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  1. 1. Ramón Tellaeche Santander Cards
  2. 2. DisclaimerBanco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements. These forward-lookingstatements are found in various places throughout this presentation and include, without limitation, statements concerning our futurebusiness development and economic performance. While these forward-looking statements represent our judgment and futureexpectations concerning the development of our business, a number of risks, uncertainties and other important factors could causeactual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) generalmarket, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currencyexchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financialposition or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past andfuture filings and reports, including those with the Securities and Exchange Commission of the United States of America (the “SEC”)could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results todiffer materially from those in the forward-looking statements.Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, informationavailable and views taken on the date on which they are made; such knowledge, information and views may change at any time.Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of newinformation, future events or otherwise.The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly availableinformation, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiringsecurities must do so only on the basis of such persons own judgment as to the merits or the suitability of the securities for itspurpose and only on such information as is contained in such public information having taken all such professional or other adviceas it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. Inmaking this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal inshares in Santander or in any other securities or investments whatsoever.Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buyany securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. SecuritiesAct of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation orinducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Servicesand Markets Act 2000.Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price orfuture earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in thispresentation should be construed as a profit forecast. 2
  3. 3. Index 1 What is Santander Cards 2 Strategy 3 Main Targets 3
  4. 4. Index 1 What is Santander Cards 2 Strategy 3 Main Targets 4
  5. 5. Our approach continues to be the world‟s best integratedcards specialist within a retail bank (since 2002)…Cards Specialist Retail Bank Product focus Customers Specialized Traditional Channels: capabilities: risk, branches/ agents, call- marketing center, web pages Direct channels: Brand Telemkt / Mailings Economies of scale Specialized systems… contributing to improve our local banks‟ performance 5
  6. 6. Our model is based on managing all levers along the product lifecycle using our own methodology Portfolio Management Activation Spending Balance Building Retention Depth of cardholder relationshipAcquisition VALUE CHURN TIME RISK MANAGEMENT ANALYTICS SERVICING TECHNOLOGY MULTI-CHANNEL 6
  7. 7. Santander Cards Global Division‟s value to the Group Card Card Knowledge Economies of scale s Homogeneous Business Model Talent Management: global opportunities, specialist trainings Common methodologies Global relationships with key Similar organizational structures industry players (Amex, Visa, across countries MasterCard, Diners) True best practices sharing Global Products and Alliances Global specialists and knowledge (Elavon, FDI, Ferrari, etc.) initiatives (Forums, Campaigns Library, Benchmarking, etc.) Value added to the Group 7
  8. 8. All clients around the world receive the same globaldesign in Debit Cards and Traditional Credit Cards 8
  9. 9. And our model also pushes innovation and creativity in accordance with the local market environment with proven cases of success Brazil Mexico Spain PortugalRevolving Cards UK Puerto Rico Spain BrazilTransaction Cards Chile Mexico Spain Portugal Security Cards 9
  10. 10. The most recent successful case is Ferrari Global Card successfully launched in 5 countries Spain Mexico Brazil Portugal GermanyBlockbuster Product 300,000 Ferrari Cards in the world in one year.Value Proposition Very relevant, aspirational, exclusivity 10
  11. 11. Santander Cards - Key Figures (2010) 16 Countries As part of Santander Retail Bank Activities + Santander Consumer Finance The Nilson Report Top Issuers Worldwide - Turnover 2010 Credit Card Country Santanders Position 36 million cards Argentina 1st Brazil 3rd €41 billion Turnover Chile 1st Germany 5th Mexico 3rd Debit Card Norway 6th Portugal 4th 57 million cards Poland 4th €119 billion Turnover Spain 2nd UK 5th Sovereign (US) 27th Economics €15 billion Loans €4 billion Revenue (includes credit, debit & acquiring) Note: Figures Include Banesto and Santander Consumer Finance (vs. Annual Statements that refer only to Santander Retail Networks) 11 Note2: The Nilson Report Ranking based on Credit+ Debit turnover except USA (only Debit). 2009 information for Germany, Norway, Portugal and Poland
  12. 12. Index 1 What is Santander Cards 2 Strategy 3 Main Targets 12
  13. 13. Santander Cards achieved 20% growth in revenuesnet of risk provisions between 2007 and 2010 CAGR Revenues net of risk Loans (€MM) Revenues (€MM) provisions (€MM) 17% 19% 20% 15,220 3,904 2,840 9,586 2,313 1,633 2007 2010 2007 2010 2007 2010 Note: Figures include Banesto and Santander Consumer Finance Note 2: Santander Cards perimeter includes Credit cards, Debit cards, Merchant Acquiring and ATMs 13
  14. 14. Key priorities for Santander CardsTotal loans 2010: 15,220 MM Euros2% of Santander Group Customer Credits Poland & USA 1 Brazil Integrate and develop new geographies Capture growth SCF opportunities Spain4 Spain, Portugal Portugal 10% Build a competitive acquiring business & SCF* 9% 33% Increase transactional activity 22% 3 UK 2 LATAM (ex. Brazil) Penetrate Santander Consolidate growth customers base 26% and leadership position * Includes operations of Santander Consumer Finance in 14 Germany, Norway, Italy, Poland and Spain
  15. 15. 1 Growth in Brazil‟s credit card market over the last years Market Loans (R$ Bn and YOY % growth) 33.2 31.6 28.5 29.0 29.2 25.6 25.7 27.0 25.0 25.4 22.1 28.8% 32.3% 25.4% 21.1% 16.2% 7.9% 17.2% 16.4% 12.5% 13.0% 13.6% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Santander Market Share % (1H 2011) Performing 12.0% Loans (<90d) Credit Outstanding turnover 14.0% Loans 11.7% Non 10.7% performing loans (>90d) Note 1: Market data source - Central Bank of Brazil 15 Note 2: Market share of 1H11 (Bacen and ABECs)
  16. 16. 1 Brazil: focus on maximizing our customer base potential Penetration x Usage x ProfitabilityMaximize 80% of 64%customer 58% 10% increase in Added value Newbase accounts 39% activity between products andpotential 2010-13 services 2007 2010 2013 Continue selective growth in Enter partnership agreements open-market customers. for co-branded cards.Compete in 20% of Focus on prime segments Leverage Group experiencenon-bank New (UK, Spain, Chile)customers accounts High risk predictability thanks to know-how Focus on strategic partners: acquired in past 5 years Shell / Esso and Telefónica 16
  17. 17. 1 Merchant Acquiring: on track to meet 2010-2012 objectives 155,200 new merchants since launch 300,000 new affiliated merchants in March 2010 (7.3% share in number of merchants). 37,600 new current accounts; Initial 150,000 new focus was on cross-selling to existing current accounts customers. 2% share in volume; Initial focus on 10% share in transaction volume small and medium merchants. Corporate business to be developed. (in 2013) Source: Santander Brazil Conference Call presentation 2Q11 17
  18. 18. 2 Back to growth in Latin America (ex. Brazil) Average Loans (Million euros) yoy % 5,000 -31% +18% Expected 4,000 annual growth 2010-13 3,000 2,000 20% 1,000 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Mexico Others LATAM 18
  19. 19. 2 The crisis had a strong impact on Mexico, but our risk performed better than the market and we gained important knowledge Non Performing Loans Main Actions taken during the crisis (% balance) Restriction on new accounts (approval rate from 44% to 11%) and closure of open-market14% Santander acquisitions Market Credit limit decreases by 30% and reduction12% of cash advances by 80% Strengthening collection and recovery10% processes Aggressive repricing to compensate credit8% losses (+700bp of yield)6% Key Lessons Learned Balance growth between internal customers4% (x-selling) and non-bank customers. Deepen relationships with non-bank customers.2% I II III IV I II III IV I II III IV I II III IV I II Reinforce risk capacities, e.g. “stop-loss” 2007 2008 2009 2010 2011 indicators, methodology to react in crisis situation. Source: CNBV Mexico. Market data does not include Santander 19
  20. 20. 2 Mexico is now resuming commercial activity focused on bank customers ~90% Branches Acceleration in Acquisition and customers New accounts („000) 250 Focus on 200 cross-selling 150 to customer 100 50 base 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Using Bank Growth in Loans for the first time since 2008 channels (MOM%) 4% 2% And 0% integrated -2% offers -4% -6% -8% Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 20
  21. 21. 3 UK: focused on cross-selling to our customer base Market Competes in Card Santander Promotions Builds Relationship Focus on cards cross-selling to bank‟s customer base Interest Free Term Build relationship through on-going value 0% for 22m - Reward customer‟s everyday spend 20m Leverage Bank channels (branches, internet, call-center) 16m 12m X2 Active accounts (2010-13) 2007 Time 2011 Santander 1-2-3 World MasterCard® 21
  22. 22. 4 Spain and Portugal: increasing transactional activity Average Loans YoY Growth 1H11 Santander Spain + Portugal Deleveraging Financial systems in restructuration markets Lending restrictions (liquidity, risk) -2.2% Turnover* YoY Growth 1H11 Achieve growth superior to market Spain + Portugal by deepening customers Focused on relationship with the bank - 100% of credit card customers are bank 6.4% transactional customers activity 4.2% 7% Santander‟s expected annual growth (2010-13) Market Santander Note: Does not include Banesto nor Santander Consumer Finance * Turnover: POS credit + debit 22
  23. 23. 5 New geographies: Poland and US Integrate BZ-WBK Launch in-house credit Cards operations cards in Sovereign High growth potential market (16% Terminated agreement with yoy growth in Debit + Credit BofA, recently purchased $200M spending in 1Q11). Sovereign cardholders portfolio. Well-positioned bank: 4th player in In-house credit card to be Cards (7% market share), launched in 1S 2012. innovations in pre-paid, contactless and mobile payments. Implement Santander Cards‟ model, as we did in UK. Implement Santander Cards model to generate revenues and costs Leverage Sovereign customers synergies. relationship and channels. 23
  24. 24. Index 1 What is Santander Cards 2 Strategy 3 Main Targets 24
  25. 25. In conclusion, our 2013 objectives are… 1 Brazil - Capture growth in Issuing & Acquiring Revenues net of risk provisions (€MM) 2 Latam (ex Brazil) - CAGR Consolidate growth and 20% leadership position 5,000 3 UK - Penetrate Santander customer base 2,840 4 Spain, Portugal & SCF - Increase transactional activity 5 Poland & USA - 2010 2013 Integrate and develop 25