, pension plan commissions (28.3% to R1.102 billion) and credit and debit cards (26.0% to R698 million).[2]
| using fx rates[5] USD million | 2007 fx rate 1.952 | 2008 fx rate 1.84 | 2009 fx rate 2.008 | 9M09[2] fx 2.083827 | 9M10[2] fx 1.780977 | Change (9M) | using fx rates USD million | 2007 fx rate 1.952 | 2008 fx rate 1.84 | 2009 fx rate 2.008 | 9M09[2] fx 2.083827 | 9M10[2] fx 1.780977 1.75 in qtr | Change (9M) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| net interest income | 7,830.31 | 9,958.02 | 27.2% | net income | 974.90 | 1,292.60 | 2,742.83 | 1,879.71 | 3,067.98 | 63.21% | |||
| net fees | 2,194.04 | 2,868.09 | 30.72% | personnel expenses | 3,865.00 | 4,648.01 | 20.26% | ||||||
| ROE (shareholders) | 10.2% | 10.3% | 0.1% | total assets | 55,491.41 | 159,885.79 | 157,356.86 | 146,958.00 | 204,360.57(qtr) | 36.64% | |||
| total equity | 5,229.77 | 27,082.17 | 34,494.72 | 26,713.35 | 41,033.10 | 53.60% | loans | 63,800.41 | 86,468.28 | 35.53% | |||
| securities | 36,730.98 | 45,183.07 | 23.01% | exp/inc | 36.0% | 34.4% |
Data in the table was changed to US dollars from Brazilian Reis (information in the company's report is only in Brazilian Reis) using exchange rates provided by irs.gov and x-rates.com (averaged out over specified period) Because the exchange rate changed significantly between the 9 months periods in 2009 and 2010 (rose 14.53%) growth or loss for each financial metric is magnified.
References
- ↑ 1.0 1.1 Banco Santander's Brazil Unit Raises $8 Billion in I.P.O. (2009-10-07).
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Banco Santander Brazil 2010 Third Quarter Report 6K Filing (2010-10-28).
- ↑ Banco Santander Brazil:Beware the Buzz (2010-10-07).
- ↑ Santander in Brazil. Retrieved on 2010-12-24.
- ↑ irs.gov yearly average exchange rates (2010).
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