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Annual Report Banco Santander Totta, SA

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Annual Report Banco Santander Totta, SA MAIN INDICATORS A Annual Report 2014 Banco Santander Totta, SA Banco Santander Totta, SA – 2014 Annual Report 1 INDEX 3 Main Indicators 4 Chairman’s Message 5 Governing Bodies 7 Relevant Facts and Prizes Awarded in 2014 9 Corporate Information 10 Corporate Social Responsibility 14 Business Environment 23 Business Areas 29 Business Support Areas 33 Financial and Economic Information 42 Risk Management 50 Proposal for Distribution of Results 51 Supplementary Information and Attachments 57 Corporate Governance 82 Consolidated Financial Statements 88 Notes to the Consolidated Financial Statements 231 Consolidated Reports and Opinions Banco Santander Totta, SA – 2014 Annual Report 2 MAIN INDICATORS BALANCE SHEET AND RESULTS (million euro) 2014 2013 2014/2013 2012 Proforma Net Assets 38,860 38,811 +0.1% 38,527 Net Loans 25,523 26,108 -2.2% 26,980 Customers' Resources 26,841 26,078 +2.9% 27,346 Own Funds + Minority Interests + Subordinated Liabilities 2,963 2,500 +18.5% 2,329 Net Interest Income (excludind dividends) 543.5 507.3 +7.2% 541.5 Fees and Other Income 262.6 290.0 -9.5% 318.0 Operating Income 895.0 829.9 +7.8% 987.1 Net Operating Income 407.8 363.4 +12.2% 528.1 Income Before Taxes & Minority Interests 235.0 133.5 +76.0% 73.4 Net Income 165.2 89.2 +85.2% 88.1 RATIOS 2014 2013 2014/2013 2012 ROE 8.5% 5.1% +3.5 p.p. 6.4% ROA 0.4% 0.2% +0.2 p.p. 0.2% Efficiency Ratio (including depreciation) 54.4% 56.2% -1.8 p.p. 46.5% CET I Ratio* 13.0% 11.3% +1.7 p.p. n.a. Tier I* Ratio 15.3% 13.0% +2.3 p.p. n.a. Total Capital* ratio 15.3% 13.0% +2.3 p.p. n.a. NPL and Doubtful Loans Ratio 4.2% 3.8% +0.5 p.p. 3.5% Credit at Risk Ratio 5.7% 5.9% -0.1 p.p. 4.3% Restructured Loans/Total Loans 9.4% 8.7% +0.8 p.p. 7.0% Restructured Loans not included in Credito at Risk/Total Loans 6.8% 5.4% +1 p.p. n.a. NPL and Doubtful Loans Coverage Ratio 102.5% 104.7% -2.1 p.p. 97.4% Credit at Risk Coverage Ratio 75.9% 67.7% +8.2 p.p. 79.7% Loan-to-Deposit Ratio** 116.0% 125.3% -9.3 p.p. 126.6% RATING 2014 2013 2012 FitchRatings short term F2 F3 F3 long term BBB BBB- BBB- Moody´s short term NP NP NP long term Ba1 Ba1 Ba1 Standard & Poor´s short term B BB long term BB BB BB DBRS short term R-1L R-1L R-1L long term BBBH BBBH BBBH Other Data 2014 2013 2014/2013 2012 Employees 5,328 5,572 -244 5,663 Employees in Portugal 5,281 5,523 -242 5,613 Branches 594 640 -46 667 Total Branches and Corporate Centers in Portugal 579 625 -46 652 * With results net of payout ** According the definition in the "Memorandum of Understanding" Note: In 2013, there was a reclassification to liabilities (representative capital instruments) of minority interests in mutual funds consolidated by the global integration method. As a result, the P&L minority interests were registered in "Other Banking Results". Banco Santander Totta, SA – 2014 Annual Report 3 CHAIRMAN’S MESSAGE “We aspire to be the best Commercial Bank that retains the trust and loyalty of our Customers, Employees, Shareholders and Society and that grows in market share. With this purpose in mind, we want the Bank to be Simple, Personal and Fair for all our Stakeholders.” 2014 was another troubled year for the Portuguese economy and particularly for the Portuguese financial x In the Individuals area, the Santander Select which industry. The new regulatory measures, the digital is a mode of differentiated treatment for affluent transformation, the abrupt reduction of interest rates Customers; and the lack of growth of the country’s economic activity x Mundo 1 2 3, launched early 2015, is a solution implied a loss of revenue in most banks, a considerable intended for the mid and mass market; in the need for investment and higher levels of provisions. Corporate segment; Consequently, the financial industry, as a whole, x Santander Advance, which provides highly recorded relevant losses. innovative financial and non-financial solutions. In spite of this scenario, Banco Santander Totta 2014 was also the year in which we started the reached, in 2014, a net income amounting to 165.2 construction of the new building, where all service million euros, an 85.2% growth relative to the amount departments will be centralized, built in line with the recorded in the previous year. We kept our capital ratios best environmental practices and which deals with new at comfortable levels, CET I ratio standing at 13.0% and and improved services common to all our Employees. Tier I ratio at 15.3%. Through Santander Universities, we continued Attaining such good results is owed above all to three strengthening our support for an higher education, factors: which is, more than ever, our focus in Social Responsibility policy. x A business model based on retail commercial banking focused on the Customer and a strict I would like to share with all our Employees and management of the net interest income; Customers, the distinctions we have received once x Prudent risk management and permanent search for again, in 2014, as “Best Bank” by the most diverse an improved efficiency through digital innovation and international magazines, and our election, for the first cost discipline; time, as “2015 Customer Choice”, in the category of x A well prepared and motivated team of Large Banks, an assessment by consumers which professionals. reflects the work of our teams and the recognition of our Customers. The digital stake was and will continue to be a priority. We developed a multichannel transformation plan, with For 2015, we aspire to be the best Commercial Bank the ambition to boost the aptness with which the Bank that retains the trust and loyalty of our Customers, relates with its Customers. I emphasize the launching of Employees, Shareholders and Society, while growing in the new process of opening a digital account through a market share. With this purpose in mind we want the tablet, which allows to decrease the time spent and to Bank to be Simple, Personal and Fair for all our improve the quality of the recorded information, whilst Stakeholders. also strengthening the rigour, the regulatory compliance and the security of the whole process. António Vieira Monteiro To better correspond to Customers’ requirements, Executive Chairman of Santander Totta several innovating solutions were launched which placed Santander Totta as a reference Bank regarding Customer proximity, in which stands out: Banco Santander Totta, SA – 2014 Annual Report 4 GOVERNING BODIES BANCO SANTANDER TOTTA, S.A. General Meeting Chairman José Manuel Galvão Teles Deputy Chairman António Maria Pinto Leite Secretary Luís Manuel Baptista Figueiredo Board of Directors Chairman António Basagoiti Garcia-Tuñón Deputy Chairman António José Sacadura Vieira Monteiro Members Carlos Manuel Amaral de Pinho João Baptista Leite José Carlos Brito Sítima José Urgel Moura Leite Maia José Manuel Alves Elias da Costa Luís Filipe Ferreira Bento dos Santos Manuel António Amaral Franco Preto Pedro Aires Coruche Castro e Almeida Audit Board Chairman Luís Manuel Moreira de Campos e Cunha Members Mazars & Associados, S.R.O.C. Ricardo Manuel Duarte Vidal Castro Alternate Member Pedro Manuel Alves Ferreira Guerra Auditors Deloitte & Associados, S.R.O.C., S.A. Executive Committee Chairman António José Sacadura Vieira Monteiro Members João Baptista Leite José Carlos Brito Sítima José Manuel Alves Elias da Costa José Urgel Moura Leite Maia Luís Filipe Ferreira Bento dos Santos Manuel António Amaral Franco Preto Pedro Aires Coruche Castro e Almeida Company Secretary Effective Luís Manuel Baptista Figueiredo Alternate Raquel João Branquinho Nunes Garcia Banco Santander Totta, SA – 2014 Annual Report 5 GOVERNING BODIES Executive Committee Functional Organization Chart Chairman Risks, Audit, “Commercial Intelligence(1)”, Accounts & Management Control(2), Human Resources, Organization and Costs(3), Caixa Geral Totta de Angola Bank António Vieira Monteiro Juridical Affairs, Prevention of Money Communication, Corporate Marketing, Laundering, Compliance, Surveillance, Economic Research, Shareholders, General Secretariat, Recoveries and Universities, Quality and Public Policy Divestment José Carlos Sítima Luís Bento dos Santos Company Network, Construction Development, Marketing, Products Finance and Private & Business Institutional Technology and and Insurance “Commercial Network, Private Customers, Operations (1)” Intelligence Banking, Promoters & International Business Brokers and and Global Banking International and Markets José Elias da João Baptista Leite José Leite Maia Pedro Castro e Manuel Preto Costa Al id (1) In the area of “Commercial Intelligence”, the Chairman is assisted by Dr. Manuel Preto (2) The Accounts and Management Control area is headed by Dr. Ignácio Centenera, Aggregate Manager to the Executive Committee (3) The Human Resources, Organization and Costs area is headed by Dr. Nuno Frias Costa, Aggregate Manager to the Executive Committee Banco Santander Totta, SA – 2014 Annual Report 6 RELEVANT FACTS AND PRIZES AWARDED IN 2014 Prizes awarded in 2014 Best Contact Centre in the Banking Sector in 2014 – APCC Best Bank in Best Bank in EDP Prize for Electric Power and Environment – Portugal Portugal EDP Euromoney Global Finance In the category “Services and Other Activities (Annual Consumption >1.25 Gwh)” “For a World with Better Fitness” Prizes– GYM Factory In the category “For the development of organizational success through the promotion of healthy life styles with employees and their families” Bank of the Year in Best Banking Group in Portugal Portugal The Banker World Finance Other relevant facts in
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