2013 Annual Report

BUSINESS PERFORMANCE Consumer Finance Santander Financiamentos is in charge of loans outside of the branch network and is the main vehicle for consumer finance in Santander Brazil. It operates with a business mix that diversifies risks and opportunities. Santander A Santander Financiamento customer service stall in a car dealership in São Paulo SANTANDER FINANCIAMENTOS ENDED 2013 AS THE LEADER IN BOTH THE VEHICLE FINANCING MARKET AND THE GOODS AND SERVICES CONSUMER FINANCING MARKET The activity includes four pillars: vehicle financing; commercial partnerships (especially with car makers) WebMotors; and CDC Bens e Serviços (Consumer Loans for Goods and Services), with business in sectors such as furniture, tourism, boats, health and technology, to name a few. Under this model Santander Financiamentos (in a joint effort with its partners) ended 2013 as a market leader both in the vehicle finance market and the Goods and Services Market, with strong operations in core segments, with high growth potential. Partnerships with carmakers such as Nissan, Renault and Hyundai strongly contributed to the Bank's solid results in this segment. The period also witnessed the expansion of WebMotors, which remains the leader in the online car catalog segment. In 2013, in order to widen its scope, the Bank acquired the website Meu Carango, with a strong performance in Northeast Brazil while executing a partnership agreement with the Australian company Carsales, one of the worldwide leaders in online vehicle classified ads, with operations in Asia and Oceania. G4-13 The consumer financing activity also evolved in internal channels. The vehicle leasing portfolio marketed in the branch network posted sales of R$ 3.2 billion, a 16.3% increase YoY. SME Segment The SMEs segment is strategic for Santander Brazil, both for its importance in economic development, with strong job creation, income growth and the excellent business opportunities it offers, considering its characteristics such as low banking coverage, increasing formalization and the improved quality in project management. The main tool used by the Bank to provide support to SMEs is innovation. Santander Brazil is the only institution in the country that operates in a massive way with a unified service model, which places under a single manager both the individual account and the firm's account for small entrepreneurs; the Bank was also pioneer in launching the Conta Integrada (1) model, which brings together the checking account and acquiring services (capturing and processing credit and debit card transactions). In 2013 the Bank included in its portfolio the products Capital the Giro Protegido (Working Capital Protected) and the Cheque Empresa Protegido (Corporate Cheques Protected). Both are insurance products that ensure the firm owner the settlement of the loan balance, limited to R$ 100 thousand, in case of death or permanent disability in case of accidents involving the firm's owners. Also, the Bank increased its commercial team from 64 to 73 the number of Núcleos, which are regional units dedicated to serving and providing support to SMEs. The combination of a unique services model, with an attractive product offer contributed to the Bank's development in two priority goals in 2013: client acquisition and building client loyalty. Within one year, the active client base grew by 8.2% and the total number of clients deemed to be loyal grew by 15%. The Bank also expanded the diversification of its revenue mix in the SME segment. The rate of commission as a percentage of the net profit increased from 16.6% in 2011 to 18.6% in 2012 and 23.5% in 2013. This decreased the Bank's exposure to credit cycles and especially to non-collateralized loans, with positive impacts on NPLs. By the end of December, the share of collateralized loans in the portfolio mix was 58% versus 51% YoY. +8.2% GROWTH IN THE ACTIVE CLIENT BASE Santander S 76 Annual Report 2013 (1) Learn more visit http://tinyurl.com/reanual8. 77

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