Santander in the world

Santander in the world Santander in Olive trees more than 1,000 years old at Grupo Santander City, Boadilla del Monte, Madrid The results of clearly show the Bank s capacity to solidly weather this difficult environment and are an excellent starting point for the future. Emilio Botín, President

Banco Santander s attributable profit was EUR 8,876 million in, the third highest among the world s banks Santander in The Group s ordinary profit increased 9.4. Excluding the extraordinary capital gains of, profit was 2 lower. Record ordinary profit in Banco Santander conducted its business in in a very complex environment for the international financial sector, which had a very significant impact on the stock market and the profits of the main international banks. In this context, Santander continued to stand out for the high quality and recurrence of its earnings. Total profit was 2 lower at EUR 8,876 million. Ordinary profit (excluding capital gains and extraordinary allowances) increased 9.4. All margins posted double digit growth. The slower pace of lending was offset by stronger business dynamism and a greater focus on managing spreads. The Group tackled the higher cost of liquidity by concentrating more on capturing deposits (+18 in ). The Group s total revenues rose 14.6, significantly faster than the growth in costs (+7.8). As a result, the efficiency ratio improved by 2.3 p.p. to 41.9. Net operating income increased 19.5. The economic downturn is reflected in an increase in provisions, non-performing loans (NPL ratio of 2.04) and a decline in coverage (91). Nevertheless, the Group still has EUR 6,181 million of generic provisions. At the end of, the Bank had a core capital ratio of 7.5 after the capital increase of EUR 7,195 million with preferred subscription rights for shareholders. By increasing its solvency and maintaining a comfortable liquidity position, Santander was able to increase lending by 10 to EUR 621,348 million. Geographic and business areas Continental Europe s profit was EUR 4,908 million. The profits of the main business units increased 10.1, with good growth in Spain s networks and in the most recurring revenues and maintaining strict control of costs. In the UK, Abbey registered notable growth in revenues. Its profit was EUR 1,247 million (+20.5 in sterling). In a very competitive market, Abbey s banking activity increased solidly. The Group s profit in Latin America was EUR 2,945 million after incorporating EUR 228 million from Banco Real (only Q408). In dollars, the currency in which Latin America is managed, profit rose 18.2. Retail banking business contributed 85 of the Group s earnings. Despite the difficult situation in the financial markets, Global Wholesale Banking did well in customer revenues. Grupo Santander attributable profit change /, currency of management 20.5 18.2 9.4 11.0 Group Continental Europe UK Latin America $ Annual Report 63

Santander in the world Geographic positioning Continental Europe The largest bank in the euro zone by market value and profits Santander is geographically well diversified Branches 5,998 Employees 48,467 Loans* 323,911 Managed customer funds* 294,608 Attributable profit* 4,908 * Millions of euros. Banco Santander is present in 16 countries in Continental Europe. Its 5,998 branches tend to more than 25 million customers. In Spain, Santander is the retail and private banking leader, through its two networks (Santander and Banesto), and the specialised private bank Banif. In Portugal, Santander Totta is the leading private-sector bank by profits. Santander Consumer has leadership positions in consumer finance in Germany, Spain, Italy, Portugal and the Nordic countries. Santander s business model in Continental Europe is very customer-focused. Particular attention is paid to efficiency and prudence in risks, as a result of which recurring revenues are generated with controlled costs and non-performing loan levels are better than those of its competitors. Ordinary attributable profit by geographical areas* 32 Latin America Brazil: 12 * Mexico: 7 Chile: 6 31 Commercial networks in Spain 23 Rest of Europe 54 Continental Europe 1 14 United Kingdom * In the calculation of Brazil s share, only three months of Banco Real s results were considered. 64 Annual Report

Título United columna Kingdom Subtítulo The third columna largest bank in the UK by deposits Título Americas columna Subtítulo Santander columna is the leading financial franchise in Latin America Branches 1,303 Employees 24,379 Loans* 202,244 Managed customer funds* 227,271 Attributable profit* 1,247 * Millions of euros. Santander is the second biggest bank in the UK by mortgages and the third in deposits. It has 25 million customers. Its retail banking model, based on business strength, a wide range of innovative products and services and very low growth in costs, is enabling it to grow much faster than the market s average and become a leading bank in the country. Grupo Santander stepped up its presence in the UK by acquiring Alliance & Leicester and the branch network and retail deposits of Bradford & Bingley. These acquisitions brought forward Abbey s expansion plan by three years. These two banks, moreover, complement Santander s geographic positioning in the UK and give the Bank a stronger presence in the segment for SMEs. Branches 6,089 Employees 96,405 Loans* 92,684 Managed customer funds* 169,186 Attributable profit* 2,945 * Millions of euros. Santander has been present in Latin America for more than 60 years, supporting economic and financial development. The Group s franchise covers nine countries and it has leadership positions in those with the greatest potential: Brazil, Mexico and Chile. With the incorporation of Banco Real in, Grupo Santander Brazil becomes the third largest bank by deposits and the second by loans, with 3,603 branches and 21.9 million customers*. Santander enters the US retail banking market The acquisition of Sovereign Bancorp has given Santander since January 2009 a significant presence in the north east of the US, through 747 branches and more than two million customers. *Corresponds to the total number of clients, both accountholders and non-accountholders. 1 2 Annual Report 65

Santander in the world Key Group figures Balance sheet and income statement Million euros Total assets Customer loans (net) Managed customer funds Shareholders funds Total managed funds Net interest income (excluding dividends) Gross operating income Net operating income Ordinary attributable profit to the Group (1) Attributable profit to the Group 1,049,632 621,348 825,116 63,768 1,168,355 18,078 31,042 17,729 8,876 8,876 91,915 565,477 784,995 51,945 1,063,892 14,882 27,095 14,842 8,111 9,060 15.0 9.9 5.1 22.8 9.8 21.5 14.6 19.5 9.4-2.0 833,873 523,346 739,223 40,062 1,000,996 12,076 22,333 11,218 6,582 7,596 Ratios Efficiency ratio including amortization ROA (1) RoRWA (1) ROE (1) BIS ratio (3) Tier 1 (3) Core capital (3) Non-performing loan (NPL) ratio NPL coverage 41.86 1.00 1.85 17.07 12.2 8.7 7.2 2.04 91 44.22 0.98 1.76 19.61 12.7 7.7 6.2 0.95 151 4.56 0.88 1.60 18.54 12.5 7.4 5.9 0.78 187 The share and capitalization Number of shares in circulation (million) Share price (euros) Market capitalization (million euros) Ordinary attributable profit per share (euros) (2) Attributable profit per share (euros) (2) (1) (2) Diluted ordinary attributable profit per share (euros) Diluted attributed profit per share (euros) (2) Nominal dividend per share (euros) Book value per share (euros) (2) Price/book value per share (times) (2) (1) (2) PER (share price/attributable ordinary profit per share) (times) 7,994 6.75 53,960 1.2207 1.2207 1.2133 1.2133 0.6508 6.60 1.02 5.53 6,254 13.79 92,501 1.1924 1.3320 1.1809 1.3191 0.6508 7.34 1.88 11.56 6,254 13.18 88,436 0.9822 1.1334 0.9772 1.1277 0.5206 6.41 2.06 13.42 Other figures Number of shareholders Number of employees (4) Continental Europe United Kingdom Latin America Financial Management and Equity Stakes Number of branches (4) Continental Europe United Kingdom Latin America 3,034,816 170,961 48,467 24,379 96,405 1,710 13,390 5,998 1,303 6,089 2,278,321 131,819 47,838 16,827 65,628 1,526 11,178 5,976 704 4,498 2,310,846 123,731 44,216 17,146 60,871 1,498 10,852 5,772 712 4,368 (1) The figures for and exclude capital gains and extraordinary allowances. (2) The calculations for and include in the denominator the number of shares into which the Valores Santander will have to be converted. The figures have also been adjusted by the capital increase at the end of with preferential subscription rights. (3) under the new Basel agreement BIS II. and under BIS I. (4) The increase in the number of employees, shareholders and branches in is due to the incorporation of new companies to the Group. 66 Annual Report

Banco Santander s attributable profit in was EUR 8,876 million, 2 lower than in. Ordinary profit, excluding capital gains, was 9.4 higher. ATTRIBUTABLE PROFIT Million Euros -2.0 EARNINGS PER SHARE Euros +2.4 (1) (2) 7,596 6,582 (1) 9,060 8,111 (1) 8,876 +9.4 (1) 0.9822 1.1924 1.2207 GROSS OPERATING INCOME (3) Million Euros +14.6 22,333 27,095 31,042 NET OPERATING INCOME Million Euros +19.5 11,218 14,842 17,729 EFFICIENCY -2.3 p.p. CORE CAPITAL (4) +1.0 p.p. 48.6 7.2 44.2 41.9 5.9 6.2 (1) The figures for and exclude capital gains and extraordinary allowances. (2) The calculations for and include in the denominator the number of shares into which the Valores Santander will have to be converted. The figures have also been adjusted by the capital increase at the end of with preferential subscription rights. (3) Ordinary margin = intermediation margin + services income + financial income expenses and amortizations. (4) under the new Basel agreement BIS II. and under BIS I. Annual Report 67