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Annual Report Banesto 09 V2 00_Cover_1 16/2/10 12:22 Página 1 ANNUAL REPORT 2009 WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 1_HIGHLIGHTS_2 16/2/10 12:22 Página B HIGHLIGHTS ROE Cost-to-income Non-performing (efficiency) ratio loan ratio 10.5 % 38.9 % 2.94 % Ordinary attributable Earnings per profit share million euros euros 822 1.13 765 824 1.10 606 570 0.97 0.81 0.82 05 06 07 08 09 05 06 07 08 09 ROE Cost-to-income (%) (efficiency) ratio (%) 19.0 48.8 46.7 17.1 16.6 42.7 40.5 15.6* 38.9 10.5 05 06 07 08 09 05 06 07 08 09 * Before discontinued operations WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 2_INDEX_2 16/2/10 12:24 Página 1 ANNUAL REPORT INDEX 2009 Chairman’s Letter 2 Governing Bodies 6 Banesto in 2009 Business model 8 The customer and quality 10 Managing talent 12 Risk control 18 Resources and technology 20 Business units Retail and consumer banking 22 Company banking 28 Wholesale banking 30 The Banesto share 32 Corporate social responsibility 34 Corporate governance 38 Financial Information 40 Risk Management 66 Report of the Audit and Compliance Committee 81 Compliance and Internal Control 90 Auditor’s Report and Annual Financial Statements 92 Auditor’s Report 92 Annual Consolidated Financial Statements 104 Management Report 239 Corporate Governance Report in accordance with the model of the National Securities Market Commission 252 Main figures 253 General information and regional offices 254 WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 3_CHAIRMAN_1 16/2/10 12:25 Página 2 2 Annual Report 09 CHAIRMAN’S LETTER Dear Shareholder, Last year, in this same letter, I said 2009 would This enabled us to achieve significantly better be a difficult and more complicated year than results than those of our competitors: 2008. And so it was. • Gross income increased 4.8% to EUR 2,562 2009 was, without a shadow of doubt, the worst million, which coupled with year of the crisis since it began in August 2007. All developed countries suffered downturns in • Containment of costs produced a 7.4% rise their economies. And Spain was not immune. in net operating income to EUR 1,564 million. The Spanish economy shrank by an estimated 3.6% in 2009, in line with other western • Against a background of a general economies, although with a much greater impact deterioration of risk throughout the financial on the labour market, domestic demand and the sector, Banesto’s non-performing loan ratio property sector. of 2.94% was well below the sector’s average of close to 5%. Macroeconomic imbalances are, however, being corrected and this is a necessary condition for Despite the difficulties, we maintained beginning a sustainable recovery. considerable lending during 2009. Banesto granted EUR 2,500 million of mortgages to The current account deficit was halved in 2009 individuals and EUR 29,049 million to SMEs to 5% of GDP. and companies. A factor at play here is an important change in We granted 61% of the total operations requested the financial position of households, whose by customers, very much in line with that in financing needs moved from 2% of GDP to a 2008. financial capacity of 6.5% of GDP. And lending was on an upward trend: in the In this complex environment, Banesto continued fourth quarter the volume was slightly above that to focus on managing risk and recoveries well; of the same period of 2008. maintaining tight control of costs and ensuring that we continued normal lending to our solvent Lastly, we were able to assign EUR 450 million customers. of extraordinary provisions to strengthen the balance sheet via a large voluntary allocation to generic provisions and valuation of assets. WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 3_CHAIRMAN_1 16/2/10 12:25 Página 3 Banesto 3 “In 2010, Banesto aspires to enhance its competitive position even more with quality growth that generates differential value for all shareholders.” Ana P. Botín Chairman As a result, ordinary net consolidated profit was Bearing in mind these results and their EUR 824 million. Attributable profit, after recurrence, as well as the balance sheet’s extraordinary provisions and taxes, was EUR solvency and soundness, rating agencies 560 million, 28.2% lower than in 2008. On the continued to regard Banesto as one of the best basis of available figures, these results compare classified Spanish and world banks. The three very well with other Spanish banks. leading agencies held their double A rating. A final dividend of EUR 0.135 per share will be All of this was recognised once again by the proposed at the Shareholders’ Meeting which, magazine Euromoney which named Banesto together with the three interim dividends already “Best bank in Spain”, emphasising the quality of paid, gives a total dividend of EUR 0.46 charged its risk, growth in operating income and robust to 2009’s earnings. Given its voluntary nature, development of our business model. the extraordinary generic provisions of EUR 100 million is not calculated in the profits. As a These good results are the consequence of a result, the final pay out will be 56%. corporate culture than combines tradition with innovation and personal commitment, as well as a Based on the year-end share price, the dividend business model whose key elements are: yield in 2009 is more than 5%. • In the first place, the customer is the focal point The Banesto share rose 5.9% in 2009, clearly of our activity: quality of service, innovation outperforming our reference banks, while the and the attractiveness of the products we total shareholder return, assuming the final offer are producing significant and sustained dividend is approved, will be 13.2%. growth in the number of customers and their product linkage. In 2009, 430,000 new WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 3_CHAIRMAN_1 16/2/10 12:25 Página 4 4 Annual Report 09 customers joined Banesto (348,000 Flexibility and anticipation in management individuals and 82,000 SMEs) and 49.1% of are the key elements behind the good customers have more than four of the bank’s performance of risk variables: Banesto has products. adapted agilely to the new economic environment, taking major decisions as of the • Commercial and operational efficiency is second half of 2007. Measures have been another defining feature, thanks to which our taken, policies reviewed and more resources cost-to-income (efficiency) ratio is one of the assigned to risk activity. sector’s best. Prudent management of liquidity and risk has • We also strive for greater productivity, contributed soundness and balance to the generating more business with the resources results. In 2009, Banesto placed EUR 3,800 available. We are an agile bank and making million of debt in the market without the the customer the focal point is the pillar of need for state guarantee. our business model. In short, and bearing in mind the current • We have a great team, full of talent and environment, Banesto’s risks model is a commitment competitive advantage and offers differential value. 2009 was the year when we consolidated the Human Resources Plan. We developed In a year when the Spanish economy was in the projects for training, career monitoring, doldrums, Banesto did not neglect its social assessment and recognition. responsibility. However, 2009 was a difficult year as we had We continued to focus on small firms and to adjust the headcount and installed foment entrepreneurial activity, in the conviction capacity to business needs. This enables us that supporting SMEs, as a job creator, is today to face 2010 with greater stability and with more important than ever. everyone prepared and focused on the growth opportunites. We developed the Internet television channel Emprendedores TV more. It has become a Banesto was once again chosen as one of the reference point for Spain’s entrepreneurs, with best companies to work for in Spain, and the more than three million visits and the presence first among the country’s banks. of 600 business people. Today, this series is used by leading European business schools. • In fourth place, prudence in managing all risks: credit, market and liquidity. We also launched the YUZZ project, a pioneering initiative to identify and promote the projects of Risk is inherent in banking activity. This is young business people in the sphere of why at Banesto, in good times as well as bad, technology. all employees, beginning with the Board, are actively involved in risk management. WorldReginfo - 929f2802-9e63-4c69-a4a5-4d25fbcace4e 3_CHAIRMAN_1 16/2/10 12:25 Página 5 Banesto 5 Lastly, our project Solidarity and Sustainable • A continuous focus on risk management and a Tourism already supports more than 300 female prudent policy in provisions. entrepreneurs in Africa and Latin America. Banesto’s contribution in the form of volunteers Difficult times always offer opportunities. has been decisive. I would like to thank all those who participated in the voluntary activities of our The current economic environment, combined bank. with the restructuring needed in part of the financial system, will offer opportunities to grow I do not want to end without commenting on the and gain market share. Banesto is well placed future. for this. Although the international financial crisis is In 2010, Banesto aspires to enhance its under control, Spain’s high unemployment and competitive position even more with quality the tough adjustment in the property sector will growth that generates differential value for all continue to affect us in 2010. Governments, shareholders. including Spain’s, have taken the right steps to soften their effects. Yet even so, it will not be We have the will and the resources for it.
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