UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of April, 2017

Commission File Number: 001-34476
 
BANCO SANTANDER (BRASIL) S.A.
(Exact name of registrant as specified in its charter)
 
Avenida Presidente Juscelino Kubitschek, 2041 and 2235
Bloco A – Vila Olimpia
São Paulo, SP 04543-011
Federative Republic of Brazil

 

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ___X___ Form 40-F _______

  Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  

Yes _______ No ___X____

  Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  

Yes _______ No ___X____

  Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:  

Yes _______ No ___X____

  If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):   N/A


 



 


Table of Contents

Managerial Analysis of Results BR GAAP


2


 


Data Summary for the Period

All information presented in this report considers the managerial result, except where otherwise indicated. It should be noted that, as of this quarter, some equity interests were accounted for using the equity method. Therefore, for better comparability, we have reclassified the 2016 information (please refer to page 28 of this report). The reconciliation with the accounting result can be found on pages 30 and 31.

MANAGERIAL¹ ANALYSIS - BR GAAP

1Q17

1Q16

Var.

1Q17x4Q16

4Q16

Var.

1Q17x4Q16

RESULTS (R$ million)

 

 

 

 

 

Net interest income

8,868

7,598

16.7%

7,825

13.3%

Fee and commission income

3,709

2,984

24.3%

3,740

-0.8%

Allowance for loan losses

(2,264)

(2,424)

-6.6%

(2,680)

-15.5%

General Expenses 2

(4,629)

(4,321)

7.1%

(4,831)

-4.2%

Personnel Expenses

(2,200)

(2,107)

4.4%

(2,397)

-8.2%

Administrative Expenses

(2,429)

(2,214)

9.7%

(2,434)

-0.2%

Managerial net profit 3

2,280

1,660

37.3%

1,989

14.7%

Accounting net profit

1,824

1,213

50.4%

1,537

18.7%

BALANCE SHEET (R$ million)

 

 

 

 

 

Total assets

713,517

668,750

6.7%

701,705

1.7%

Securities

166,131

151,377

9.7%

169,590

-2.0%

Loan portfolio

257,169

248,271

3.6%

256,883

0.1%

Individuals

93,986

85,593

9.8%

91,414

2.8%

Consumer finance

35,779

32,708

9.4%

34,777

2.9%

SME

32,511

34,064

-4.6%

32,799

-0.9%

Corporate

94,892

95,906

-1.1%

97,893

-3.1%

Expanded Credit Portfolio 4

325,426

312,018

4.3%

322,783

0.8%

Funding from Clients 5

300,678

283,141

6.2%

298,402

0.8%

Deposits (demand. saving and time)

145,750

134,503

8.4%

142,583

2.2%

Equity 6

58,994

54,428

8.4%

55,598

6.1%

PERFORMANCE INDICATORS (%)

 

 

 

 

 

Return on average equity excluding goodwill 6 - annualized

15.9%

12.6%

3 bps

13.9%

200 bps

Return on average asset excluding goodwill 6 - annualized

1.3%

1.0%

30 bps

1.2%

10 bps

Efficiency Ratio 7

44.9%

50.3%

-540 bps

49.3%

-440 bps

Recurrence Ratio 8

80.1%

69.1%

1100 bps

77.4%

270 bps

BIS ratio

15.8%

16.4%

-59 bps

16.3%

-49 bps

Tier I

14.7%

15.1%

-39 bps

15.1%

-40 bps

Tier II

1.1%

1.3%

-20 bps

1.2%

-10 bps

PORTFOLIO QUALITY INDICATORS (%)

 

 

 

 

 

Delinquency ratio (over 90 days)

2.9%

3.3%

-40 bps

3.4%

-50 bps

Individuals

4.0%

4.7%

-70 bps

4.1%

-10 bps

Corporate

1.9%

2.1%

-20 bps

2.7%

-80 bps

Delinquency ratio (over 60 days)

3.9%

4.2%

-30 bps

4.2%

-30 bps

Coverage ratio (over 90 days)

229.3%

200.1%

2920 bps

212.0%

1730 bps

OTHER DATA

 

 

 

 

 

Assets under management - AUM (R$ million) 9

257,362

213,191

20.7%

251,042

2.5%

Branches

2,254

2,263

(9)

2,254

-

PABs (mini branches)

1,166

1,176

(10)

1,167

(1)

Own ATMs

13,679

14,165

(486)

13,806

(127)

Shared ATMs

20,516

18,504

2,012

19,868

648

Total Customers (thousand)

35,909

33,926

1,983

35,524

385

Employees

46,897

50,142

(3,245)

47,254

(357)

¹ Excluding 100% of the goodwill amortization expense, the foreign exchange hedge effect and other adjustments, as described onpages 30 and 31.
² Administrative expenses exclude 100% of the goodwill amortization expense. Personnel expenses include profit-sharing.
³ Managerial net profit corresponds to the corporate net income, excluding the extraordinary result and the 100% reversal of the goodwill amortization expense that occurred in the period. Goodwill amortization expenses were R$ 456 million in 1Q17, R$ 451 million in 4Q16 and R$ 447 million in 1Q16.
⁴ Including other credit risk transactions (debentures, FDIC, CRI, promissory notes, floating rate notes, acquiring-activities related assets and guarantees).
⁵ Including Savings, Demand Deposits, Time Deposits, Debentures, LCA, LCI, Treasury Notes and Certificates of Structured Operations ("COE").
⁶ Excluding 100% of the goodwill balance (net of amortization), which in 1Q17 amounted to R$ 1,703 million, R$ 2,174 million in 4Q16 and R$ 3,625 million in 1Q16.
⁷ Efficiency Ratio: General Expenses / (Net Interest Income + Fee and Commission Income + Tax Expenses + Other Operating Income/Expenses).
⁸ Recurrence: Fee and Commission Income / General Expenses.
9 According to ANBIMA (Brazilian Financial and Capital Markets Association) criteria. 3

 

3


 


Strategy

Banco Santander Brasil is the only international bank with scale in the country. We are convinced that the best way to grow in a recurring and sustainable manner is by providing excellent services to enhance client satisfaction levels and attract more customers, making them more loyal. Our actions are based on establishing close and long-lasting relationships with customers, suppliers and shareholders. To accomplish that goal, our purpose is to help people and businesses prosper by being a Simple, Personal and Fair Bank, guided by the following strategic priorities:

   
Increase customer preference and loyalty by offering targeted, simple, digital and innovative products and services through a multi-channel platform.

Improve the recurrence and sustainability of our results by growing in businesses with greater revenue diversification, aiming to strike a balance between credit, funding and services, while maintaining a preventive risk management approach and rigorous cost control.

 
Be disciplined with capital and liquidity to preserve our solidity, face regulatory changes and seize growth opportunities.


Boost productivity through an intense agenda of commercial improvements that enable us to offer a complete portfolio of services.

Throughout 1Q17 we made progress on several strategic fronts, of which we highlight:

Co mmercial acceleration:

  Digital advances:

Strengthening the digital experience, at the end of March 2017: not just to view account data. In addition to that, we launched Santander ID to replace the token for business clients.

§   we crossed the 2 million down load s mark of Santander Way a card management app for Santander  c ards.

§ for individuals, we added more functionalities to the app with the implementation of Santander ID, replacing the online security card, and launched a new Internet Banking platform, with more user-friendly navigation.

§ we launched the digital account opening process, which now can be done via mobile, tablet and the internet.

§ for clients of Santander Corretora we launched a new app, which allows for more agile access to account information, recommendations and investments.

§ thanks to all these actions, we continued to expand the number of digital customers, which reached 6.9 million, +1.8 MM in twelve months, and we kept growing our volume of digital transactions, which already account for 76% of the Bank's total transactions, an increase of 540 bps in the last twelve months.

§ for SMEs, we redesigned the "Santander Empresas" app, which is now transactional and

 

4


 

 




We are an organization focused on
 creating value for our customers and,
 based on their continued support, we
 grow in a sustainable manner

5


 

 




We are an organization focused on
 creating value for our customers and,
 based on their continued support, we
 grow in a sustainable manner

6


 



7


 



8


 


Next, we present our analysis of the managerial results.

MANAGERIAL FINANCIAL STATEMENTS¹

1Q17

1Q16

Var.

4Q16

Var.

(R$ million)

1Q17x1Q16

1Q17x4Q16

 

 

 

 

 

 

Net Interest Income

8,868

7,598

16.7%

7,825

13.3%

Allowance for Loan Losses

(2,264)

(2,424)

-6.6%

(2,680)

-15.5%

Net Interest Income after Loan Losses

6,604

5,174

27.6%

5,145

28.3%

Fee and commission income

3,709

2,984

24.3%

3,740

-0.8%

General Expenses

(4,629)

(4,321)

7.1%

(4,831)

-4.2%

Personnel Expenses + Profit Sharing

(2,200)

(2,107)

4.4%

(2,397)

-8.2%

Administrative Expenses²

(2,429)

(2,214)

9.7%

(2,434)

-0.2%

Tax Expenses

(906)

(804)

12.6%

(899)

0.8%

Investments in Affiliates and Subsidiaries

5

2

n.a.

2

n.a.

Other Operating Income/Expenses

(1,372)

(1,197)

14.7%

(860)

59.6%

Operating Income

3,411

1,838

85.6%

2,298

48.4%

Non Operating Income

(68)

26

n.a.

(5)

n.a.

Net Profit before Tax

3,343

1,863

79.4%

2,293

45.8%

Income Tax and Social Contribution

(973)

(205)

n.a.

(325)

n.a.

Minority Interest

(90)

1

n.a.

21

n.a.

Net Profit

2,280

1,660

37.3%

1,989

14.7%

           

¹ Excluding 100% of the goodwill amortization expense, foreign exchange hedge effect and other adjustments, as described on pages 30 and 31.
² Administrative expenses exclude 100% of the goodwill amortization expense.

Net interest income totaled R$ 8,868 million in the first quarter of 2017, growing 16.7% in twelve months (or R$ 1,270 million) and 13.3% in three months.

Revenues from loan operations advanced 5.6% in twelve months and 0.5% in three months. The year-over-year increase in revenues mostly reflects the higher average spread of the loan portfolio. In the quarter, the revenue growth is associated with an increase in the average volume. Deposit revenue climbed 54.3% in twelve months and 12.1% in three months. The good performance in both periods is a result of the liability management plan, as previously mentioned.

The "Others" interest income, which considers the result of the structural gap in the balance sheet interest rate and activities with treasury clients, among others, grew 37.6% in twelve months and 65.2% in three months. The increase in both periods is explained by stronger gains from market activities.


 

 


 


 

9


 

NET INTEREST INCOME

1Q17

1Q16

Var.

1Q17x1Q16  

4Q16

Var .

1Q17x4Q16

(R$ million)

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

8,868

7,598

16.7%

7,825

13.3%

Loan

5,590

5,293

5.6%

5,561

0.5%

Average volume

252,657

251,473

0.5%

249,059

1.4%

Spread (Annualized)

8.9%

8.4%

42 bps

8.9%

1 bps

Funding

977

633

54.3%

871

12.1%

Average volume

234,831

218,153

7.6%

224,459

4.6%

Spread (Annualized)

1.7%

1.2%

52 bps

1.6%

14 bps

Others¹

2,302

1,673

37.6%

1,393

65.2%

¹ Including other margins and the result from financial transactions.
 

Revenues from banking services and fees totaled R$ 3,709 million in the first quarter of 2017, reaching the highest level of fees for a first quarter, largely explained by the dynamics of our business. In twelve months, these revenues rose 24.3% (or R$ 725 million), due to credit cards and current account services, reflected in the higher number of loyal customer and increased transactionality. In the quarter, total revenues decreased by 0.8%, mostly attributed to card and insurance products, given the typical seasonality of the period.

Card fees amounted to R$ 1,154 million, growing 27.6% in twelve months, primarily owing to higher interchange revenues due to better transaction volumes. Compared with the previous quarter, these revenues fell by 3.2%, impacted by the effect of seasonality in the period.

 

Current account service fees came to R$ 654 million, up 32.6% in twelve months and 6.2% in three months. The improvement in both periods was fueled by the increase in transactionality and the realignment of our products.

Insurance fees stood at R$ 588 million, rising 21.2% in twelve months. Relative to the previous quarter, these revenues were 14.5% lower, affected by the seasonal effect of policy renewals, which are generally concentrated in the fourth quarter of the year.

Asset management fees amounted to R$ 263 million, advancing 5.9% in twelve months. In the quarter, these revenues declined by 1.0%, which was partially caused by a change in the mix of these revenues.

Brokerage and bond placement fees reached R$ 179 million, increasing 25.4% in twelve months and 23.0% in three months, mostly due to the good performance in capital markets.

 

 

 

10


 

 

FEES INCOME

1Q17

1Q16

Var.

4Q16

Var.

(R$ million)

 

 

1Q17x1Q16

 

1Q17x4Q16

 

 

 

 

 

 

Cards

1,154

904

27.6%

1,192

-3.2%

Insurance fees

588

485

21.2%

688

-14.5%

Current Account Services

654

493

32.6%

615

6.2%

Asset Management

263

248

5.9%

266

-1.0%

Lending Operations

370

338

9.6%

371

-0.3%

Collection Services

348

279

24.8%

330

5.6%

Securities Brokerage and Placement Services

179

143

25.4%

145

23.0%

Others

153

94

62.3%

132

15.7%

Total

3,709

2,984

24.3%

3,740

-0.8%

General expenses, including depreciation and amortization, came to R$ 4,629 million in the first quarter of 2017, registering growth of 7.1% (or R$ 308 million) in twelve months, influenced by higher administrative and personnel expenses. In the quarter, expenses fell by 4.2%, mainly owing to personnel expenses. Depreciation and amortization expenses were R$ 490 million, increasing 19.1% in twelve months (or R$ 79 million) and 4.1% in three months, impacted by the normalization after the write-off of intangible assets occurred in previous periods.

Administrative and personnel expenses, excluding depreciation and amortization, totaled R$ 4,139 million in the first quarter of 2017, growth of 5.9% in twelve months and 5.1% lower in three months.

Personnel expenses, including profit-sharing, amounted to R$ 2,200 million in the first quarter of 2017, rising 4.4% in twelve months (or R$ 93 million), given higher expenses with compensation and charges, mainly due to the collective bargaining agreement. In the quarter, these expenses declined by 8.2%, thanks to the impact of lump-sum bonus paid to employees occurred in the previous quarter following the collective agreement of 2016.

Administrative expenses, excluding depreciation and amortization, totaled R$ 1,938 million in the first quarter of 2017, growing 7.5% in twelve months (or R$ 136 million), affected by higher expenses with specialized technical and third-party services and data processing. In the quarter, these expenses fell by 1.2%, mostly owing to lower expenses with advertising, promotions and publicity.

 

 

 

 

11


 

 

The efficiency ratio reached 44.9% in the first quarter of 2017, improving 540bps in twelve months and 440bps in three months. The good performance stems from our efforts to grow more efficiently, focused on recurring revenue growth, influenced by our business strategy and cost control.


EXPENSES' BREAKDOWN

1Q17

1Q16

Var.

4Q16

Var.

(R$ million)

 

 

1Q17x1Q16

 

1Q17x4Q16

 

 

 

 

 

 

Outsourced and Specialized Services

631

543

16.3%

563

12.0%

Advertising, promotions and publicity

66

62

6.3%

163

-59.2%

Data processing

428

385

11.2%

433

-1.3%

Communications

110

122

-9.8%

124

-10.7%

Rentals

185

179

3.4%

192

-3.7%

Transport and Travel

42

59

-28.6%

49

-12.8%

Security and Surveillance

150

177

-15.4%

165

-9.4%

Maintenance

57

63

-9.1%

59

-3.8%

Financial System Services

68

61

12.9%

64

6.5%

Water, Electricity and Gas

50

63

-19.6%

45

10.9%

Material

13

18

-28.3%

17

-25.6%

Others

137

72

92.1%

88

56.3%

Subtotal

1,938

1,803

7.5%

1,963

-1.2%

Depreciation and Amortization1

490

412

19.1%

471

4.1%

Total Administrative Expenses

2,429

2,214

9.7%

2,434

-0.2%

Compensation²

1,426

1,358

5.0%

1,570

-9.1%

Charges

401

380

5.5%

452

-11.4%

Benefits

355

368

-3.4%

375

-5.2%

Training

9

15

-41.7%

17

-47.0%

Others

9

(14)

-165.1%

(16)

-156.6%

Total Personnel Expenses

2,200

2,107

4.4%

2,397

-8.2%

 

 

 

 

 

 

ADMINISTRATIVE + PERSONNEL EXPENSES (excludes deprec. and amortization)

4,139

3,909

5.9%

4,360

-5.1%

 

 

 

 

 

 

TOTAL GENERAL EXPENSES

4,629

4,321

7.1%

4,831

-4.2%

¹ Excluding 100% of the goodwill amortization expenses, which totaled R$ 456 million in 1Q17, R$ 451 million in 4Q16 and R$ 447 million in 1Q16.
² Including Profit-Sharing.

 

 

12


 

Allowance for loan losses totaled R$ 2,264 million in the first quarter of 2017, down 6.6% in twelve months (or R$ 160 million) and 15.5% in three months.

These reductions are mainly related to a write-off in a specific case in the corporate segment and to the positive results of our model, which was able to keep the quality indicators of the loan portfolio under control.

As of the first quarter of 2017, in accordance with CMN Resolution No. 4,512 and Brazilian Central Bank Circular Letter No. 3,782, we began to consolidate in loan-loss expenses, provisions for financial guarantees.


Other net operating revenue and expenses amounted to R$ 1,372 million in the first quarter of 2017.

OTHER OPERATING INCOME (EXPENSES)

  1Q1 7

1Q16

Var.

4Q16

Var.

(R$ million)

 

 

1Q17x1Q16

    1Q17x1Q16

 

 

 

 

 

 

Expenses from cards

(398)

(335)

18.9%

(319)

24.7%

Net Income from Capitalization

88

70

25.5%

89

-0.9%

Provisions for contingencies¹

(524)

(460)

13.8%

(263)

99.0%

Others

(539)

(472)

14.2%

(367)

46.9%

Other operating income (expenses)

(1,372)

(1,197)

14.7%

(860)

59.6%

¹ Including tax, civil and labor provisions.
 

Taxes totaled R$ 973 million in the first quarter of 2017, with an effective rate of 29.1%, increasing 1,820bps in twelve months and 1,480bps in three months. In the quarter, no amount was set aside for the payment of interest on capital (“IoC") and, furthermore, we had a higher taxable result.

 

13


 


 

 

Total assets reached R$ 713,517 million at the end of March 2017, advancing 6.7% in twelve months and 1.7% in three months. Total equity was R$ 60,698 million in the same period. Excluding the goodwill balance, total equity came to R$ 58,994 million.

ASSETS

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

Mar/17xMar/16

 

Mar/17xDec/16

 

 

 

 

 

 

Current Assets and Long Term Assets

701,088

655,329

7.0%

688,673

1.8%

Cash and Cash Equivalents

5,405

5,463

-1.1%

5,723

-5.6%

Interbank Investments

52,642

51,481

2.3%

59,669

-11.8%

Money Market Investments

38,271

31,838

20.2%

47,479

-19.4%

Interbank Deposits

1,350

2,248

-40.0%

1,191

13.4%

Foreign Currency Investments

13,022

17,395

-25.1%

11,000

18.4%

Securities and Derivative Financial Instruments

166,131

151,377

9.7%

169,590

-2.0%

Own Portfolio

42,842

30,072

42.5%

60,041

-28.6%

Subject to Repurchase Commitments

73,180

82,498

-11.3%

70,175

4.3%

Posted to Central Bank of Brazil

2,634

6,712

-60.8%

3,045

-13.5%

Pledged in Guarantees

22,491

15,036

49.6%

12,250

83.6%

Others

24,984

17,059

46.5%

24,079

3.8%

Interbank Accounts

64,369

57,101

12.7%

62,900

2.3%

Lending Operations

240,629

232,145

3.7%

239,190

0.6%

Lending Operations

257,187

248,360

3.6%

256,898

0.1%

Lending Operations Related to Assignment

526

181

191.1%

624

-15.7%

(Allowance for Loan Losses)

(17,084)

(16,396)

4.2%

- 18,333

-6.8%

Others Receivables

169,123

154,830

9.2%

148,992

13.5%

Others Assets

2,788

2,932

-4.9%

2,609

6.9%

Permanent Assets

12,430

13,420

-7.4%

13,031

-4.6%

Investments

379

164

130.8%

178

113.4%

Fixed Assets

7,238

6,915

4.7%

7,551

-4.1%

Intangibles

4,812

6,341

-24.1%

5,303

-9.2%

Goodwill

1,703

3,625

-53.0%

2,174

-21.6%

Others Assets

3,109

2,717

14.5%

3,129

-0.6%

Total Assets

713,517

668,750

6.7%

701,705

1.7%

 

 

 

 

 

 

Total Assets (excluding goodwill)

711,814

665,125

7.0%

699,531

1.8%

 

14


 

 

 

LIABILITIES

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

Mar/17xMar/16

 

Mar/17xDec/16

 

 

 

 

 

 

Current Liabilities and Long Term Liabilities

649,710

608,360

6.8%

640,843

1.4%

Deposits

148,012

136,947

8.1%

145,705

1.6%

Demand Deposits

14,824

14,491

2.3%

16,006

-7.4%

Savings Deposits

36,114

34,964

3.3%

36,051

0.2%

Interbank Deposits

2,262

2,444

-7.5%

3,122

-27.6%

Time Deposits

94,813

85,048

11.5%

90,525

4.7%

Money Market Funding

160,419

148,702

7.9%

160,924

-0.3%

Own Portfolio

131,591

121,355

8.4%

123,578

6.5%

Third Parties

971

5,672

-82.9%

5,795

-83.2%

Free Portfolio

27,856

21,675

28.5%

31,551

-11.7%

Funds from Acceptance and Issuance of Securities

95,009

96,863

-1.9%

105,170

-9.7%

Resources from Real Estate Credit Notes, Mortgage Notes, Credit and Similar

89,096

88,553

0.6%

95,122

-6.3%

Funding from Certificates of Structured Operations

1,270

899

41.2%

1,236

2.8%

Securities Issued Abroad

3,494

6,443

-45.8%

7,722

-54.8%

Others

1,149

968

18.8%

1,090

5.4%

Interbank Accounts

1,390

1,276

9.0%

44

n.a.

Interbranch Accounts

2,210

2,397

-7.8%

3,887

-43.1%

Borrowings

28,040

32,127

-12.7%

30,600

-8.4%

Domestic Onlendings - Official Institutions

16,772

16,082

4.3%

16,803

-0.2%

Derivative Financial Instruments

21,794

14,297

52.4%

19,945

9.3%

Other Payables

176,064

159,669

10.3%

157,766

11.6%

Deferred Income

543

409

32.7%

565

-3.9%

Minority Interest

2,566

1,928

33.1%

2,526

1.6%

Equity

60,698

58,053

4.6%

57,772

5.1%

Total Liabilities

713,517

668,750

6.7%

701,705

1.7%

 

 

 

 

 

 

Equity (excluding goodwill)

58,994

54,428

8.4%

55,598

6.1%

 

Total securities amounted to R$ 166,131 million at the end of March 2017, rising 9.7% in twelve months – mainly due to an increase in government bonds and financial instruments – and declining 2.0% in three months.

SECURITIES

 

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

 

Mar/17xMar/16

 

Mar/17xDec/16

Public securities

 

122,479

116,536

5.1%

124,965

-2.0%

Private securities

 

18,672

17,785

5.0%

20,549

-9.1%

Financial instruments

 

24,981

17,056

46.5%

24,076

3.8%

Total

 

166,131

151,377

9.7%

169,590

-2.0%

 


15


 

 



The loan portfolio totaled R$ 257,169 million at the end of March 2017, growing 3.6% in twelve months (or R$ 8,898 million) and 0.1% in three months. In twelve months, the BRL fluctuation against the USD impacted the foreign currency loan portfolio, which also includes dollar-indexed transactions. Therefore, disregarding the impact of the exchange rate fluctuation, the total loan portfolio would have grown 5.2%.

The balance of the foreign currency portfolio, including dollar-indexed loans, was R$ 31,790 million at the end of March 2017, declining 21.9% in comparison with the balance of R$ 40,711 million in March 2016 and 7.5% relative to the balance of R$ 34,352 million in December 2016.

The year-over-year growth in the loan portfolio was primarily driven by individuals' portfolios, with credit card alongside payroll loans as the highlights, and consumer finance, as a result of our commercial strategy. The corporate portfolio decreased by 1.1% in twelve months and 3.1% in three months, given a write-off related to a specific case.

 

In the first quarter of 2017, the corporate portfolio accounted for 37% of the total portfolio, a reduction of 200bps in twelve months. The individuals’ portfolio represented 37% of the total portfolio, an increase of 300bps in twelve months, mostly influenced by our commercial strategy. Meanwhile, the consumer finance portfolio accounted for 14%, up 100bps.

 

 

16


 

 

 

MANAGERIAL BREAKDOWN OF CREDIT BY SEGMENT

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

Mar/17xMar/16

 

Mar/17xDec/16

 

 

 

 

 

 

Individuals

93,986

85,593

9.8%

91,414

2.8%

Consumer Finance

35,779

32,708

9.4%

34,777

2.9%

SMEs

32,511

34,064

-4.6%

32,799

-0.9%

Corporate

94,892

95,906

-1.1%

97,893

-3.1%

Total portfolio

257,169

248,271

3.6%

256,883

0.1%

Other credit related transactions¹

68,257

63,747

7.1%

65,900

3.6%

Total expanded credit portfolio

325,426

312,018

4.3%

322,783

0.8%

In light of changes of customers turnover, we reclassified the loan portfolio between SMEs and Corporate segments. Meanwhile, we also have changed the 2016 information in order to give better comparison.

1 - Includes debenture, FIDC, CRI , floating rate notes, promissory notes, acquiring activities related assets and guarantees.

The expanded loan portfolio, which includes other credit risk transactions, acquiring-activities related assets and guarantees, totaled R$ 325,426 million at the end of March 2017, growing 4.3% in twelve months (or R$ 13,408 million) and 0.8% in three months. Excluding the impact of exchange rate fluctuation, the expanded loan portfolio would have increased by 5.6% in twelve months.

Loans to individuals amounted to R$ 93,986 million at the end of March 2017, expanding 9.8% (or R$ 8,393 million) in twelve months and 2.8% in three months. The products that explain the portfolio growth in twelve months are credit card and payroll loans.

The payroll loans portfolio reached R$ 20,469 million, an increase of 31.7% in twelve months (or R$ 4,932 million) and 9.2% in three months.

The card portfolio ended the period at R$ 20,320 million, advancing 11.7% in twelve months (or R$ 2,133 million) and declining 1.7% in three months.

The balance of mortgage loans was R$ 27,059 million, rising 2.0% in twelve months (or R$ 532 million) and down 0.3% in three months.



 

17


 


 
The consumer finance portfolio, which is originated outside the branch network, totaled R$ 35,779 million at the end of March 2017, growing 9.4% in twelve months (or R$ 3,070 million) and 2.9% in three months. Of the total in this portfolio, R$ 29,642 million refers to vehicle financing for individuals.

The total vehicle portfolio for individuals, which includes operations carried out by both the financing unit (correspondent banks) as well as by Santander's branch network, showed growth of 6.5% in twelve months and 4.2% in three months, totaling R$ 31,465 million at the end of March 2017. It should be noted that the portfolio growth this quarter already reflects the increase in our sales, thanks to our digital platform "+ Negócios".

With "+ Negócios", Santander Financiamentos' sales platform started to operate under a digital model, providing a better experience for our clients, especially at the moment of securing a financing. This platform made us the first choice for car dealers. On top of that, we continue to strengthen our offering and positioning with complete solutions through Webmotors (leading vehicle advertisement portal) and AutoCompara (a web-based tool that allows customers to compare car insurance quotes and acquire insurance from different insurers).

 

The Corporate & SME loan portfolio stood at R$ 127,404 million at the end of March 2017, down 2.0% in twelve months (or R$ 2,566 million) and 2.5% in three months.

The corporate loan portfolio came to R$ 94,892 million, declining 1.1% (or R$ 1,013 million) in twelve months and 3.1% in three months. It should be noted that the portfolio was impacted by a write-off related to a specific case and by the effect of the exchange rate fluctuation. Excluding the effect of the latter, the portfolio would have increased by 2.7% in twelve months and decreased by 2.2% in three months.

The volume of loans to the SME segment was R$ 32,511 million, down 4.6% (or R$ 1,552 million) in twelve months and 0.9% in three months. In line with our commercial strategy, we continue to expand our offering of products for this segment with the goal of increasing customer loyalty.


 


 

18


 


 

MANAGERIAL BREAKDOWN OF CREDIT

 

Mar/17

Mar/16

Var.

Dec/16

Var.

PORTFOLIO BY PRODUCT (R$ million)

 

 

 

Mar/17xMar/16

 

Mar/17xDec/16

 

 

 

 

 

 

 

Individuals

 

 

 

 

 

 

Leasing / Auto Loans¹

 

1,823

2,280

-20.0%

1,875

-2.8%

Credit Card

 

20,320

18,187

11.7%

20,677

-1.7%

Payroll Loans

 

20,469

15,537

31.7%

18,745

9.2%

Mortgages

 

27,059

26,527

2.0%

27,153

-0.3%

Agricultural Loans

 

3,860

3,593

7.4%

3,427

12.6%

Personal Loans / Others

 

20,456

19,469

5.1%

19,537

4.7%

Total Individuals

 

93,986

85,593

9.8%

91,414

2.8%

Consumer Finance

 

35,779

32,708

9.4%

34,777

2.9%

Corporate and SMEs

 

 

 

 

 

 

Leasing / Auto Loans

 

2,737

2,833

-3.4%

2,783

-1.6%

Real Estate

 

8,808

10,605

-16.9%

9,337

-5.7%

Trade Finance

 

22,815

18,917

20.6%

20,339

12.2%

On-lending

 

33,424

16,615

101.2%

12,891

159.3%

Agricultural Loans

 

6,772

2,761

145.3%

5,531

22.4%

Working capital / Others

 

52,848

78,239

-32.5%

79,810

-33.8%

Total Corporate and SMEs

 

127,404

129,969

-2.0%

130,692

-2.5%

 

 

 

 

 

 

 

Total Credit

 

257,169

248,272

3.6%

256,883

0.1%

Other Credit Risk Transactions with clients2

 

68,257

63,747

7.1%

65,900

3.6%

 

 

 

 

 

 

 

Total Expanded Credit Portfolio

 

325,426

312,019

4.3%

322,783

0.8%


¹ Including consumer finance, the auto loan portfolio for individuals totaled R$ 31,465 million in Mar/17, R$ 30,196 million in Dec/16 and R$ 29,543 million in Mar/16.

² Including debentures, FIDC, CRI, promissory notes, floating rate notes, acquiring-activities related assets and guarantees.

The balance of allowance for loan losses amounted to R$ 17,084 million at the end of March 2017, meaning a 4.2% rise in twelve months. Compared to the previous quarter, there was a decrease of 6.8%, attributed to a specific case in the corporate segment, whose was written-off as loss in the period.

The coverage ratio reached 229% at the end of March 2017, advancing 1,730bps in twelve months and 2,920bps in three months.


 


 

19


 



Loan renegotiations came to R$ 13,172 million at the end of March 2017, rising 1.7% in twelve months. These operations include loan agreements that were renegotiated to enable their payment under conditions agreed upon with customers, including renegotiations of loans that had already been written-off in the past. On a quarterly comparison, the renegotiated portfolio fell by 2.4%.

At the end of March, the coverage ratio of these loans with delays greater than 90 days reached 57.9%, a level considered adequate for these operations.

RENEGOTIATED PORTFOLIO

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

Mar/17xMar/16

 

Mar/17xDec/16

 

 

 

 

 

 

Renegotiated Portfolio

13,172

12,946

1.7%

13,497

-2.4%

Allowance for loan losses over renegotiated portfolio

  (7,631) (7,234)

5.5%

(7,851)

-2.8%

Coverage

57.9%

55.9%

200bps

58.2%

-30bps

             

 

 

We operate in accordance with our risk culture and international best practices, in order to protect our capital and guarantee the profitability of our businesses.

Our credit approval process, particularly the approval of new loans and risk monitoring, is structured according to our classification of customers and products, centered around our retail and wholesale segment.

At the end of March 2017, portfolios rated "AA" and "A" accounted for 74% of the total loan portfolio.

 

 

NPL Formation, calculated based on the balance of credit operations that are delinquent for over 90 days, the balance of the renegotiated portfolio and the balance of the portfolio written-off as loss in the quarter, reached R$ 2,748 million, 9.3% lower in twelve months and 3.8% in three months, attesting to the quality of the portfolio. The ratio between NPL Formation and the loan portfolio in the quarter was 1.1%, falling 10bps in twelve months and remaining stable relative to the previous quarter.

Note: NPL Formation is obtained from the change in balance of the portfolio delinquent over 90 days and the portfolio under negotiation, disregarding the portfolio written-off as loss in the period.

 

20


 

 

The over-90-day delinquency ratio reached, at the end of March 2017, 2.9% of the total loan portfolio, declining 40bps in twelve months and 50bps in three months. These changes were influenced by the evolution of our risk model during the last few years.

The delinquency ratio in the individuals’ segment was 4.0%, down 70bps in twelve months and 10bps in three months. In the corporate & SME segment, the over-90-day delinquency ratio came to 1.9%, falling 20bps in twelve months and 80bps in three months, mainly owing to a write-off related to a specific case this quarter, as well as the improvement in the quality of the portfolio.

.


 

The 15-to-90-day delinquency ratio stood at 5.5% at the end of March 2017, rising 70bps in twelve months and 120bps in three months. The increase in the quarter is partially related to the typical seasonality of the period in the individuals' segment.

Delinquency among individuals decreased by 10bps in twelve months and increased by 80bps in three months, reaching 6.9%. In the corporate & SME segment, the ratio advanced 130bps in twelve months and 150bps in three months, to 4.3%.

 


 

21


 


 
 

FUNDING

 

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

 

Mar/17xMar/16

Mar/17xDec/16

 

 

 

 

 

 

 

Demand deposits

 

14,824

14,491

2.3%

16,006

-7.4%

Saving deposits

 

36,114

34,964

3.3%

36,051

0.2%

Time deposits

 

94,813

85,048

11.5%

90,525

4.7%

Debenture/LCI/LCA¹

 

96,261

86,486

11.3%

90,426

6.5%

Financial Bills²

 

58,667

62,152

-5.6%

65,393

-10.3%

Funding from clients

 

300,678

283,141

6.2%

298,402

0.8%

¹ Repo operations backed by Debentures, Real Estate Credit Notes ("LCI") and Agricultural Credit Notes ("LCA").
² Including Certificates of Structured Operations ("COE").

Total customer funding amounted to R$ 300,678 million at the end of March 2017, growing 6.2% in twelve months (or R$ 17,537 million) and 0.8% in three months. These changes were influenced by funding from time deposits and debentures/LCI/LCA.
 

FUNDING VS. CREDIT

 

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

 

Mar/17xMar/16

Mar/17xDec/16

 

 

 

 

 

 

 

Funding from clients (A)

 

300,678

283,141

6.2%

298,402

0.8%

(-) Reserve Requirements

 

(61,751)

(55,555)

11.2%

(61,199)

0.9%

Funding Net of Reserve Requirements

 

238,927

227,586

5.0%

237,204

0.7%

Borrowing and Onlendings

 

17,212

16,154

6.5%

17,249

-0.2%

Subordinated Debts

 

8,495

17,380

-51.1%

8,781

-3.3%

Offshore Funding

 

31,095

38,498

-19.2%

37,876

-17.9%

Total Funding (B)

 

295,728

299,618

-1.3%

301,110

-1.8%

Assets under management¹

 

257,362

213,191

20.7%

251,042

2.5%

Total Funding and Asset under management

 

553,090

512,809

7.9%

552,152

0.2%

Total Credit (C)

 

257,169

248,271

3.6%

256,883

0.1%

C / B (%)

 

87.0%

82.9%

 

85.3%

 

 

 

 

 

 

 

 

C / A (%)

 

85.5%

87.7%

 

86.1%

 

               
¹ According to ANBIMA criteria.

The loan portfolio to customer funding ratio came to 85.5% at the end of March 2017, declining 220bps in twelve months and 60bps in three months.

The liquidity metric adjusted for the impact of reserve requirements and medium/long-term funding reached 87.0% in March 2017, advancing 410bps in twelve months and 170bps in three months.

The Bank is in a comfortable liquidity situation, with stable funding sources and an adequate funding structure.

 

   

22


 

The BIS ratio reached 15.8% at the end of March 2017, down 60 bps in twelve months and 50bps in three months, 530bps higher than the sum of the minimum Regulatory Capital and Capital Conservation requirements.

CET1 stood at 13.7%, falling 20bps in twelve months and 30bps in three months.

The twelve-month change in the ratio is largely explained by the RWA increase in Market and Operating Risk, partially offset by the Increase of reference equity.

It is important to note that, as of January 2017, in accordance with CMN Resolution No. 4,193/2013, the capital requirement was altered from 9.875% to 9.250% + conservation capital of 1.250%, totaling 10.5%. For Tier I Capital it is at 7.250%, while for CET1 it is at 5.750%.

 


 

OWN RESOURCES AND BIS

 

Mar/17

Mar/16

Var.

Dec/16

Var.

(R$ million)

 

 

 

Mar/17xMar/16

Mar/17xDec/16

 

 

 

 

 

 

 

Tier I Regulatory Capital

 

57,773

54,005

7.0%

56,264

2.7%

CET1

 

53,761

49,498

8.6%

52,137

3.1%

Additional Tier I

 

4,012

4,507

-11.0%

4,127

-2.8%

Tier II Regulatory Capital

 

4,098

4,667

-12.2%

4,281

-4.3%

Adjusted Regulatory Capital (Tier I and II)

 

61,871

58,672

5.5%

60,545

2.2%

Risk Weighted Assets (RWA)

 

392,503

357,112

9.9%

371,337

5.7%

Required Regulatory Capital

 

36,306

35,265

3.0%

36,670

-1.0%

Adjusted Credit Risk Capital requirement

 

29,162

30,566

-4.6%

31,310

-6.9%

Market Risk Capital requirement

 

4,192

3,042

37.8%

2,389

75.5%

Operational Risk Capital requirement

 

2,952

1,657

78.2%

2,971

-0.6%

Basel Ratio

 

15.76%

16.43%

-60bps

16.30%

-50bps

Tier I

 

14.72%

15.12%

-40bps

15.05%

-30bps

CET1

 

13.70%

13.86%

-20bps

14.04%

-30bps

Tier II

 

1.14%

1.31%

-20bps

1.15%

0bps

 

23

 


Corporate Governance

Santander Brasil has a free float of 10.6% and is currently listed on the traditional segment of the São Paulo Stock Exchange (Bolsa de Valores, Mercadorias e Futuros S.A. – BM&FBovespa). The Bank adopts the best practices in corporate governance, such as holding periodic meetings with the market, disclosing information on its Investor Relations website, Board of Directors comprised of 50% independent members, among others.


Ownership Structure

Santander’s ownership structure, as of March 31st, 2017:

OWNERSHIP STRUCTURE

Common shares

%

Preferred shares

%

Total share capital

Total

 

(thousand)

 

(thousand)

 

(thousand)

%

 

 

 

 

 

 

 

Santander Group ¹

3,444,228

89.4%

3,277,565

88.3%

6,721,793

88.9%

Treasury Shares

21,486

0.6%

21,486

0.6%

42,972

0.6%

Free Float

385,257

10.0%

413,061

11.1%

798,318

10.6%

Total

3,850,971

100.0%

3,712,112

100.0%

7,563,082

100.0%

¹ Considering the shareholding positions of: Grupo Empresarial Santander S.L. and Sterrebeeck B.V., as well as the shares owned by Management.

Stock Performance

SANB11

1Q17

1Q16

Var.

4Q16

Var.

 

 

 

1Q17x1Q16

 

1Q17x4Q16

 

 

 

 

 

 

Earnings (annualized) per unit (R$)

2.43

1.77

37.3%

2.12

14.5%

Dividend + Interest on capital per unit¹ (R$)

0.00

0.00

n.a.

1.26

n.a.

Closing price (R$) 1

27.7

17.0

63.1%

29.5

-6.4%

Book Value per unit (R$) 2

15.7

14.5

8.4%

14.8

6.0%

Market Capitalization (R$ bi) 3

104.0

63.7

63.1%

110.9

-6.3%

¹ Closing price refers to the historical value.
² Book Value excludes goodwill.
³ Market Capitalization: Total Units (Unit = 1 ON + 1 PN) x Unit closing price on March 31st, 2017.

 

¹ Stock Swap Offer completed on October 30th, 2014

24


 


Rating Agencies

Santander is rated by international rating agencies and the ratings it receives reflect several factors, including the quality of its management, its operational performance and financial strength, as well as other variables related to the financial sector and the economic environment in which the company operates, with its long-term foreign currency rating limited to the sovereign rating. The table below presents the ratings assigned by Standard & Poor's and Moody's:

 

 

 

Global Scale

 

Domestic Scale

 

 

 

 

 

 

 

 

 

 

Ratings

 

Local Currency

 

Foreign Currency

 

Domestic

 

 

Long Term

Short Term

 

Long Term

Short Term

 

Long Term

Short Term

Standard & Poor’s (outlook)


 

BB (negative)

B

 

BB (negative)

B

 

brAA- (negative)

brA-1

 

 

 

 

 

 

 

 

 

Moody's (outlook)


 

Ba1 (negativa)

NP

 

Ba3 (negative)

NP

 

Aaa.br

Br-1

 

 

 

 

 

 

 

 

 

                   

 

Ratings assigned according to reports published by the Rating Agencies.

25


 


Balance Sheet

 

ASSETS

 

Mar/17

Dec/16

Sep/16

Jun/16

Mar/16

(R$ million)

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets and Long Term Assets

 

701,088

688,673

647,837

642,337

655,329

Cash and Cash Equivalents

 

5,405

5,723

6,089

5,209

5,463

Interbank Investments

 

52,642

59,669

63,960

64,278

51,481

Money Market Investments

 

38,271

47,479

57,407

47,349

31,838

Interbank Deposits

 

1,350

1,191

1,596

2,446

2,248

Foreign Currency Investments

 

13,022

11,000

4,957

14,482

17,395

Securities and Derivative Financial Instrument

 

166,131

169,590

153,135

149,988

151,377

Own Portfolio

 

42,842

60,041

62,315

42,820

30,072

Subject to Repurchase Commitments

 

73,180

70,175

55,444

65,301

82,498

Posted to Central Bank of Brazil

 

2,634

3,045

3,826

4,432

6,712

Pledged in Guarantees

 

22,491

12,250

11,992

14,032

15,036

Others

 

24,984

24,079

19,557

23,402

17,059

Interbank Accounts

 

64,369

62,900

64,573

61,478

57,101

Restricted Deposits:

 

61,920

61,368

62,641

59,667

55,724

-Central Bank of Brazil

 

61,751

61,199

62,472

59,499

55,555

-National Housing System

 

169

170

169

168

169

Others

 

2,449

1,532

1,933

1,810

1,376

Lending Operations

 

240,629

239,190

230,780

227,906

232,145

Lending Operations

 

257,187

256,898

247,322

244,290

248,360

Lending Operations Related to Assignment

 

526

624

738

162

181

(Allowance for Loan Losses)

 

- 17,084

- 18,333

- 17,280

- 16,546

- 16,396

Other Receivables

 

169,123

148,992

126,839

130,637

154,830

Foreign Exchange Portfolio

 

108,323

87,044

69,315

70,859

93,784

Tax Credits

 

26,490

26,767

27,828

26,701

30,085

Others

 

34,309

35,181

29,697

33,077

30,961

Others Assets

 

2,788

2,609

2,461

2,842

2,932

Permanent Assets

 

12,430

13,031

13,349

12,857

13,420

Investments

 

379

178

182

164

164

Fixed Assets

 

7,238

7,551

7,612

6,825

6,915

Intangibles

 

4,812

5,303

5,555

5,868

6,341

Goodwill

 

1,703

2,174

2,625

3,071

3,625

Other Assets

 

3,109

3,129

2,930

2,797

2,717

Total Assets

 

713,517

701,705

661,186

655,194

668,750

 

 

 

 

 

 

 

Total Assets (excluding goodwill)

 

711,814

699,531

658,561

652,123

665,125

 

26


 


 

LIABILITIES

 

Mar/17

Dec/16

Sep/16

Jun/16

Mar/16

(R$ million)

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities and Long Term Liabilities

 

649,710

640,843

597,106

593,035

608,360

Deposits

 

148,012

145,705

140,865

134,548

136,947

Demand Deposits

 

14,824

16,006

15,452

14,917

14,491

Savings Deposits

 

36,114

36,051

34,764

34,517

34,964

Interbank Deposits

 

2,262

3,122

3,162

2,601

2,444

Time Deposits

 

94,813

90,525

87,483

82,513

85,048

Money Market Funding

 

160,419

160,924

152,403

152,759

148,702

Own Portfolio

 

131,591

123,578

107,834

120,342

121,355

Third Parties

 

971

5,795

17,347

6,424

5,672

Free Portfolio

 

27,856

31,551

27,221

25,992

21,675

Funds from Acceptance and Issuance of Securities

 

95,009

105,170

104,295

100,247

96,863

Resources from Real Estate Credit Notes, Mortgage Notes, Credit and Similar

 

89,096

95,122

95,322

92,611

88,553

Funding from Certificates of Structured Operations

 

1,270

1,236

1,110

980

899

Securities Issued Abroad

 

3,494

7,722

6,791

5,732

6,443

Others

 

1,149

1,090

1,072

923

968

Interbank Accounts

 

1,390

44

1,729

1,651

1,276

Interbranch Accounts

 

2,210

3,887

3,048

2,443

2,397

Borrowings

 

28,040

30,600

29,283

27,645

32,127

Domestic Onlendings - Official Institutions

 

16,772

16,803

16,615

15,934

16,082

National Economic and Social Development Bank (BNDES)

 

9,715

9,423

9,014

8,129

7,900

National Equipment Financing Authority (FINAME)

 

6,765

7,041

7,259

7,543

7,892

Other Institutions

 

292

339

342

262

289

Derivative Financial Instruments

 

21,794

19,945

15,020

18,049

14,297

Other Payables

 

176,064

157,766

133,850

139,760

159,669

Foreign Exchange Portfolio

 

107,967

86,753

69,235

66,533

88,552

Tax and Social Security

 

12,170

11,594

11,916

11,863

11,705

Subordinated Debts

 

481

466

454

8,675

8,379

Debt Instruments Eligible to Compose Capital

 

8,014

8,315

8,209

8,188

9,001

Others

 

47,433

50,638

44,037

44,502

42,032

Deferred Income

 

543

565

565

372

409

Minority Interest

 

2,566

2,526

2,194

1,938

1,928

Equity

 

60,698

57,772

61,321

59,850

58,053

Total Liabilities

 

713,517

701,705

661,186

655,194

668,750

 

 

 

 

 

 

 

Equity (excluding goodwill)

 

58,994

55,598

58,695

56,779

54,428

 

 

27


 


On January 1st, 2017, CMN Resolution No. 4,517 of August 24th, 2016 went into effect, establishing the equity method of accounting for equity interests in jointly controlled companies. Therefore, for better comparability, we have reclassified our accounting information for the year 2016, as shown below:

 

ACCOUNTING PRO FORMA

1Q16

2Q16

3Q16

4Q16

2016

(R$ milhões)

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

11,134

11,972

8,655

8,273

40,033

Allowance for Loan Losses

(2,617)

(3,136)

(3,579)

(3,907)

(13,240)

Net Interest Income after Loan Losses

8,518

8,835

5,075

4,365

26,793

Fee and commission income

2,984

3,216

3,322

3,740

13,263

General Expenses

(4,768)

(4,790)

(4,884)

(5,283)

(19,725)

Personnel Expenses + Profit Sharing

(2,107)

(2,057)

(2,136)

(2,397)

(8,698)

Administrative Expenses

(2,661)

(2,733)

(2,748)

(2,885)

(11,027)

Tax Expenses

(1,140)

(1,167)

(782)

(903)

(3,991)

Investments in Affiliates and Subsidiaries

2

1

1

2

7

Other Operating Income/Expenses

(1,107)

(1,079)

(1,120)

(493)

(3,799)

Operating Profit

4,488

5,017

1,613

1,429

12,548

Non Operating Income

26

(5)

20

(455)

(414)

Net Profit before Tax

4,514

5,012

1,633

974

12,133

Income Tax and Social Contribution

(3,303)

(3,610)

(113)

542

(6,484)

Minority Interest

1

(55)

(85)

21

(117)

Net Profit

1,213

1,347

1,436

1,537

5,533

Controlled companies accounted for by the equity method of accounting: Cibrasec Companhia Brasileira de Securitização, Norchem Participaçao e Consultoria S/A, Estruturadora Brasileira de Projetos S/A, Campo Grande Empreendimentos, WebmotorsS/A, PSA Corretora de Seguros e Serviços Ltda e Tecban-Tecnologia BancáriaS/A and controlled companies.

 

28


 


Managerial Financial Statement Summary

For the 2016 period, the managerial financial statement below includes the accounting reclassifications mentioned on page 28.

MANAGERIAL FINANCIAL STATEMENT¹

1Q16

2Q16

3Q16

4Q16

2016

 

1Q17

(R$ million)

 

 

 

 

 

 

 

Net Interest Income

7,598

7,807

8,266

7,825

31,497

 

8,868

Allowance for Loan Losses

(2,424)

(2,515)

(2,837)

(2,680)

(10,456)

 

(2,264)

Net Interest Income after Loan Losses

5,174

5,292

5,430

5,145

21,041

 

6,604

Fee and commission income

2,984

3,216

3,322

3,740

13,263

 

3,709

General Expenses

(4,321)

(4,331)

(4,436)

(4,831)

(17,919)

 

(4,629)

Personnel Expenses + Profit Sharing

(2,107)

(2,057)

(2,136)

(2,397)

(8,698)

 

(2,200)

Administrative Expenses²

(2,214)

(2,274)

(2,300)

(2,434)

(9,222)

 

(2,429)

Tax Expenses

(804)

(810)

(822)

(899)

(3,335)

 

(906)

Investments in Affiliates and Subsidiaries

2

1

1

2

7

 

5

Other Operating Income/Expenses

(1,197)

(1,184)

(1,065)

(860)

(4,306)

 

(1,372)

Operating Profit

1,838

2,184

2,430

2,298

8,750

 

3,411

Non Operating Income

26

(5)

20

(5)

36

 

(68)

Net Profit before Tax

1,863

2,179

2,450

2,293

8,785

 

3,343

Income Tax and Social Contribution

(205)

(319)

(482)

(325)

(1,330)

 

(973)

Minority Interest

1

(55)

(85)

21

(117)

 

(90)

Net Profit

1,660

1,806

1,884

1,989

7,339

 

2,280

¹ Excluding 100% of the goodwill amortization expense, the tax hedge effect and other adjustments, as stated on pages 30 and 31.
² Administrative expenses exclude 100% of the goodwill amortization expense.

Under Brazilian tax rules, gains (losses) derived from exchange rate fluctuations on foreign currency investments are not taxable (tax deductible). This tax treatment leads to exchange rate exposure on the tax line. An exchange rate hedge position was set up with the purpose of protecting the net profit from the impact of foreign exchange fluctuations related to this exposure on the tax lines.

EXCHANGE HEDGE

 

1Q16

 

2Q16

3Q16

4Q16

 

2016

1Q17

(R$ million)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

3,434

3,648

(409)

41

41

967

Tax Expenses

 

(336)

(357)

40

(4)

(4)

95

Income Tax

 

(3,098)

(3,292)

369

(37)

(37)

(872)

 

 

29


 


Accounting and Managerial Results Reconciliation

For a better understanding of BR GAAP results, the reconciliation between the accounting result and the managerial result is presented below. It should be clarified that these adjustments, except for the amortization of goodwill and non-recurring items, have no effect on net profit .

ACCOUNTING AND MANAGERIAL RESULTS RECONCILIATION (R$ million)

1Q17

Reclassifications

Other Events

1Q17

 

Accounting

Exchange Hedge¹

Credit Recovery²

Amortization of goodwill³

Profit Sharing

Foreign exchange variation 4

Extraordinary

Managerial

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

10,541

(967)

(789)

-

-

83

-

8,868

Allowance for Loan Losses

(3,020)

-

839

-

-

(83)

-

(2,264)

NET INTEREST INCOME AFTER LOAN LOSSES

7,521

(967)

50

-

-

-

-

6,604

Fee and commission income

3,709

-

-

-

-

-

-

3,709

General Expenses

(4,765)

-

-

456

(319)

-

-

(4,629)

Personnel Expenses + Profit Sharing

(1,881)

-

-

-

(319)

-

-

(2,200)

Administrative Expenses

(2,884)

-

-

456

-

-

-

(2,429)

Tax Expenses

(1,000)

95

-

-

-

-

-

(906)

Investments in Affiliates and Subsidiaries

5

-

-

-

-

-

-

5

Other Operating Income/Expenses

(1,323)

-

(50)

-

-

-

-

(1,372)

OPERATING INCOME

4,147

(872)

-

456

(319)

-

-

3,411

Non Operating Income

(68)

-

-

-

-

-

-

(68)

NET PROFIT BEFORE TAX

4,078

(872)

-

456

(319)

-

-

3,343

Income Tax

(1,845)

872

-

-

-

-

-

(973)

Profit Sharing

(319)

-

-

-

319

-

-

-

Minority Interest

(90)

-

-

-

-

-

-

(90)

NET PROFIT

1,824

-

-

456

-

-

-

2,280

                 

 

ACCOUNTING AND MANAGERIAL RESULTS RECONCILIATION (R$ million)

4Q16

Reclassifications

Other Events

4Q16

 

Accounting

Exchange Hedge¹

Credit Recovery²

Amortization of goodwill³

Profit Sharing

Foreign exchange variation 4

Extraordinary

Managerial

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

8,273

(41)

(709)

-

-

(85)

388

7,825

Allowance for Loan Losses

(3,907)

-

709

-

-

2

517

(2,680)

NET INTEREST INCOME AFTER LOAN LOSSES

4,365

(41)

-

-

-

(83)

905

5,145

Fee and commission income

3,740

-

-

-

-

-

-

3,740

General Expenses

(5,021)

-

-

451

(262)

-

-

(4,831)

Personnel Expenses + Profit Sharing

(2,136)

-

-

-

(262)

-

-

(2,397)

Administrative Expenses

(2,885)

-

-

451

-

-

-

(2,434)

Tax Expenses

(903)

4

-

-

-

-

-

(899)

Investments in Affiliates and Subsidiaries

2

-

-

-

-

-

-

2

Other Operating Income/Expenses

(493)

-

-

-

-

83

(450)

(860)

OPERATING INCOME

1,691

(37)

-

451

(262)

-

455

2,298

Non Operating Income

(455)

-

-

-

-

-

450

(5)

NET PROFIT BEFORE TAX

1,236

(37)

-

451

(262)

-

905

2,293

Income Tax

542

37

-

-

-

-

(905)

(325)

Profit Sharing

(262)

-

-

-

262

-

-

-

Minority Interest

21

-

-

-

-

-

-

21

NET PROFIT

1,537

-

-

451

-

-

-

1,989

                 

 


30

 

 

ACCOUNTING AND MANAGERIAL RESULTS RECONCILIATION (R$ million)

1Q16

Reclassifications

Other Events

1Q16

 

Accounting

Exchange Hedge¹

Credit Recovery²

Amortization of goodwill³

Profit Sharing

Foreign exchange variation 4

Extraordinary

Managerial

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

11,134

(3,434)

(604)

-

-

501

-

7,598

Allowance for Loan Losses

(2,617)

-

604

-

-

(411)

-

(2,424)

NET INTEREST INCOME AFTER LOAN LOSSES

8,518

(3,434)

-

-

-

90

-

5,174

Fee and commission income

2,984

-

-

-

-

-

-

2,984

General Expenses

(4,450)

-

-

447

(318)

-

-

(4,321)

Personnel Expenses + Profit Sharing

(1,788)

-

-

-

(318)

-

-

(2,107)

Administrative Expenses

(2,661)

-

-

447

-

-

-

(2,214)

Tax Expenses

(1,140)

336

-

-

-

-

-

(804)

Investments in Affiliates and Subsidiaries

2

-

-

-

-

-

-

2

Other Operating Income/Expenses

(1,107)

-

-

-

-

(90)

-

(1,197)

OPERATING INCOME

4,807

(3,098)

-

447

(318)

-

-

1,838

Non Operating Income

26

-

-

-

-

-

-

26

NET PROFIT BEFORE TAX

4,832

(3,098)

-

447

(318)

-

-

1,863

Income Tax

(3,303)

3,098

-

-

-

-

-

(205)

Profit Sharing

(318)

-

-

-

318

-

-

-

Minority Interest

1

-

-

-

-

-

-

1

NET PROFIT

1,213

-

-

447

-

-

-

1,660

¹ Foreign Exchange Hedge: more details on page 29.
² Credit Recovery: reclassified from Revenue from Loan Operations to Allowance for Loan Losses and, from 2017 onwards, it includes provision for guarantees provided.
³ Amortization of Goodwill: reversal of goodwill amortization expenses.
Exchange Rate Fluctuation/Others: includes, in addition to the effect of exchange rate fluctuation, reclassifications between different lines of the Bank’s results (other operating income/expenses, allowance for loan losses, and non-operating result) for better comparability with previous quarters.
5
Other Events:

4Q16

a) Net interest income: refers to an asset valuation adjustment related to a securities impairment.

b) Allowance for loan losses: refers to the establishment of an additional allowance for loan losses for corporate clients.

c) For better comparability, we have reclassified the establishment of the productivity and efficiency fund from the non-operating result line to other operating expenses.

d) Income tax: benefit arising from the distribution of Interest on Capital (“IoC").

31


 

32

 

SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
Date: April 26, 2017
 
Banco Santander (Brasil) S.A.
By:
/ S Amancio Acurcio Gouveia  
 
Amancio Acurcio Gouveia
Officer Without Specific Designation

 
 
By:
/ S Angel Santodomingo Martell
 
Angel Santodomingo Martell
Vice - President Executive Officer

 

 


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