14th Sep 2007 13:28
Banco Santander Central Hispano SA14 September 2007 --------------------------------------------------------------------------------Press Release-------------------------------------------------------------------------------- Santander Investors' Day Emilio Botin: "We will end 2007 with EUR 8,000 million of ordinary net attributable profit" • The Banco Santander Chairman confirms the targets announced at the Annual General Meeting in June. • "Our strategy places us in an excellent position, a winning position, within international banking" • "The Group has the capacity to grow our EPS 5% ahead of our competitors in the next two years" Madrid, September 14, 2007 - Santander Chairman Emilio Botin today closed ananalysts' and investors' meeting saying he is confident that "the bank'sstrategy places us in an excellent position, a winning position, withininternational banking." Botin also summed up the reasons explaining Santander'shistory of success. "We've known how to systematically adjust our ambitions tothe capacities we had at different times. We've never gone beyond where wecould. But neither have we been a single step behind where we could be. We'vealways optimised our human, economic and financial resources and we willcontinue to do so in the future." The Chairman of Santander highlighted the creation of value for shareholders asthe focus of the bank's corporate culture. He went through Santander's trackrecord in the last twenty years and recalled that "Santander's annual averageshare return has been 16.5% since 1997, meaning that every euro invested in ourshares at the beginning of 1997 has grown fivefold". Botin pointed to two levers that have enabled Santander to become the seventhbank in the world in terms of profit in 2006: - Growth and diversification of our business, focusing always on retail banking. - We have improved and doubled the efficiency of our business model, investing in technology and human resources and implementing a structural process of cost discipline and efficiency enhancement. "We've known how to capitalize on our successes to create capacities in managingthe business, the balance sheet and earnings, to continue investing in thefuture and, thus, increasing medium-term value creation. Banco Santander hasalways sought to align short-term profitability with the investments required tobe a better, more diversified and profitable bank in the medium term. In short,we've been obsessed with the idea of keeping the highest standards. Thisrequirement has allowed the bank to attract one of the best management teams ininternational banking". Botin attributed a large portion of the Group's success to the management team.He said: "Santander's team has enabled profit to grow 50% ahead of our localcompetitors. Without their contribution, the bank's EPS would have grown 11%, inline with the rest of global banks, instead of 15%. Clearly, our ability to growmore than international banking is thanks to our management team." "I am convinced the market is progressively accepting that: - Our executive teams' capacity to plan, execute and manage skilfully our business initiatives is one of Santander's main differentiating factors and competitive advantages. - Santander has execution capacities. - This strength is more than proven." The Chairman of Santander also spoke about growth strategy, consisting in"focusing on guaranteeing sustainable growth of our EPS, ahead of our maincompetitors." "To achieve this," he added, "the Group has been for many yearsusing two levers: sustained and recurrent organic growth and value-creatingacquisitions. It would have been impossible to build a success story if wehadn't strived to count on two supporting factors and not just one." Regarding organic growth, Botin explained that what makes Santander differentfrom other global banks is the focus on retail banking, which is a source ofrecurrent revenues, and he highlighted that, excluding the Chinese market,Santander has the largest branch network in international banking. Moreover, heunderlined the importance of geographical diversification, sound risk managementand the development of state-of-the-art technology -essential to systematicallyimprove efficiency- as the keys to higher growth potential. "For all these reasons, and the low risk profile of our businesses, our thirdquarter earnings will be in line with the trend shown in the first half of theyear. I can ratify what I already said in the AGM in June: We are in line toregister ordinary net attributable profit of EUR 8,000 million for the year." "Our business model, with a moderate risk profile, the strength of our balancesheet and our broad provisions place us in a favourable position whatever themarket conditions", Botin said. He also mentioned the current market situation."In the last few weeks, we've seen a clear adjustment in international financialconditions, which has created liquidity tensions, increased the cost of risk andpenalized the use of certain financial instruments. I am convinced the liquiditysituation will soon be resolved because it is not based on fundamental factors.As to the adjustment in the cost of risk, I must say I think it's reasonable, asit puts things where they should be and, undoubtedly, benefits companies such asSantander, with a more transparent and predictable business and lower risks." The Santander Chairman explained his position regarding acquisitions. "I amconvinced that in order to maintain recurrent EPS growth ahead of ourcompetitors, it is key to actively manange our business portfolio: investing inbanks and markets where our management enables strong profit growth and, thus,value creation; but also, when appropriate, disposing of assets which are notessential and where our ability to create value is limited." "We're not trying to build a larger bank, but rather a better bank: moreprofitable and with better growth and value creation prospects. That's whySantander's main criterion in acquisitions is investing in retail banking, withthe goal of controlling management. The acquisitions we do must enable us toachieve important and sustainable growths in the mid term as a result ofSantander's management model." As an example, he mentioned the Abbey acquisitionand the joint offer, together with Royal Bank of Scotland and Fortis, for ABNAmro. Regarding the latter, Botin said: "It is an acquisition which fitsperfectly in this strategy of buying and selling. We're not only proposing aninvestment which meets our strategic and financial criteria, but we're financingit in the most efficient manner for our shareholders." Finally, Botin reiterated his "confidence in the Group, solidly based. Santanderis today living its best moment in history and I am convinced this will continuein the next few years, whatever market conditions, in a sustained track recordof excellence and value creation for our shareholders." Also participating in the second session of Santander Investors' Day were MatiasRodriguez Inciarte, third Vice Chairman and Chairman of the Risk Committee; theexecutive vice-presidents of Technology and Operations, and of FinancialManagement; and the managers of global areas in Wholesale Banking, AssetManagement, Insurance, Private Banking and Cards) Risks: Matias Rodriguez Inciarte, head of risk management for the Group, saidthat Banco Santander has a medium-low and predictable risk profile. Loans tocustomers account for 62% of the Group's balance sheet, of which 83% isfinancing to retail customers an SMEs (retail banking) and 17% is corporatecredit. "Our activity in the new forms of wholesale finance, in high risk dealsor businesses outside our core markets and customers is very marginal." Matias Rodriguez Inciarte said: "In the Spanish real estate market, we havealways acted prudently and have deliberately limited our market share inhigh-risk segments." Santander's aspiration is to keep the low volatility andpredictable risk profile, together with the excellent risk quality ratios in themarkets where we are present. Rodriguez Inciarte recalled that Banco Santander'sgeneric provisions amount to EUR 6,000 million. Technology: Jose Maria Fuster, head of Technology and Operations, said: "We havedeveloped state-of-the-art technology, which is essential to systematicallyimprove efficiency and to be supported by a platform which gives us a commercialadvantage in our businesses. In a market as competitive as financial servicestoday, technology is a decisive instrument to achieve permanent efficiencyimprovements and to tackle constant competitive pressures in margins andcommissions." Jose Maria Fuster added that "technology is key to rapidly improve proceduresand costs in acquisitions we integrate into the Group, as is the case in Abbey." Financial Management: Jose Antonio Alvarez, executive vice-president of theFinancial Division, said that we've seen, in the last few weeks, an adjustmentin the international financial situation. He thinks "in the new cycle, we expectthe distinction between good and bad banks to grow." Jose Antonio Alvarez explained that capital discipline is one of Santander'smain hallmarks, visible in the sale of loans to free capital, minimise capitalincreases, the release of capital through the sale of non-core assets, andshareholder remuneration with a dividend equivalent to 50% of ordinary profit. Santander's Global Businesses Wholesale Banking: Adolfo Lagos, head of Santander Global Banking & Markets,said the main target is to "put together a global wholesale business in linewith Santander's potential." The levers to achieve this will be: to furtherpenetrate in transactional banking; distribute wholesale products to LatinAmerica; extend project finance to other sectors; grow our market share in ourmain customers' businesses and enhancing our distribution capacities,thuscreating business that is later distributed in the market. Adolfo Lagos underlined that the Division has a high revenue growth target, witha 20% CAGR through 2009, based on attracting more business per customer andincreasing capital rotation to maximise value creation. Asset Management: Joan David Grima, head of Santander Asset Management,explained that this global and integrated unit will continue progressing in itscapacities to "provide Santander and third parties with innovative products,maintaining efficiency as the main competitive advantage." Joan David Grima said the unit should register annual organic growth above 10%in assets under management and revenues until 2009, enabling to increase pre-taxprofit over 15%. Seguros. Jorge Moran, head of Santander Insurance, said activity in this unit is"based on the size and strength of the Group" and that it's aspiration is toanticipate customers' needs and take advantage of the local distributioncapacity of the Group's banks. Jorge Moran believes in sustainable and quality growth, which would allowrevenues to increase around 20% until 2009. This growth will be supported in themiddle term by bancarisation in Latin America, which entails strong loan andinsurance growth, and, in the long term, by Europe's demographic changes. Private Banking. Javier Marin, head of Santander Private Banking, the globalunit created recently, said that the main challenges for this quarter are forthe private banking unit in Italy to be fully in place and, in 2008, to beginthe transformation of the business in the UK, together with the adaptation andimplementation of the business model to each Latin American bank. Javier Marin anticipated the unit will grow assets under management - EUR 96,000million at the end of last year - by 18% annually to 2009. This growth rate willenable CAGR of 20% in pre-tax profit. Cards: Ramon Tellaeche, head of Santander Cards, explained that the focus of theunit is "to be the best specialist in means of payment integrated in a retailbank in the world", counting on 16 million credit cards, 6 million corporatecards, 32 million debit cards and 22,800 ATMs. Ramon Tellaeche said the main financial target is to finish 2009 doubling 2006revenues, which amounted to EUR 1,657 million, maintaining credit risk undercontrol. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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