Banco Comercial Portugues

Investor Presentation • Sep 23, 2015

Helping people and businesses prosper 0

Country Head Brazil

Banco Santander (Brasil) S.A. ("Santander Brasil") and Banco Santander, S.A. ("Santander") both caution that this presentation contains forward-looking statements. These forwardlooking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the "SEC") could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements.

Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. Santander does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this presentation available, Santander gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever.

Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000.

Note: Statements as to historical performance, share price or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast.

Note: The businesses included in each of the geographical segments and the accounting principles under which their results are presented by Grupo Santander may differ from the business included in the public subsidiaries in such geographies and the accounting principles applied locally. Accordingly, the results of operations and trends shown by Grupo Santander for its geographical segments may differ materially from those disclosed locally by such subsidiaries.

Agenda

Strengthening fundamentals for continued growth

1980	1990	2000	2010	2015-2016	2020	2030
Democracy	End of hyperinflation	Income distribution	Fiscal expansion	Fiscal contraction realignment to fiscal surplus	Infrastructure
			Macro
	Trade openness	Privatisations	Growing middle class	Reduce govt. intervention	Productivity
Financial System
Over regulation	Privatisation and consolidation	Bankarisation and credit boom	State-owned banks expansion	Reduced presence of state-owned banks	Further development of local capital markets

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2003-2014: Economic policies focused on income distribution improvement

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2015: Adjusting macro, converging policies

Sources: Santander Research and Central Bank of Brazil

2016-2018: a recovery period

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An attractive, consolidated banking market

	DOUBLE DIGIT PROFITABILITY	17.0% RoE
		Deposits	~78%
MAIN HIGHLIGHTS	MARKET SHARE	Loans	~70%
(5 largest banks)		AUM	~73%
	WELL CAPITALISED	BIS Ratio	16.3%
	WELL FUNDED	Loans/Funding	107%

Source: Central Bank of Brazil. Data 1H'15

Going forward, private banks have room to regain market share

• State-owned banks (SOBs) current market share (55%) is overweighted compared to the previous period (2000-2007)
• SOBs have limited capital availability to sustain accelerated growth
• SOBs are 2.3x more leveraged than private owned banks

Agenda

Strengths: Santander Brazil is well positioned to capture opportunities

FINANCIAL HIGHLIGHTS	1H'15
• Total Assets	€159bn
• Loan Portfolio¹	€81bn
Core Capital2 •	15.5%
RoTE3 •	14.8%

COMMERCIAL PLATFORM

Branches4 •	3,436
• ATMs	14,338

(1) Expanded (2) BR GAAP (3) Group criteria (4) Includes mini-branches

Strengths: proactive de-risking based on deeper knowledge of customer behaviour

Underwriting	Portfolio breakdown by rating
• Customer centric Risk Model	Individuals (%)
Underwriting enhancement: improvement of capabilities for credit • quality differentiation both in retail and in SMEs • SME risk model: deeper knowledge and proximity to customers Focus on better risk/return and longer term relationship products • (acquiring, mortgages)	22 35 High Risk 21 20 Average 58 45 Low 1H'12 1H'15
Monitoring and recoveries	SMEs (%)
• Early warning system: immediate response to deterioration of customers and portfolios • Improved collection capabilities: early delinquency focus, multichannel, balancing specialisation, …	31 High Risk 54 7 Average 7 62 Low 39 1H'12 1H'15

Strengths: we have laid the foundations for future growth…

(1) Sales. Data as of 7M'15 / 7M'14

Strengths: …and we have improved our customer experience

• Days to open an account:

• Market average: D+15
• Santander: D+1

CURRENT ACCOUNT+ CREDIT CARD + ACCESS CHANNELS

(1) Point of sale

• Number of codes required to access account data:
• Market: several codes
• Santander: single code

Onboarding Current account Integrated account

• Operation of POS¹ device:

• Market average: different product than the current account
• Santander: single offer with the current account

Opportunities: room for higher penetration in retail…

Sources: Central Bank of Brazil, World Bank

Opportunities: …and also in SMEs and Corporate

Sources: World Bank, Sebrae and Dieese

Agenda

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Focusing on the real goal: THE CUSTOMER

STRATEGY

Synergies across all segments

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A Individuals - differentiated strategy for each segment

• Build on existing branch network

• Launch a dedicated digital platform for the segment

• Brand reinforcement

• Multichannel approach: remote relationship manager, digital channels

• Aligning channel, product and market knowledge

• High potential growth

Strengthening the

Mass affluent

segment

• More products provided and acquired through digital channels
• Operational simplification

Our strategy

• Leverage on improvements/upgrades already delivered to:
• Larger SMEs
• Global SME platform with unrivalled customised offerings
• From average to leading / best in class
• Smaller SMEs: next segment to be re-launched
• High growth business platform in place

ACQUIRING

• Platform optimises banking with acquiring services
• Strong commercial proposition

C We will continue to implement a customer-centric model in all business decisions and operations

• Full roll out of the new customer branch model "CERTO"
• Further simplification of processes

An innovative retail platform for a new growing middle class

Branches Multichannel

• Complete SMEs Online Banking
• Offer new products at ATMs
• Expand biometric capabilities (100% penetration by 2017)
• Further development of the mobile platform (68% mobile banking penetration by 2018)
• Increase capabilities to service customers remotely

Increase the use of electronic channels

C Digital channels usage is thriving

USA 87.4 BRAZIL 57.6 China 49.3 18.0 India Mexico 44.4 Russia 70.5 Internet users (%) Digital customers (MM) High internet penetration Santander digital customers

4.5 9.2 +26% CAGR

2015(e) 2018(e)

Source: World Bank 2014

Helping people and businesses prosper 24 Complaints per 1 million customers (per month) JUL'14 DEC'14 MAR'15 6.7 2° 3° 3° 4° 13.6 JUL'13 1° TOP 3 IN CUSTOMER SERVICE QUALITY ²⁰¹⁸ Sources: Central Bank ranking and Ibope AUG'15 D Better service levels and customer satisfaction. The organisation is aligned with the objective: "É comigo Santander"

D We will achieve a larger and more loyal customer base

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We will extract full value of leading segments that already have a consolidated business model

Leader on the Auto market

• Market share 18%
• Best and largest web platform: Web Motors

Consumer Finance Global Corporate Banking Local corporate

Only international bank with full service

• 1st/2nd player in key activities:
• FX
• Financial advisor in Project Finance LATAM

• Trade Finance / Export Finance

• 2nd player

• Consistent leader in customer satisfaction

RoRWA 2018 >3% 2018 2018

• Increase loyalty through a more complete service offering • Intensify diversification of customer base

Double digit revenue growth

Sources: Central Bank ranking and Ranking Dealogic

Platforms upgrades support the growth of the businesses and assure efficiency

Prudent risk management continue to be a priority

• Top-class models
• Solid infrastructure
• High quality risk professionals
• Scenario analysis / Stress test
• Risk appetite
• Risk identification

(1) BR GAAP

Risk management: prepared to face the macro challenge

Agenda

2018 Brazil targets

		1H'15	2018
People	Great Place to Work bank ranking	-	Top 3
	Retail loyal customers (MM)	2.73	4.03
	Loyal SMEs and corporates (MM)	0.26	0.52
Customers	Digital customers (MM)	4.0	9.2
	Customer service quality (rank)	4th	3rd
	Fee income CAGR	11%2	>10%3
	NPL ratio¹	3.2%	~ peers
Shareholders	RoTE	15%	c.17%
	C/I ratio	39%	37%
	Number of scholarships 2016-2018 (k)		10.7
Communities	Number of micro credit 2016-2018 (k)		478

Note: Group criteria except FL CET1 (1) BR GAAP (2) 1H'15/1H'14 (3) 2018/2015

Transparent performance metrics for 2016

Note: Group criteria (1) BR GAAP (2) Among privates

Key takeaways

The only sizeable international bank in a highly attractive/profitable banking system

We believe in differentiation through:

Talent delivering Santander Brasil on an integrated manner. One team one goal: serving the customer

High quality and consistent customer service

Innovation/digital focus - setting the ground for convenience, speed and transparency

Cost discipline

Asset quality - embedded risk management culture at all levels

Commitment to Shareholders - superior returns stemming from focused management & clearly identified growth pillars throughout this presentation