2013 Annual Report
R$5.7
R$ Billion
NET INCOME
ECONOMIC/FINANCIAL
INFORMATION (BR GAAP)
SELECTIVE
GROWTH
The loan portfolio grew
by 7.3% and NPL ratios
dropped 1.8pp
11.4%
IMPROVEMENT IN THE PROVISIONS
FOR NON-PERFORMING LOANS
R$ 75.5
Billion
IN INDIVIDUAL LOANS
Scenario
The economic activity remained at a moderate pace
in 2013, with an improvement YoY. The Q4 GDP reported
a 1.9% growth YoY and ended the year with a growth
of 2.3%, up from 1% in 2012. Household consumption is
expected to report a 2.3% growth while investments now
project a 6.3% growth. On the supply side, the services
sector continues to drive economic growth.
Inflation as measured by the consumer price index (the IPCA)
ended 2013 at 5.91%, slightly above the 5.84% recorded
at YE2012. Services remain as the #1 source of inflationary
pressure, offset by regulated prices. Under the circumstances,
the Brazilian Central Bank's Monetary Policy Committee
(the Copom) ended 2013 with a benchmark interest rate
(the Selic) of 10% per annum, another round in the cycle
of tight monetary policy that started last April.
The still vulnerable global environment has taken a toll
on Brazilian exports, with a slight drop of 0.2% YoY.
Imports, in turn, grew 7.4% YoY. As a result, the trade
surplus came at USD2.5 billion, a plunge versus the
USD19.4 billion recorded last year. Thus, the current
account deficit totaled USD81.4 bn while direct foreign
investments reached USD64 bn for the same period.
USD/BRL exchange rate ended the year at 2.34 after
undergoing much volatility due to the changes in the
monetary policy by the US. The efforts by the Brazilian
Central Bank via the currency swap agreement auctions
was instrumental in the control of exchange rate volatility.
The weak pace of economic activity and the tax giveaways
took a toll on tax revenues and the government's primary
surplus ended 2013 at 1.9% of the GDP, thus contributing
for the public debt of 3.28% of the GDP. On the other hand,
the net public debt fell by 1.5 p.p. and was 33.8% of GDP
by the end of the year. Gross debt fell by 1.7p.p. in the same
period to 57.2% of the GDP.
ECONOMIC-FINANCIAL INDICATORS
2013
2012
Country risk (EMBI)
233
149
Exchange rate (R$/US$ end of period)
2,340
IPCA (in 12 months)
5.91%
Selic rate target (p.a)
10.00%
CDI¹
2.31%
Ibovespa index (closing)
51,507
2,044
5.84%
7.25%
1.69%
60,952
1. Rate in force during the quarter.
Executive summary
Santander's managerial net profit(1) totaled R$ 5,744 million
in 2013, a decrease of 9.7% compared to the previous
year. Total equity came to R$ 53,446 million at the close
of the year, excluding R$ 9,374 million related to goodwill.
Return on average equity (ROAE), adjusted for goodwill,
stood at 11.0% for the year as a whole, 2.0 p.p. less than
at the end of 2012.
There were two non-recurring events in 2013, which
generated revenue of R$ 1,508 million after taxes,
R$ 1,205 million from the conclusion of the sale of
Santander Brasil Asset Management, booked under
non-operating income, and R$ 303 million from the
installment program and cash payment of tax and social
security debts(2), booked under other operating income.
These revenues were offset by non-recurring expenses
of the same amount(³).
General expenses totaled R$ 16,297 million in 2013,
2.9% (or R$ 454 million) up on the year before, less
than the period inflation. The efficiency ratio stood
at 47.5% in the year.
Soundness Indicators: the BIS ratio stood at 19.2%
in December 2013, down 1.6 p.p. in 12 months.
The coverage ratio (over 90 days) reached 179.4%
in December, up by 53.9p.p. in 12 months, due to
the better quality of the portfolio.
The total credit portfolio closed the year at
R$ 227,482 million, 7.3% up in 12 months.
The foreign currency credit portfolio, which also
includes dollar-indexed transactions, was impacted
by the devaluation of the Real against the dollar,
resulting in an increase in this portfolio. Excluding
the exchange variation, the total credit portfolio
would have grown by 5.7% in 12 months.
The expanded credit portfolio, which includes
other credit risk transactions, acquiring activities and
guarantees, came to R$ 279,812 million, 9.3%
up in the annual comparison.
50 Annual Report 2013
(1) Accounting net profit + 100% reversal of goodwill amortization expenses.
(2) Established by Law 12.865/2013 in Articles 17 and 39 (Refis).
(3) For more details, see page 30: "Non-recurring events in 4Q13".
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