2013 Annual Report

MESSAGE FROM THE CEO 54-1 OUR A OUR ACTIONS WILL ALWAYS BE GEARED TO OUR CLIENTS AND THEIR SATISFACTION. PROFITABILITY, GROWTH AND BRAND RECOGNITION ARE JUST CONSEQUENCES THEREOF 2 HOW DOES SANTANDER SEE THE POTENTIAL OF BRAZIL IN THE COMING YEARS AND WHAT ARE THE BANK'S PLANS FOR THE COUNTRY? Few economies worldwide have such a critical mass and potential for growth as Brazil. The country relies on a strong local market and a dynamic, stable business environment, while generating great investment opportunities. Of course the international crises in the last few years led the country's economic growth to remain below the desired levels and highlighted the need for reforms at a macro level. However, these issues did not change our trust in the country. Brazil is a priority for the Santander Group and remains as such. In a recent speech, the Group Chairman Mr. Emilio Botín said that "a concern we would have about Brazil is not being in Brazil". 2013 SAW MATERIAL CHANGES IN THE FINANCIAL SECTOR. HOW DO YOU ASSESS YOUR PERFORMANCE AND WHAT WERE THE KEY ADVANCEMENTS? The transformational scenario in the financial industry demands that the banks increase productivity while enhancing efficiency in operations. This effort did not end in 2013: it is a goal we must pursue at all times if we want to remain competitive. To that effect I highlight two efforts: we completed our offer/ segmentation for individuals with the launch of both Contas Combinadas and Santander Select; we started operations for our new Data Center, the most advanced in Latin America; with an excellent management in credit grant and recovery, we managed to reduce NPL ratio to a level that is below the market average; and with a conservative cost control policy our expenses grew by half the inflation rates for the period. Another point we would like to highlight in 2013 was the amazing response by our employees to our internal suggestion program "Trabalhar Bem" (Working Right). We had the participation of more than 10,000 employees who suggested 942 ideas that were either adopted or are in the implementation phase. This engagement by our employees encourages us to further advance in our efforts. 3 WHAT ARE THE SANTANDER BRAZIL OBJECTIVES AND THE STRATEGIES FOR 2014? Our objective can be summarized in a single word: Growth. We strive for selective growth, with efficiency and profitability. To that effect our focus is on a single element: our clients. We want to increase the number of clients. Loyal, happy customers. Our actions will always be geared to our clients and their satisfaction. Profitability, growth and brand recognition are just consequences thereof. 2014 will be our commercial year. HOW HAS THE BANK SOUGHT TO IMPROVE CLIENT SATISFACTION? In 2013 we had an increase in the complaints with the Central Bank. Although the number of complaints is rather small vis-à-vis our total number of clients, this is a situation that we can't - and won't accept. The "Trabalhar Bem" program is tacking the root causes of such complaints and solving the issues involved. The outcome will be felt soon. Incidentally, the number of complaints placed with Customer Service and Ombudsman reflect this initiative. We need happy clients and as a consequence, loyal clients. This is one of the key points in our strategy. Not only do we strive to increase the number of clients, but we also want to increase the number of clients for whom Santander is the main bank. WHAT IS THE POSITIONING OF SANTANDER BRAZIL IN TERMS OF SUSTAINABILITY AND HOW HAS THE BANK ADVANCED ON THIS ISSUE? Sustainability is one of the pillars of Santander Brazil. In addition to being one of our main tenets such as the Global Compact, the Equator Principles and the Pacto Nacional pela Erradicação do Trabalho Escravo, we have our own agenda with focus on providing support to develop the most critical topics for Brazil. To that effect, we lead our initiatives around three tenets: Social and Financial Inclusion, Education and Sustainable Business. In 2013, we both achieved and consolidated key advancements in these three topics. Among other achievements, we granted microcredit in excess of R$ 2 billion; we exceeded the level of 37,000 scholarships for low income students with high academic performance through the Santander Universities program; we granted approximately R$ 2 billion in social/environmental financing while launching a pioneering program that offsets carbon emissions on a daily basis for both firms and individuals. In 2014 we will advance our work plan contemplating our long-term commitments and outcomes, fully integrated to our business with quantifiable metrics. Jesús Zabalza CEO São Paulo, March 2014. 8 Annual Report 2013 6

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