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BSBR Banco Santander

Filed: 3 Feb 21, 7:00am

 

 

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 December, 2020


 

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

 


INDEX

 

Performance Review.. 3

Balance Sheet 35

Income Statements. 38

Statements of Comprehensive Income. 39

Statements of Changes in Stockholders' Equity – Bank. 40

Statements of Changes in Stockholders' Equity – Consolidated. 43

Cash Flows Statements. 46

Statements of Value Added. 50

1.General Information. 51

2.Presentation of Financial Statements. 51

3.Significant Accounting Policies. 52

4.Cash and Cash Equivalents. 59

5.Interbank Investments. 59

6.Securities and Derivatives Financial Instruments. 61

7.Interbank Accounts. 76

8.Credit Portfolio and Provision for Expected Losses Associated with Credit Risk. 76

9.Foreign Exchange Portfolio. 79

10.Other Financial Assets. 80

11.Tax Assets and Liabilities. 81

12.Other Assets. 86

13.Dependences Information and Foreign Subsidiary. 87

14.Investment in Affiliates and Subsidiaries. 89

15.Fixed Assets. 93

16.Intangibles. 93

17.Funding. 93

18.Other Financial Liabilities. 96

19.Other Payables – Other 97

20.Provisions, Contingent Assets and Liabilities and Legal Obligations - Tax and Social Security. 98

21.Stockholders’ Equity. 102

22.Related Parties. 104

23.Income from Services Rendered and Banking Fees. 113

24.Personnel Expenses. 113

25.Other Administrative Expenses. 113

26.Other Operating Income. 113

27.Other Operating Expenses. 113

28.Non-Operating Income. 114

29.Employee Benefit Plans - Post-Employment Benefits. 114

30.Risk Management, Capital and Sensitivity Analysis. 120

31.Corporate Restructuring. 123

32.Other information. 125

33.Subsequent Events. 128

Composition of Management Bodies. 129

Declaration of directors on the financial statements. 132

Directors' Statement on Independent Auditors. 133

Audit Committee Report 133

Fiscal Council's Opinion. 135

 

 

 

 

 

 

 

 


 

 

Performance Review

Dear Stockholders:

We present the Management Report to Individual and Consolidated Financial Statements of Banco Santander (Brasil) S.A. (Santander or Bank) related to the period ended December 31, 2020, prepared in accordance with accounting practices set by Brazilian Corporate Law, the standards of the National Monetary Council (CMN), the Central Bank of Brazil (Bacen) and document template provided by the Accounting National Financial System Institutions (Cosif) and the Brazilian Exchange Commission (CVM), that does not conflict with the rules issued by Bacen.

The Interim Condensed Consolidated Financial Statements in accordance with the International Accounting Standards Board (IASB) for the fiscal year ended December 31, 2020, will be disclosed in the legal deadline, on the website www.santander.com.br/ri.

1. Macroeconomic Environment

The Santander considers that the international environment has continued to be influenced by developments regarding the COVID-19 pandemic, with the initial countries affected by the disease going through a “second wave” of contamination on the heels of easing in social distancing policies. Nonetheless, the Bank highlights the fast progress observed in the development of vaccines to fight the pandemic, with some countries having already launched an immunization campaign to their citizens and several nations mulling over the same initiative during the first months of 2021. Notwithstanding uncertainties brought by the pandemic, fiscal and monetary stimuli granted by the vast majority of countries continued to led the Bank to witness the release of activity indicators hinting at the extension of a recovery trend after the hit observed in the second quarter. The Bank assesses that these fiscal and monetary stimuli have helped to support financial asset prices. For instance, the S&P500 receded to the vicinity of 2,500 points in March 2020 from 3,200 points in December 2019, but it moved back close to 3,100 points in the end of June, then it climbed to 3,400 points in the end of third quarter and reached 3,700 points in the fourth quarter (a 11.7% expansion in the last three months of 2020).

On the domestic front, Santander thinks that the setbacks brought by the COVID-19 led the debate about structural reforms to play a secondary role, as measures aiming at fighting the impact of the pandemic have become the focus of market participants, especially those related to the most vulnerable part of the population as well as of corporate sector, which were heavily hit by the social distancing policy. According to Santander, these temporary measures were key to mitigate the impact of the health crisis, but they were also responsible for a significant expansion of public expenditures during 2020, which will translate into a hefty increase in the Brazilian public indebtedness. The Bank considers that this backdrop just reinforces the need for the resumption of discussions about structural reforms once the pandemic is over in order to prevent the public debt to enter into an unsustainable trajectory.

After a widespread wave of downward revisions in the forecasts for the GDP real change in 2020 as compared with those seen in the first quarter of 2020, the Bank observed incentives granted leading to a strong recovery in certain segments–markedly, retail sales. This more intense reaction than many had initially thought led market participants to start anticipating less severe drops of the Brazilian GDP this year. This trend has continued to prevail lately. The median forecast for the GDP real change this year indicated a 6.6% contraction for 2020 by the end of second quarter. Then, the median forecast moved up to a 4.36% decline for 2020 by the end of fourth quarter. The Bank judges that, albeit less intense than initially thought, the prospect for a strong contraction of the Brazilian GDP in 2020, which should be followed by a gradual recovery in the coming years—the median expectations for the GDP growth in 2021 and 2022 were 3.4% and 2.5%, respectively in the end of December 2020—continued to justify the general perception that the IPCA change should converge towards the targeted levels set for the relevant time horizon for the monetary policy, notwithstanding the fact that it ended 2020 above the goal on the heels of temporary shocks–the IPCA annual change reached 4.5%, above the target of 4.0%. According to Santander’s appraisal, the mix of gradual economic recovery and inflation readings compatible with targeted levels opened room for the Brazilian Central Bank to keep the base interest rate at 2.00% pa in the end of 2020 and it has allowed it to indicate the maintenance of this level for most of 2021.

In the Bank’s view, the prospect of high public indebtedness and low growth has kept market participants skeptical in acquiring Brazilian financial assets. However, not even that skepticism was a hurdle for a favorable performance of the Brazilian 5-year CDS spread and the FX rate in fourth quarter. Regarding the former, the instrument to hedge the Brazilian insolvency risk ended the period at a level similar to the average observed in first quarter—i.e., before the pandemic—when this indicator was hovering around 150bps, thus below the 250bps observed in the end of third quarter. The Brazilian FX rate followed a similar pattern, as the USD/BRL pair receded to USD/BRL5.20 in December 2020 from USD/BRL5.60 in September 2020 and after having hovered reached as high as USD/BRL5.80 in fourth quarter. On both cases, the Santander understands that the trigger for the improvement observed in the period had to do with the diminution of uncertainties regarding the conduct of fiscal policy in the coming years on the heels of official statements that indicated the willingness to abide by the rules imposed by the legal framework of the public spending cap.

Therefore, the Bank considers that additional improvements in the performances of these indicators will require measures that indicate a stricter commitment of the Brazilian government with the reversal of the ascending trend of public spending in the coming years. In the Bank’s view, this will only be possible with the resumption of structural reforms.

2. Performance                 

 

 

 

 

2.1) Corporate Net Income

Consolidated Income Statements (R$ Millions)

12M20

12M19

annual changes%

4Q20

3Q20

quarter changes %

Financial Income

108,988.3 

82,740.4 

31.7 

7,641.5 

21,783.3 

(64.9) 

Financial Expenses

(87,751.0) 

(51,759.7) 

69.5 

6,651.9 

(14,493.7) 

(145.9) 

Gross Profit From Financial Operations (a)

21,237.3 

30,980.7 

(31.4)

14,293.4 

7,289.6 

96.1 

Other Operating (Expenses) Income (b)

(12,555.1) 

(14,218.8) 

(11.7) 

(3,838.5) 

(2,595.8) 

47.9 

Operating Income

8,682.3 

16,761.9 

(48.2)

10,454.9 

4,693.7 

122.7 

Non-Operating Income

239.0 

8.5 

2,718.3 

(13.5) 

15.9 

(185.0) 

Income Before Taxes on Income and Profit Sharing

8,921.2 

16,770.4 

(46.8)

10,441.4 

4,709.6 

121.7 

Income Tax and Social Contribution (a)

6,539.5 

(462.1) 

(1,515.2) 

(6,113.8) 

(412.6) 

1,381.7 

Profit Sharing

(1,857.9) 

(1,734.9) 

7.1 

(436.7) 

(457.7) 

(4.6) 

Non-Controlling Interest

(133.4) 

(392.4) 

(66.0) 

(32.3) 

(28.1) 

14.9 

Consolidated Net Income

13,469.4 

14,181.0 

(5.0)

3,858.7 

3,811.2 

1.2 

 

Operating Result before adjusted Taxation

12M20

12M19

annual variation %

4Q20

3Q20

quarterly variation %

(R$ Million)

Result before Taxation on Profit and Participation

8,921.2 

16,770.0 

(46.8) 

10,441.4 

4,709.6 

121.7 

Foreign Exchange Hedge

13,271.2 

1,370.8 

868.2 

(4,248.0) 

2,071.8 

(305.0) 

Operating Income Before Adjusted Taxation

22,192.4 

18,140.8 

22.3 

6,193.4 

6,781.4 

(8.7)

Income TAX

12M20

12M19

annual variation %

4Q20

3Q20

quarterly variation %

(R$ Million)

Income tax and social contribution

6,539.5 

(462.0) 

(1,515.5) 

(6,113.8) 

(412.6) 

1,381.7 

Foreign Exchange Hedge

(13,271.2) 

(1,370.8) 

868.2 

4,248.0 

(2,071.8) 

(305.0) 

Adjusted Income Tax and Social Contribution

(6,731.7)

(1,840.8)

267.3 

(1,865.8)

(2,484.5)

(24.9)

 

The Bank's rapid adaptation to different scenarios, supported by a solid balance sheet position and a well-defined business model, made it possible to capture important opportunities in the period, always prioritizing customer needs. Accordingly, we offer a plan to extend installments of various types of financing granted to customers in order to provide greater financial capacity. In this quarter, an additional provision of R$3,2 billion was made, supported by assumptions based on stress scenarios. In addition, the Bank continued to evolve our risk models, which helped to maintain the quality of the credit portfolio at controlled levels. As a result of our actions in the period, we observed an increase in margins while reaching the best historical level of the efficiency index.

The return on average shareholders' equity reached 18.11% in the year, down 2.90 p.p. and 13.79% in the last 12 months.

a) Foreign Exchange Hedge of the Grand Cayman and Luxembourg Branches and the Subsidiary Santander Brasil EFC

Santander operates branches in the Cayman Islands and Luxembourg and the subsidiary Santander Brasil Establecimiento Financiero de Credito, EFC, or “Santander Brasil EFC” which are used, mainly, to raise funds in the capital and financial foreign markets, providing credit lines that are extended to clients for trade-related financings and working capital. To protect the exposures to foreign exchange rate variations, the Bank uses derivatives. According to Brazilian tax rules, the gains or losses resulting from the impact of appreciation or depreciation of the local currency (Real) in foreign investments are nontaxable to PIS/COFINS/IR/CSLL, while gains or losses from derivatives used as hedges are taxable or deductible. The purpose of these derivatives is to protect the after-tax net income. As of 2022, all exchange rate variations will be computed on the taxable basis of the IRPJ and CSLL.

Law 14.031/20, of July 28, 2020, determines that, as of January 2021, 50% of the foreign exchange variation of investments abroad must be computed in the determination of the real profit and in the calculation base of the Social Contribution on the Net Income (CSLL) of the investing legal entity domiciled in the country. As of 2022, the foreign exchange variation of investments abroad will be fully computed on the basis of the IRPJ and CSLL.

The different tax treatment of such foreign exchange rate differences results in a volatility on the operational earnings or losses and on the gross revenue tax expense (PIS/COFINS) and income taxes (IR/CSLL), as demonstrated below:

Foreign Exchange Hedge of the Grand Cayman and Luxembourg Branchs
and the Subsidiary Santander Brasil EFC
(R$ Million)

12M20

12M19

annual variation %

4Q20

3Q20

quarterly variation %

Exchange Variation - Profit From Financial Operations

16,791.9 

1,511.3 

1011.1 

(5,015.4) 

2,449.4 

(304.8) 

 

 

 

 

 

 

Derivative Financial Instruments - Profit From Financial Operations

(30,374.9)

(2,776.6)

994.0 

9,723.8 

(4,587.7)

(312.0)

Income Tax and Social Contribution

13,271.2 

1,370.8 

868.1 

(4,248.0)

2,071.8 

(305.0)

PIS/COFINS - Tax Expenses

311.8 

(106.5)

(392.8)

(460.4)

66.5 

(792.3)

 

b) Other Operating (Expenses) Income

Banking service fees and fees totaled R$ 18,464 million in the year, down 1.2% over 12M19, mainly explained by the lower revenue from cards and services acquired. In 4Q20, these revenues totaled R$ 5,133 million, 8.2% higher than 3Q20, as a result of the better performance of almost all revenue lines.

Income from Services Rendered and Banking Fees
(R$ Millions)

12M20

12M19

annual changes%

4Q20

3Q20

quarter changes %

Asset Management

1,016.9 

1,085.9 

(6.4) 

276.7 

262.0 

5.6 

Checking Account Services

3,965.6 

3,857.1 

2.8 

1,057.7 

1,021.6 

3.5 

Lending Operations and Income from Guarantees Provided

1,437.6 

1,379.3 

4.2 

389.1 

378.2 

2.9 

   Lending Operations

805.8 

834.5 

(3.4) 

233.5 

197.2 

18.4 

   Income Guarantees Provided

631.8 

544.7 

16.0 

155.6 

181.0 

(14.0) 

Insurance Fees

3,116.9 

3,118.3 

(0.0) 

907.4 

745.3 

21.7 

Cards (Debit and Credit) and Acquiring Services

5,590.2 

6,118.4 

(8.6) 

1,621.7 

1,406.5 

15.3 

Collection

1,471.1 

1,514.6 

(2.9) 

384.8 

368.6 

4.4 

Brokerage, Custody and Placement of Securities

1,062.0 

982.1 

8.1 

223.5 

361.0 

(38.1) 

Others

803.7 

628.8 

27.8 

272.4 

203.1 

34.1 

Total

18,464.0 

18,684.5 

(1.2)

5,133.3 

4,746.3 

8.2 

General Expenses - General expenses, including depreciation and amortization without goodwill, totaled R$ 21,835 million in the year, 2,7% higher than 12M19, and significantly below the 4.52% inflation for the period. In the quarterly comparison, general expenses registered an increase of 9,4%.

Personnel expenses, including profit sharing, totaled R$ 9,035 million in the year, down 4.9% over the same period last year. In three months, these expenses increased by 13,5%.

Administrative expenses, excluding depreciation and amortization, reached R$ 9,705 million in the year, an increase of 4,9% compared to 12M19, with emphasis on the increase in data processing expenses due to the development of projects. Compared to 3Q20, these expenses expanded 9.4%, mainly as a result of higher expenses with specialized and third-party technical services, and with advertising, promotions and publicity, as a result of higher expenses with year-end campaigns.

General Expenses
(R$ Millions)

12M20

12M19

annual changes%

4Q20

3Q20

quarter changes %

Personnel Expenses

(9,035.2) 

(9,496.2) 

(4.9) 

(1,522.0) 

(1,340.7) 

13.5 

Other Administrative Expenses, excluding the effects of goodwill amortization

(12,800.4) 

(11,775.1) 

8.7 

(3,456.9) 

(3,210.0) 

7.7 

General Expenses, excluding the effects of goodwill amortization

(21,835.5)

(21,271.3)

2.7 

(4,978.9)

(4,550.7)

9.4 

2.2) Assets and Liabilities

Consolidated Balance Sheets
(R$ Millions)

Dec/20

Dec/19

annual variation %

Current and Long-Term Assets

988,537.8 

844,294.7 

17.1 

Permanent Assets

13,851.2 

13,248.4 

4.5 

Total Assets

1,002,389.0 

857,543.1 

16.9 

Current and Long-Term Liabilities

921,914.6 

785,789.3 

17.3 

Deferred Income

355.5 

285.2 

24.7 

Non-Controlling Interest

1,150.7 

1,695.4 

(32.1) 

Stockholders' Equity

78,968.2 

69,773.2 

13.2 

Total Liabilities and Stockholders' Equity

1,002,389.0 

857,543.1 

16.9 

 

 

Total assets are mainly represented:

(R$ Millions)

Dec/20

Dec/19

annual variation %

Loan Portfolio

411,654.8 

352,027.9 

16.9 

Securities and Derivative Financial Instruments

266,088.4 

193,454.7 

37.5 

Interbank Investments

69,698.3 

43,367.5 

60.7 

Interbank Accounts

91,011.3 

89,265.0 

2.0 

 

 

 

 

2.3) Loan Portfolio

Management Disclosure of Loan Portifolio by Segment
(R$ Million)

Dec/20

Dec/19

 annual changes %

Individuals (1)

173,627.0 

155,337.8 

11.8 

Consumer Finance

60,256.3 

58,231.0 

3.5 

  Individuals (1)

53,974.2 

50,671.1 

6.5 

  Corporate

6,282.1 

7,559.9 

(16.9) 

Small and Medium-sized Entities

55,914.9 

41,261.7 

35.5 

Large-sized Entity

121,183.5 

97,197.3 

24.7 

Sim

673.1 

0.0 

673.1 

Total Loan portfolio (gross)

411,654.8 

352,027.9 

16.9 

Other Operations with Credit Risk

99,311.8 

80,505.1 

23.4 

Total Extended Portfolio (gross)

510,966.6 

432,533.0 

18.1 

Allowance for Loan Losses (2)

(25,067.0) 

(21,408.1) 

17.1 

Total Loan portfolio (net)

485,899.6 

411,124.9 

18.2 

(1) Including the loans to individual in the consumer finance segment, the individual portfolio reached R$227,601 on December 31, 2020 - 12/31/2019 – R$206,009).

(2) In addition to the provision for loans, also includes debentures, FIDC, CRI, promissory notes, promissory notes for placement abroad, assets related to acquiring activities and sureties and sureties.

 

The credit portfolio reached R$ 411,655 million in 2020, which represents an increase of 16.9% in relation to the previous year. Most of segments registered a positive variation in the year, with the SME and Large Companies segments being the most significant variations, 35.5% and 24.6%, respectively.

In addition, the performance is still supported by the +Negócios platform, which operates in the vehicle segment and offers better experiences throughout the customer's journey.

Delinquency

The delinquency rate over 90 days decreased by 0.9 p.p. in the year and reached 2.1% in December 2020, the lowest level ever recorded. This movement was a result of the improvement in the index of the Individuals and Individuals segments, which are still partly influenced by the effect of the payment extensions offered to our customers. In addition, the product mix, with a lower share of the rotating ones, also contributes positively to the good performance of the default rate. In three months, the indicator was stable.

The 15 to 90 day delinquency rate reached 2.8% in December 2020, a reduction of 1.0 p.p. in the year in both segments. In the quarter, the index decreased by 0.3 pp, also benefiting from the increase in the loan portfolio in the period.

The balance of provisions for expected losses associated with credit risk represents 6.1% of the credit portfolio on December 31, 2020, 6.1% on December 31, 2019.

The expense for allowance for loan losses, net of revenue from recovery of credits written off for losses in 2020 and 2019, was R$13,689 million and R$13,447 million, respectively, showing an increase of 1.8%.

2.4) Funding by Customers

Funding by Customers
(R$ Millions)

12M20

12M19

annual variation %

Demand Deposits

41,821.3 

29,107.5 

43.7 

Saving Deposits

63,306.5 

49,039.9 

29.1 

Time Deposits

279,778.6 

190,344.5 

47.0 

Debentures/LCI/LCA/LIG (1)

52,382.8 

50,635.2 

3.5 

Treasury Bills/Structured Operations Certificates

18,462.0 

34,526.5 

(46.5) 

Total Funding

455,751.2 

353,653.6 

28.9 

(1)   Debentures repurchase agreement, Real Estate Credit Notes (LCI), Agribusiness Credit Notes (LCA) and Guaranteed Real State Credit Notes (LIG).

Customer borrowings totaled R$455,751 million on December 31, 2020, with an increase of 28.9% in twelve months (or R$102 million), mainly influenced by the expressive 43.7% expansion in demand deposits, and by the 47,0% growth in time deposits.

2.5) Issuance of Debt Instruments Eligible to Compose Capital

On November 5, 2018, the Board of Directors approved the redemption of Level I and Level II Notes issued on January 29, 2014, in the total amount of US $ 2.5 billion. The repurchase was approved by the Central Bank on December 18, 2018.

 

 

 

 

In conjunction with the approval of the redemption of the previous notes, the Board of Directors approved the issuance of the equity instruments, which was held on November 8, 2018. Such issuance took the form of notes issued abroad, in US dollars, in the amount of US$2.5 billion, for payment in Level I and Level II of Reference Equity. The offering of these Notes was made outside of Brazil and the United States of America, for non-US Persons, based on Regulation S under the Securities Act, and was fully paid in by Santander España, controlling shareholder of Banco Santander Brasil.

On December 18, 2018, the Bank issued an approval for the Notes to comprise Level I and Level II of Banco Santander's Reference Equity as of such date. This approval led to the reclassification of these instruments from the line of Eligible Debt Instruments to Capital for Subordinated Debts.

Details of the balance of Debt Instruments Eligible to Compose Capital referred to the issuance of equity instruments for the composition of Tier I and Tier II of Regulatory Capital due to the Capital Optimization Plan are as follows:

Debt Instruments Eligible to Compose Capital

dec/20

dec/19

Specific features

Tier I

Tier II

Tier I (1)

Tier II (1)

Issuance

Nov-18

Nov-18

Nov-18

Nov-18

Amount (Million)

$1.250 

$1.250 

$1.250 

$1.250 

Interest Rate (p.a.) (2)

7,250% 

6,125% 

7,250% 

6,125% 

Maturity

No Maturity

(Perpetual)

Nov-28

No Maturity (Perpetual)

Nov-28

Value

$6.554 

$6.565 

$5.092 

$5.083 

Periodicity of

semiannually, as of May 8,

2019

semiannually, as of May 8,

2019

semiannually, as of May 8, 2019

semiannually, as of May 8, 2019

Payment

 

 

 

 

 

 

 

 

 

(1) Notes repurchased in 2019; as authorized by Bacen on December 18, 2018. As of the date of these notes were excluded of Level I and Level II PR.

(2) The debts of January 2014 were made by Banco Santander in Brazil, therefore, as Income Tax at source assumed by the issuer, in the form of a corresponding exchange rate, is 8.676% and 7.059% for the instruments Level I and Level II, respectively. The emissions generated from November 2018 were made through the Cayman Agency and, consequently, there is no incidence of Income Tax at Source.

 

The Notes issued in 2018 have the following common characteristics:

(a) Unit value of at least US$150 thousand and in integral multiples of US$1 thousand in excess of such minimum value;

(b) The Notes may be repurchased or redeemed by Santander after the fifth anniversary as of the date of issue of the Notes, at the sole discretion of the Bank or as a result of changes in the tax legislation applicable to the Notes; or at any time, due to the occurrence of certain regulatory events.

2.6) Stockholders’ Equity

As of December 31, 2020, Banco Santander 's consolidated shareholders' equity increased by 13.2% compared to December 31, 2019.

The change in Shareholders' Equity between December 31, 2020 and December 31, 2019, was mainly due to the net income for the year in the amount of R$13,469 million, the negative equity valuation adjustment (marketable securities and derivative financial instruments ) in the amount of R$890 million and in an employee benefit plan in the amount of R$572 million (net of tax effects), due to the remeasurement of actuarial obligations due to the variation in interest rates caused by the macroeconomic scenario observed in the fiscal year 2020.

Treasury Shares

Below, the movement of Treasury Shares:

Dec/20

Dec/19

Quantity

Quantity

Units

Units

Treasury shares at beginning of the period

16,702 

13,317 

Shares Acquisitions

5,052 

6,465 

Payment - Share-based compensation

(2,925) 

(3,080) 

Treasury shares at end of the period

18,829 

16,702 

Subtotal - Treasury Shares in thousands of reais

$785,587.00 

$679,364 


Emission Costs in thousands of Reais

$1,771.00 

$1,771 

Balance of Treasury Shares in thousands of reais

$787,358.00 

$681,135 

Cost/Share price

 Units

Units

 

 

 

 

 

 

Minimum cost

R$7.55

R$7.55

Weighted average cost

R$33.24

R$32.10

Maximum cost

R$49.55

R$49.55

Share price

R$44.83

R$42.60


In the fiscal year ended on December 31, 2020 and 2019, there were highlights of Dividends and Interest on Capital, as below:

DIVIDENDS AND INTEREST ON CAPITAL
(R$ Millions)

Dec/20

Dec/19

Interest on capital

3,325.0 

4,010.0 

Dividends

0.0 

6,790.0 

Total

3,325.0 

10,800.0 


2.7) Basel Index

Bacen determines that financial institutions maintain a Reference Equity (PR), PR Level I and Principal Capital compatible with the risks of their activities, higher than the minimum requirement of the Required Reference Equity, represented by the sum of the credit risk, risk market risk and operational risk.

As established in CMN Resolution No. 4,193 / 2013, the requirement for PR in 2019 was 10.5%, comprising 8.0% of Minimum Equity of Reference plus 2.5% of Additional Capital Conservation. Considering this surcharge, PR Level I increased to 8.5% and Minimum Principal Capital to 7.0%.

For the base year 2020, the PR requirement remains at 10.25%, including 8.0% of Reference Equity Minimum, plus 1.25% of Capital Conservation Additional and 1.0% of Systemic Additional. PR Level I reaches 8.25% and Minimum Principal Capital 6.75%.

In view of the pandemic scenario, the Central Bank of Brazil has been monitoring the Brazilian market and defining a set of rules to minimize the impacts of the pandemic. In the case of capital, it reduces the reduction in the Additional Capital Conservation Additional from 2.5% to 1.25%, expanding the capacity to grant new credit operations.

The Basel ratio is calculated in accordance with the Financial Statements of the Prudential Conglomerate prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen, as shown below:

Basel Index%

Dec/20

Dec/19

Tier I Regulatory Capital

77,571.5 

66,481.7 

Principal Capital

71,006.3 

61,389.5 

Supplementary Capital

6,565.2 

5,092.2 

Tier II Regulatory Capital

6,554.4 

5,083.8 

Regulatory Capital (Tier I and II)

84,126.0 

71,565.5 

Credit Risk

478,303.5 

407,786.2 

Market Risk

15,846.3 

20,235.2 

Operational Risk

57,419.4 

47,965.5 

Total RWA

551,569.2 

475,986.9 

Basel I Ratio

14.06 

13.97 

Basel Principal Capital

12.87 

12.90 

Basel Regulatory Capital

15.25 

15.04 

 

2.8) Main Subsidiaries

The table below shows the balances of total assets, shareholders' equity, net income and loan operations portfolio for the period ended December 31, 2020, of the main subsidiaries of Banco Santander:

Subsidiaries (R$ Millions)

Total Assets

Stockholders' Equity

Net
Income

Loan
Portfolio (1)

Ownership/Interest (%)

Aymoré Crédito, Financiamento e Investimento S.A.

50,196.7 

1,542.3 

743.3 

48,542.3 

100.00% 

Getnet Adquirência e Serviços para Meios de Pagamento S.A.

42,321.1 

2,072.0 

289.9 

0.0 

100.00% 

Banco Bandepe S.A.

27,002.1 

5,369.5 

90.9 

0.0 

100.00% 

Banco RCI Brasil S.A.

12,095.2 

1,405.5 

180.6 

9,345.2 

39.89% 

Santander Leasing S.A. Arrendamento Mercantil

8,544.5 

5,832,9 

78.3 

2,096.2 

100.00% 

Santander Corretora de Seguros, Investimento e Serviços S.A.

6,684.9 

3,571.5 

570.3 

0.0 

100.00% 

Santander Brasil, Establecimiento Financiero de Credito, S.A.

420.6 

1.3 

(14.7) 

0.0 

100.00% 

Atual Serviços de Recuperação de Créditos e Meios Digitais S.A.

1,792.9 

1,758.6 

88.8 

0.0 

100.00% 

Santander Corretora de Câmbio e Valores Mobiliários S.A.

1,009.2 

731.3 

90.9 

0.0 

100.00% 

(1) Includes balances referring to leasing portfolio and other credits.  

 

 

 

 

The financial statements of the Subsidiaries above were prepared in accordance with the accounting practices adopted in Brazil, established by the Brazilian Corporate Law, in conjunction with the CMN, Bacen rules and model of the document provided for in the Accounting Plan of Cosif Institutions, of CVM, in which they do not conflict with the rules issued by Bacen, without the elimination of transactions with related companies.

3. Other Events

3.1) Post-employment Benefit Plan

On June 30, 2018, there was an increase in the cost contribution established in the Post-Employment Benefit Plan, which is calculated as a percentage of the total monthly compensation of members. The increase in the contribution resulted in a decrease in the past service cost, due to changes in the plan. The changes proposed in the Post-Employment Benefit imply a reduction in the present value of the obligations of the defined benefit plan, which is supported by actuarial valuations.

3.2) Corporate Restructuring

During the 2019 and 2020 financial years, several corporate movements were implemented in order to reorganize the operations and activities of the entities in accordance with the Banco Santander business plan:

i) Dissolution and liquidation of Santander Brasil, Establecimiento Financiero de Credito, S.A.

On November 12, 2020, by the decision of its sole partner, the dissolution and liquidation of Santander Brasil, Establecimiento Financiero de Credito, SA (whose name was changed to Santander Brasil, SAU), an offshore entity with headquarters in Spain, was approved, wholly owned by Banco Santander Brasil, which acted to complement the foreign trade strategy for corporate clients (large Brazilian companies and their operations abroad) and offer financial products and services. The capital invested abroad was repatriated in November 2020. The deed of dissolution and liquidation of the company was registered with the Mercantile Registry of Madrid with effect on December 15, 2020. These activities are now carried out by the Bank's branch in Luxembourg.

ii) Disposal of the equity interest held in Super Payments and Administration of Means of Electronic Media S.A.

On February 28, 2020, the sale to Superdigital Holding Company, SL of a company indirectly controlled by Banco Santander, SA, of the shares representing the entire share capital of Super Payments and Administração de Meios Eletrônico SA (“Superdigital”) for the amount R$270 million. As a result, the Company is no longer a shareholder of Superdigital.

iii) Put option of equity interest in Banco Olé Bonsucesso Consignado S.A. and incorporation of Banco Olé Consignado S.A. and of Bosan Participações S.A.

On March 14, 2019, the minority shareholder of Banco Olé Bonsucesso Consignado S.A. (Olé Consignado) formalized its interest to exercise the put option right provided in the Investment Agreement, executed on July 30, 2014, to sell its 40% equity interest in the capital stock of Olé Consignado to Banco Santander (Brazil) S.A. (“Banco Santander”).

On December 20, 2019, the parties entered into a binding agreement for the acquisition, by Banco Santander, of all the shares issued by Bosan Participações S.A. (holding company whose only asset are shares representing 40% of the capital of Banco Olé).

On January 31, 2020, the Company and the shareholders of Bosan Participações SA (“Bosan”) concluded the definitive agreement and signed the purchase and sale agreement for 100% of the shares issued by Bosan, through the transfer of Bosan's shares to Company and payment to sellers in the total amount of R$1,608,772. As a result, Banco Santander became, directly and indirectly, the holder of 100% of Banco Olé's shares.

On August 31, 2020, the shareholders of Banco Santander approved the merger by the Bank of Banco Olé Consignado SA and Bosan Participações SA The mergers did not result in an increase in the capital of Santander Brasil and are pending approval by the Central Bank of Brazil.

iv) Acquisition of direct equity interest in Toque Fale Serviços de Telemarketing LTDA.

On March 24, 2020, the Company acquired shares representing the total share capital of Toque Fale Serviços de Telemarketing LTDA (“Toque Fale”) for the amount of R$1,099, corresponding to the equity value of the quotas on February 29, 2020, previously held by Getnet Adquirência e Serviços para Means of Payment SA and Auttar HUT Processamento de Dados LTDA. As a result, the Company became a direct shareholder of Toque Fale and holder of 100% of its capital.

v) Acquisition of residual equity interest in Return Capital Serviços e Recuperação de Crédito S.A.

On November 1, 2019, Atual Serviços de Recuperação de Creditos e Meios Digitais SA (“Atual”), wholly owned subsidiary of Banco Santander, and the minority shareholders of Return Capital Serviços e Recuperação de Crédito SA (“Return Capital”) celebrated Return Capital Stock Purchase and Sale Agreement, in which Atual acquired all the shares of minority shareholders, corresponding to 30% of

 

 

 

Return Capital's share capital. The acquisition was completed on November 1, 2019, so Atual now holds 100% of the shares representing Return Capital's share capital.

vi) Acquisition of Summer Empreendimentos Ltda.

On May 14, 2019, Banco Santander (Brasil) S.A. and its wholly owned subsidiary Santander Holding Imobiliária S.A. (“SHI”) entered into a binding document with the partners of Summer Empreendimentos Ltda. (“Summer”) establishing the terms of the purchase and sale negotiation of quotas representing Summer's total share capital. The acquisition was approved by BACEN on September 16, 2019 and concluded on September 20, 2019, so that SHI now holds 99.999% and Banco Santander 0.001% of the shares representing Summer's share capital. Due to the Entity's sale plan in the term term, Summer was initially recorded as Non-Current Assets Held by the Sale, at its cost value. In June 2020, with the failure to execute the established plan, Summer became part of the scope of Banco Santander Consolidated Financial Statements.

vii) Disposal of investments in Norchem Holding e Negócios S.A. and Norchem Participações e Consultoria S.A.

On October 8, 2020, the shareholders of Norchem Holding e Negócios SA and Norchem Participações e Consultoria SA (jointly, “Norchem Companies”) approved the capital reduction of the two Norchem Companies, in the amounts of R$14,770 and R$19,950, respectively, after that Banco Santander withdrew from the board of shareholders of Norchem Societies.

viii) Execution of an Agreement for the Acquisition of Equity Interest in Toro Controle

On September 29, 2020, Pi Distribuidora de Titulos e Investimentos SA, which is indirectly controlled by Banco Santander, entered into an investment agreement and other covenants with Toro Controle e Participações SA shareholders (“Toro Controle”) which, once the operation is completed, will hold 60% of Toro Controle's share capital. Toro Controle is a holding company that ultimately controls Toro Corretora de Titulos e Valores Mobiliários Ltda. and Toro Investimentos S.A. (together “Toro”). Toro is an investment platform founded in Belo Horizonte in 2010. In 2018, it received the necessary authorizations and started its operation as a securities broker focused on the retail public. The completion of the transaction is subject to the signing of the definitive instruments and the implementation of certain usual conditions in this type of transaction, including the applicable regulatory approvals.

ix) Execution of a Contract for the Acquisition of Equity Interest in Gira - Integrated Management of Receivables from Agronegócio S.A.

On August 11, 2020, Banco Santander entered into a share purchase agreement and other covenants with Gira - Integrated Management of Receivables of Agronegócio S.A. Gira is a technology company that operates in the management of agribusiness receivables and has a robust technological platform, capable of adding greater security to agricultural credit operations. Upon compliance with the conditions established in the contract, in particular the applicable regulatory approvals, the parties formalized the definitive instruments on January 8, 2020. With the completion of the operation, Banco Santander now holds 80% of Gira's share capital.

x) Execution of a contract for the Acquisition of Paytec Tecnologia em Payments Ltda. and Paytec Logística e Armazém EIRELI

On December 8, 2020, Banco Santander celebrated, with the partners and owners of Paytec Tecnologia em Payments Ltda. and Paytec Logística e Armazém Eireli (jointly "Paytec"), purchase and sale of quotas, transfer of ownership and other covenants, whereby, once the transaction is completed, it will hold 100% of Paytec's share capital. Paytec acts as a logistics operator with national coverage and focused on the payments market. The completion of the transaction is subject to the signing of definitive instruments and approval by the Central Bank of Brazil.

xi) Sale of the entire stake held in CIBRASEC

On July 24, 2019, Banco Santander sold its entire stake in CIBRASEC - Companhia Brasileira de Securitização, corresponding to 4,000 common shares and 50 preferred shares, to ISEC Securitizadora SA for the amount of R$ 9,845. Due to the closing of the transaction, Banco Santander is no longer a shareholder of CIBRASEC.

xii) Incorporation of the spun-off portion of Integry Tecnologia e Serviços A.H.U Ltda.

On October 31, 2019, the partial spin-off of Integry Tecnologia e Serviços AHU Ltda. was approved. (“Integry”), a wholly owned subsidiary of Getnet Adquirência e Serviços para Meios de Pagamento S.A (“Getnet”), with version of the spun-off portion of its assets, referring to its assets and liabilities, to Getnet. The incorporation of the spun-off portion by Getnet is pending approval by the Central Bank of Brazil.

On December 20, 2019, Getnet and Santander Merchant Platform Solutions, SL (“SMPS Global”), a company based in Spain and controlled by Banco Santander, SA (Santander Spain), entered into a Purchase and Sale Agreement of the representative shares of Integry's total share capital, so that SMPS Global now holds 100% of Integry's share capital. On December 23, 2019, Integry changed its name to Santander Merchant Platform Solutions Brasil Ltda.

4. Strategy and Rating Agencies

 

 

 

 

For information regarding the Bank's strategy and rating at rating agencies, see the Results Report available at www.santander.com.br/ri.

5. Corporate Governance

Banco Santander's Board of Directors met and resolved:

On December 26, 2020, approve the proposal for declaration and payment of interest on own capital, in the gross amount of R$665 million for payment as of February 1, 2021, without any remuneration as monetary restatement.

On December 18, 2020, approve the election of directors Adriana Marques Lourenço de Almeida, Francisco Soares da Silva Junior, Marilize Ferrazza Santinoni and Ricardo Olivare de Magalhães as Directors without a Specific Designation.

On October 26, 2020, approve the proposal to highlight and pay interest on own capital, in the gross amount of R$1 billion paid on December 23, 2020, without any monetary restatement.

On October 26, 2020, to approve the Parent Company and Consolidated Condensed Interim Financial Statements of Banco Santander, prepared in accordance to the accountancy practices adopted in Brazil, applicable to the institutions authorized to operate by Bacen and Parent Company and Consolidated Condensed Interim Financial Statements prepared in accordance to the International Financial Reporting Standards (IFRS), both relative to the period ended in September 30, 2020.

On October 9, 2020, approve (i) the amendment to the Internal Rules of the Sustainability Committee and (ii) the election of Mr. Tasso Rezende de Azevedo as a member of the Sustainability Committee.

On September 22, 2020, approve the re-election of Ms. Monique Silvano Arantes Bernardes. as the Company's Ombudsman for a new 1 (one) year term.

On September 1, 2020, to re-ratify the resolutions at the Company’s Board of Directors’ Meeting held on May 21, 2020, which dealt with the election of the members of the Company’s Audit Committee for a new term.

On August 28, 2020, to know the resignation of Mr. Rafael Bello Noya, Officer without specific designation of the Company.

On July 29, 2020, approve (i) the proposal for the merger of Bosan Participações S.A. by the Company; (ii) the proposal for the merger of Banco Olé Consignado S.A. by the Company; and (iii) the call of an Extraordinary General Meeting of the Company to be held on August 31, 2020, at 3 p.m., to resolve on the following Agenda: (a) to ratify the hiring of PricewaterhouseCoopers Auditores Independentes, a specialized company responsible for preparing the corresponding appraisal reports of the Merged Companies; (b) to approve the Appraisal Reports; (c) to approve the Protocol and Justification of Bosan; (d) to approve the merger of Bosan by the Company; (e) to approve the Protocol and Justification of Banco Olé; (f) to approve the merger of Banco Olé by the Company; and (g) to authorize the managers of the Company to perform all necessary and/or convenient acts for the implementation of the Mergers.

On July 28, 2020, approve the Banco Santander Consolidated Financial Statements, prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen and the Banco Santander Interim Consolidated Financial Statements, prepared in accordance with the International Financial Reporting Standards (IFRS), both referring to the semester ended June 30, 2020.

On July 28, 2020, to approve the proposal for declaration and payment of interest on equity, in the gross amount of R$ 770 million, for paid in September 25, 2020, without any indexation.

On July 03, 2020, approve the election of Mr. João Marcos Pequeno De Biase as Executive Officer without specific designation of the Bank.

On June 29, 2020, approve (i) the departure of Mr. René Luiz Grande from the position of member of the Bank's Risk and Compliance Committee; and (ii) the election of Mr. René Luiz Grande to the position of member of the Bank's Audit Committee.

On June 12, 2020, approve the election of Ms. Virginie Genès-Petronilho as a member of the Bank's Risk and Compliance Committee.

On May 27, 2020, approve the amendment to the Internal Regulations of the Board of Directors, the Audit Committee and the Risks and Compliance Committee.

On May 21, 2020, approve the election of the members of the Bank's Audit Committee for a new term of officer: Ms. Deborah Stern Vieitas, Mr. Luiz Carlos Nannini and Ms. Maria Elena Cardoso Figueira.

On April 28, 2020, approve the election of Mr. Pedro Augusto de Melo as a member and Coordinator of the Bank's Risk and Compliance Committee.

On April 27, 2020, to approve the proposal for declaration and payment of interest on equity, in the gross amount of R$ 890 million, paid in of June 26, 2020, without any indexation.

 

 

 

 

On April 27, 2020, approve the Individual and Consolidated Financial Statements of Banco Santander, prepared in accordance with the accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen and the consolidated Condensed Intermediate Financial Statements of Banco Santander, prepared in accordance with International Financial Reporting Standards (IFRS), both for the period ended March 31, 2020.

On April 23, 2020, (i) acknowledgment of the resignation presented by Mr. Celso Clemente Giacometti to the positions of member of the Board of Directors, Coordinator of the Nomination and Governance Committee and member of the Remuneration Committee of the Bank; (ii) approve the appointment of Mr. Álvaro Antonio Cardoso de Souza, current member of the Nomination and Governance Committee of the Bank, to the position of Coordinator of the referred Committee; (iii) approve the exoneration of Mr. Bernardo Parnes from the position of Coordinator of the Risk and Compliance Committee of the Bank; (iv) approve the appointment of Mr. Álvaro Antonio Cardoso de Souza, current member of the Risk and Compliance Committee of the Bank, to the position of Coordinator of the referred Committee; and (v) approve the exoneration of Mr. José Roberto Machado Filho, Executive Officer of the Bank.

On April 07, 2020, approve the election of Sr. Marcelo Augusto Dutra Labuto as Director with no specific designation.

On February 28, 2020, approve the resignation of Mr. Ulisses Gomes Guimarães, Director with no specific designation of the Bank; (ii) know the resignation of Mr. Gilberto Duarte de Abreu Filho, Director without a specific designation of the Bank; and (iii) approve the election of Mr. Sandro Rogério da Silva Gamba as an Officer without a specific designation of the Bank.

On February 3, 2020, approve the election of Sres. Sandro Kohler Marcondes, Vítor Ohtsuki and Geraldo José Rodrigues Alckmin Neto as Directors with no specific designation.

On January 28, 2020, approve Banco Santander Individual and Consolidated Financial Statements, prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen for the year ended December 31, 2019.

There was no change in corporate governance decided by the Bank for the base date of March 31, 2020. These decisions are described in the Management Report of the Individual and Consolidated Financial Statements of December 31, 2019.

6. Risk Management        

On February 23, 2017, Bacen published CMN Resolution No. 4,557, which provides for the structure of risk and capital management (GIRC), effective from the same year. The resolution highlights the need to implement an integrated risk and capital management structure, define an integrated stress test program and declare the Risk Appetite Statement (RAS - Risk Appetite Statement), set up a Risk Committee, define a disclosure policy of published information, appointment of director for risk management, director of capital and director responsible for information disclosure policy. Banco Santander develops necessary actions on a continuous and progressive basis, aiming at adhering to the resolution. No relevant impacts were identified as a result of this standard.

For more information, see note 30 to this publication.

Capital Management Structure

Banco Santander's capital management structure has robust governance, which supports the processes related to this topic and establishes the responsibilities of each of the teams involved. In addition, there is a clear definition of the guidelines that must be adopted for effective capital management. Further details can be found in the Risk and Capital Management Structure, available on the Investor Relations website at www.santander.com.br/ri/gerenciamento-de-risco.

Internal Audit                     

The Internal Audit reports directly to the Board of Directors, with the Audit Committee responsible for its supervision.

Internal Audit is a permanent function and independent from any other function or unit, whose mission is to provide the Board of Directors and senior management with independent assurance on the quality and effectiveness of internal control and risk management systems (current or emerging) and government, thus contributing to the protection of the organization's value, solvency and reputation. The Internal Audit has a quality certificate issued by the Institute of Internal Auditors (IIA).

In order to fulfill its functions and coverage risks inherent in Banco Santander activity, Internal Audit has a set of tools developed internally and updated when necessary. Among them, the risk matrix stands out, used as a planning tool, prioritizing the risk level of the auditable universe considering, among others, its inherent risks, the latest audit rating, the degree of compliance with the recommendations and its dimension. The work programs, which describe the audit tests to be carried out, are periodically reviewed.

The Audit Committee and the Board of Directors have favorably analyzed and approved the Internal Audit work plan for 2020.

7. People

 

 

 

 

With the public health crisis triggered earlier this year, there has never been so much talk about care. Take care of yourself and the other. And at Santander, we continue to take care of our people, an essential element in the Company. After all, they are the ones who think, design, develop, interact and build what Banco Santander wants to be. This is why the Bank invests in each of the 38,531 employees here in Brazil.

In the Health theme, we designed our internal protocol for action to contain COVID-19, guided by Organs sanitary and health agencies. We have the Telemedicine service in partnership with Hospital Albert Einstein, guaranteeing high quality medical care to 100% of employees and their dependents, in addition to the investment in the Emotional Health Program that has supported our people in adapting and facing social distance.

For the development of our people, the Corporate Academy - Academia Santander, works for a strong, transversal culture, providing that everyone, online and in person, can improve what they already know and explore new possibilities. From mandatory certifications for certain functions to Digital Leadership courses, the most important thing is to leave the comfort zone and invest in yourself by expanding knowledge and repertoire.

Banco Santander supports leaders and managers so that they are close and available. This performance is based on three pillars: Feedback, Open Chat and Personalized Recognition, making sure that there is alignment between everyone through recurring and frank conversations, career guidance and special moments to reward the growth of the teams.

Banco Santander values ​​a diverse environment, where each competence and each difference is valued. An example is the Affinity Group, created to promote diversity and inclusion based on the 5 pillars: Female Leadership; Racial Equity; Disabled people; Diversity of Formations, Experiences and Generations and the LGBT + pillar. Another good example is the Talent Show. In it, Banco Santander opens space to get to know the most different performances and explore the universe of skills that exist in the Bank, allowing interaction and fraternization among colleagues.

Since 2007, the bank has held Santander Week, a week that aims to celebrate institutional culture and connect with the community, through initiatives that mobilize the more than 45 thousand employees. In the 2020 edition, the challenges posed by the pandemic motivated us to go beyond the borders of agencies and corporate buildings, inviting the whole society to participate even though remotely, but multiplying the effect of the campaign. The entire effort was invested in the “Mothers of the Favela” project, of the Central Única das Favelas (CUFA), more than R$7,226 million distributed to mothers who are heads of families in more than 5,000 favelas throughout Brazil. The dissemination of #efeitosantander throughout Brazil!

The result of all these actions is the high level of engagement, proven through two surveys that are carried out annually and that bring excellent indicators. One of them points out that at least 90% of employees say they want to stay at Banco Santander for a long time. It is believed that this satisfaction reflects positively on interactions with Customers, generating greater loyalty, sustainable growth and investments in Society, which leads Banco Santander to be the best Bank for all stakeholders.

8. Sustainable Development         

Santander Brasil's Sustainability strategy is based on three pillars: (i) Strategic and efficient use of Environmental Resources, (ii) Development of Potentials and (iii) Resilient and Inclusive Economy. The Bank's vision, through these pillars, is to contribute to a better, more prosperous and fair society, maintaining excellence and responsibility in internal management, with ethical values ​​as the basis and technology at the service of people and businesses.

The year 2020 will be marked by the transformation in ESG (environmental, social and governance) businesses with the launch of new products on the market; for the partnership with Itaú and Bradesco in making ten commitments to boost sustainable development in the Amazon region; and also for the social impact generated in the communities, mainly in supporting institutions to fight the COVID-19.

In total, R$32.3 billion were made possible in ESG businesses, an increase of more than 100% in relation to the previous year. Among the novelties of 2020 are the first ESG Linked Loan operation, which has interest rates linked to the achievement of strategic environmental commitments; the participation in the first issue of Green Bonds by a Brazilian company in the logistics sector in the international market; the issuance of the second operation carried out in the world of Sustainable Linked-Bond in the amount of US$1.25 billion and the launch of a line of R$5 billion to enable investments in sanitation. It was also the first bank to sell CBIOs, bonds issued by biofuel manufacturers to help distributors offset their carbon emissions, and launched a new financing model for agro cooperatives in the areas of solar energy and irrigation. The Bank relaunched the Ethical fund, one of the first with a sustainable theme and launched Santander Go Global Equity ESG, a fund that invests its resources in a variable income offshore with a diversified portfolio and that invests in high quality companies in the main countries of the world. and that present solid sustainability criteria. Among the main recognitions, we highlight the presence in the portfolio of B3's Corporate Sustainability Index (ISE) 2021, for the 11th consecutive year and the 1st Notable CNN 2020 Award, in the Social Responsibility category. The Bank also received the A- score on the Carbon Disclosure Project (CDP) and thus ranks among the 2% of companies with the best climate performance in Brazil and among the best 1.5% in Latin America.

 

 

 

 

In the social sphere, the Bank promoted a series of actions to support customers and society in the face of the global health crisis scenario, which totaled R$100 million. Among the actions, we highlight the support to five hospitals that acted on the front line in combating the COVID-19, in which more than R$7 million were collected, half of which was donated by employees and the other half doubled by the Bank. Through lives, employees also collected around 800 tons of food, in addition to clothes and hygiene products. The materials were donated to more than 500 institutions, impacting more than 170 thousand people in the country. In partnership with the Central Única de Favelas (CUFA), the Bank promoted a 12-hour festival, O Canal é Seu, broadcast on television and radio channels and raised more than R $ 3 million for the project Mãe da Favela. Considering the Bank's donation, a total of R$7 million was allocated to be distributed to 20 thousand families through SuperDigital. Finally, the Amigo de Valor program, in which employees and customers donate part of the income tax due to the Funds for the Rights of Children and Adolescents, allocated R$15.7 million to 59 projects.

Among the main recognitions, we highlight the presence in the portfolio of B3's Corporate Sustainability Index (ISE) 2021, for the 11th consecutive year and the 1st Notable CNN 2020 Award, in the Social Responsibility category. The Bank also received the A- score on the Carbon Disclosure Project (CDP) and thus ranks among the 2% of companies with the best climate performance in Brazil and among the best 1.5% in Latin America.

9. Pandemic Effects - COVID-19

The Bank monitors the effects of this pandemic that affect its operations and that may adversely affect its results. Since the beginning of the pandemic in Brazil, Committees have been set up to monitor the effects of the spread and its impacts, in addition to government actions to mitigate the effects of COVID-19.

The Bank maintains its operational activities, observing the protocols of the Ministry of Health and other Authorities. Among the actions taken, we highlight (a) the dismissal of employees from the risk group and intensification of work in the home office, (b) the definition of a follow-up protocol, with health professionals, for employees and family members who have the symptoms of COVID-19 and (c) increased communication about preventive measures and remote means of care.

The Federal Government through the National Monetary Council and the Central Bank of Brazil has adopted measures to mitigate the impacts caused by COVID-19, specifically on credit operations, fundraising, reduction of reserve requirements and aspects related to capital, such as ( a) measures to facilitate the renegotiation of credit operations without an increase in provisions, (b) a reduction in capital requirements, in order to expand the credit system's ability to grant credit and (c) a reduction in reserve requirements. , to improve liquidity conditions.

As of the date of this disclosure, the Bank has identified (a) increase in loan and financing operations, especially for companies; (b) increase in requests for renegotiation and extension of terms for credit operations; (c) impacts on the allowance for loan losses and (d) increase in funds raised.

Future impacts related to the pandemic, which have a certain degree of uncertainty as to their duration and severity and which, therefore, cannot be accurately measured at this time, will continue to be monitored by Management.

10. Independent Audit

The policy of Banco Santander, including its subsidiaries, in contracting services not related to the auditing of the Financial Statements by its independent auditors, is based on Brazilian and international auditing standards, which preserve the auditor's independence. This reasoning provides for the following: (i) the auditor must not audit his own work, (ii) the auditor must not exercise managerial functions in his client, (iii) the auditor must not promote his client's interests, and (iv) the need for approval of any services by the Bank's Audit Committee.

In compliance with the Securities and Exchange Commission Instruction 381/2003, Banco Santander informs that in the period ended December 31, 2020, PricewaterhouseCoopers did not provide services not related to the independent auditing of the Financial Statements of Banco Santander and controlled companies over 5% of the total fees related to independent audit services.

In addition, the Bank confirms that PricewaterhouseCoopers has procedures, policies and controls in place to ensure its independence, which include assessing the work performed, covering any service other than an independent audit of the Financial Statements of Banco Santander and its subsidiaries. This assessment is based on the applicable regulations and accepted principles that preserve the auditor's independence. The acceptance and provision of professional services not related to the audit of the Financial Statements by its independent auditors during the period ended on December 31, 2020, did not affect the independence and objectivity in conducting the external audit exams carried out at Banco Santander and other entities of the Group, since the above principles were observed.

The Board of Directors

The Executive Board

 

 

 

 

 

(Authorized at the Board of Directors' Meeting of (02/02/2021).


 

 


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Balance Sheet

Bank

Consolidated

Notes

12/31/2020

12/31/2019

12/31/2020

12/31/2019

 Current Assets

586,324,279 

496,060,072 

603,330,917 

514,863,901 

  Cash

19,522,250 

9,543,649 

19,512,315 

9,924,644 

  Financial Instruments

511,695,788 

434,417,861 

523,139,590 

447,930,114 

    Interbank Investments

112,963,929 

82,235,455 

68,116,477 

42,571,395 

    Securities and Derivative Financial Instruments

96,534,510 

58,995,620 

107,235,066 

63,266,293 

    Derivative Financial Instruments

17,886,650 

2,653,751 

18,446,009 

8,894,341 

    Lending Operations

114,776,536 

86,609,089 

141,271,392 

116,559,396 

    Others Assets Instruments

10.a

169,534,163 

203,923,946 

188,070,646 

216,638,689 

  Leasing Operations

905,502 

1,216,238 

  Provisions for Expected Losses Associated with Credit Risk

8.e

(7,078,539)

(3,740,217)

(8,563,593)

(4,866,288)

  Other Assets

12 

62,184,780 

55,838,779 

68,337,103 

60,659,193 

Long-Term Assets

403,900,472 

342,475,655 

399,058,061 

342,679,166 

Financial Instruments

331,190,945 

272,362,351 

340,476,305 

288,712,079 

      Interbank Investments

30,940,159 

33,694,075 

1,581,776 

796,099 

      Securities and Derivative Financial Instruments

119,283,560 

103,773,467 

126,013,272 

112,747,234 

      Derivative Financial Instruments

14,394,066 

8,532,484 

14,394,066 

8,546,799 

      Lending Operations

164,803,732 

124,642,741 

196,839,325 

164,339,938 

      Others Assets Instruments

10.a

1,769,428 

1,719,584 

1,647,866 

2,282,009 

Leasing Operations

1,565,882 

1,584,760 

Provisions for Expected Losses Associated with Credit Risk

8.e

(14,756,906)

(14,921,750)

(16,503,895)

(16,541,804)

Other Assets

12 

16,309,573 

19,862,679 

19,747,782 

23,771,384 

Current and deferred tax assets

11 

35,748,981 

28,074,411 

39,920,834 

31,904,371 

Investments

23,208,562 

26,831,540 

332,851 

354,490 

   Investments:
      Investments in Associates and Subsidiaries

14 

23,187,617 

26,810,793 

311,852 

333,674 

     Other Investments

20,945 

20,747 

20,999 

20,816 

Fixed Assets

15 

6,102,538 

6,214,168 

7,046,685 

7,181,088 

Intangível

16 

6,096,779 

4,052,256 

6,471,617 

5,712,798 

Total Assets

990,224,751 

838,535,727 

1,002,388,978 

857,543,067 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank

 

Consolidated

Notes

12/31/2020

12/31/2019

12/31/2020

12/31/2019

 

 

 

Current Liabilities

642,103,558 

594,642,669 

657,760,203 

598,591,332 

Deposits and Other Financial Instruments

612,837,974 

561,166,493 

604,543,402 

550,316,567 

     Deposits

17 

292,520,822 

214,983,542 

290,741,035 

212,838,421 

     Money Market Funding

17 

119,188,451 

111,939,869 

114,214,008 

106,248,412 

     Local Borrowings

17 

53,750,603 

43,870,657 

53,790,402 

41,322,712 

     Domestic Onlendings - Official Institutions

17 

4,920,596 

3,697,638 

4,920,596 

3,697,638 

     Funds from Acceptance and Issuance of Securities

17 

36,043,882 

60,517,226 

30,549,046 

51,265,094 

     Derivative Financial Instruments

17,389,567 

3,774,395 

18,372,819 

10,112,463 

     Other Financial Liabilities

 18a

89,024,053 

122,383,166 

91,955,496 

124,831,827 

Other Liabilities

19 

26,145,866 

30,621,361 

48,710,732 

44,182,331 

Current and Deferred Tax Liabilities

11 

3,119,718 

2,854,815 

4,506,069 

4,092,434 

Long-Term Liabilities

268,624,333 

173,943,594 

264,154,358 

187,197,923 

Deposits and Other Financial Instruments

232,775,324 

139,047,452 

222,518,755 

144,417,032 

    Deposits

17 

99,950,659 

59,228,624 

99,310,763 

60,089,570 

    Money Market Funding

17 

40,783,009 

17,692,578 

40,783,009 

17,692,578 

     Local Borrowings

17 

1,221,159 

1,788,469 

1,221,159 

1,802,272 

    Domestic Onlendings - Official Institutions

17 

7,827,793 

8,056,939 

7,827,793 

8,056,939 

    Funds from Acceptance and Issuance of Securities

17 

51,015,924 

31,062,142 

40,078,721 

34,697,521 

    Derivative Financial Instruments

17,737,559 

10,208,817 

17,896,646 

10,510,899 

    Other Financial Liabilities

18a

14,239,221 

11,009,883 

15,400,664 

11,567,253 

Other Liabilities

19 

33,579,893 

31,236,486 

38,833,292 

38,581,468 

Current and Deferred Tax Liabilities

11 

2,269,116 

3,659,656 

2,802,311 

4,199,423 

Deferred Income

313,983 

261,741 

355,526 

285,219 

Stockholders' Equity

21 

79,182,877 

69,687,723 

78,968,183 

69,773,232 

    Capital

57,000,000 

57,000,000 

57,000,000 

57,000,000 

    Capital Reserves

302,665 

197,369 

298,313 

194,115 

    Profit Reserves

23,128,797 

12,909,736 

22,511,135 

12,986,778 

    Adjustment to Fair Value

(457,227) 

261,753 

(49,907) 

273,474 

    (-) Treasury Shares

(791,358) 

(681,135) 

(791,358) 

(681,135) 

Non Controlling Interest

21.e

1,150,708 

1,695,361 

Total Stockholders' Equity

79,182,877 

69,687,723 

80,118,891 

71,468,593 

Total Liabilities

990,224,751 

838,535,727 

1,002,388,978 

857,543,067 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Income Statements

Bank

Consolidated

Notes

 07/01 to 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

07/01 to 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

Income Related to Financial Operations

25,197,617 

99,165,058 

74,721,192 

29,424,800 

108,988,273 

82,740,412 

Loan Operations

18,228,031 

46,237,064 

42,352,541 

23,272,154 

57,764,083 

55,491,261 

Leasing Operations

131,269 

287,529 

359,013 

Securities Transactions

6.a

6,685,978 

57,259,976 

28,749,086 

5,032,562 

54,234,954 

24,912,162 

Derivatives Transactions

(795,801) 

(277,672) 

(2,509,211) 

35,849 

747,518 

(3,213,924) 

Foreign Exchange Operations

539,859 

(5,605,733) 

2,308,073 

411,606 

(5,605,733) 

1,345,226 

Compulsory Deposits

539,550 

1,551,423 

3,820,703 

541,360 

1,559,922 

3,846,674 

Expenses on Financial Operations

(5,563,232)

(83,174,153)

(50,096,357)

(7,841,847)

(87,750,952)

(51,759,742)

Funding Operations Market

17.b

(3,975,642) 

(44,594,777) 

(30,172,230) 

(4,686,817) 

(45,880,675) 

(29,214,553) 

Borrowings and Onlendings Operations

2,817,236 

(24,511,485) 

(6,309,687) 

2,804,244 

(24,542,771) 

(6,265,632) 

Operations of Sale or Transfer of Financial Assets

154,215 

(851,467) 

(182,779) 

154,296 

(851,335) 

(213,304) 

Allowance for Loan Losses

8.e

(4,559,041) 

(13,216,424) 

(13,431,661) 

(6,113,570) 

(16,476,171) 

(16,066,253) 

Gross Income Related to Financial Operations

19,634,385 

15,990,905 

24,624,835 

21,582,953 

21,237,321 

30,980,670 

Other Operating Revenues (Expenses)

(4,696,709)

(8,479,146)

(10,102,631)

(6,434,338)

(12,555,051)

(14,218,790)

Banking Service Fees

23 

5,041,389 

9,536,192 

10,252,006 

7,057,633 

13,184,767 

13,597,719 

Income Related to Bank Charges

23 

2,427,653 

4,590,143 

4,416,991 

2,821,992 

5,279,203 

5,086,733 

Personnel Expenses

24 

(3,077,785) 

(6,220,134) 

(6,786,496) 

(3,555,591) 

(7,177,217) 

(7,761,299) 

Other Administrative Expenses

25 

(6,057,677) 

(11,337,530) 

(10,318,009) 

(6,666,913) 

(12,800,395) 

(12,142,730) 

Tax Expenses

11.d

(2,122,340) 

(2,841,346) 

(3,228,943) 

(2,685,550) 

(3,980,474) 

(4,570,928) 

Investments in Affiliates and Subsidiaries

14 

1,184,901 

3,007,124 

2,724,415 

42,170 

51,718 

44,364 

Other Operating Revenues

26 

2,266,794 

4,600,025 

4,288,089 

3,086,895 

6,265,868 

5,193,964 

Other Operating Expenses

27 

(4,359,644) 

(9,813,620) 

(11,450,684) 

(6,534,974) 

(13,378,521) 

(13,666,613) 

Operating Income

14,937,676 

7,511,759 

14,522,204 

15,148,615 

8,682,270 

16,761,880 

Non-Operating Income

28 

9,460 

240,290 

102,588 

2,384 

238,967 

8,479 

Income Before Taxes on Income and Profit Sharing

14,947,136 

7,752,049 

14,624,792 

15,150,999 

8,921,237 

16,770,359 

Income Tax and Social Contribution

11 

(6,046,029)

7,972,186 

1,020,710 

(6,526,405)

6,539,467 

(462,073)

Provision for Income Tax

344,879 

(28,965) 

(1,061,570) 

(392,822) 

(1,519,306) 

(2,396,580) 

Provision for Social Contribution Tax

291,450 

(35,590) 

(729,267) 

(91,106) 

(835,326) 

(1,335,965) 

Deferred Tax Credits

(6,682,358) 

8,036,741 

2,811,547 

(6,042,477) 

8,894,099 

3,270,472 

Profit Sharing

(787,837) 

(1,668,087)

(1,557,012)

(894,429) 

(1,857,937)

(1,734,870)

Non Controlling Interest

21.e

(60,347) 

(133,387) 

(392,429) 

Net Income

8,113,270 

14,056,148 

14,088,490 

7,669,818 

13,469,380 

14,180,987 

Number of Shares (Thousands)

21.a

7,498,531 

7,498,531 

7,498,531 

$)

1,081.98 

1,874.52 

1,878.83 

The accompanying notes from Management are an integral part of these financial statements.


 

 

Statements of Comprehensive Income

Bank

Consolidated

07/01 to 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

07/01 to 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

Profit for the Period

8,113,270 

14,056,148 

14,088,490 

7,669,818 

13,469,380 

14,180,987 

Other Comprehensive Income that will be subsequently reclassified for profit or loss when specific conditions are met:

(493,902)

(1,291,042)

2,011,631 

(93,190)

(895,443)

2,023,353 

Available-for-sale financial assets

(499,061) 

(1,157,351) 

2,049,434 

(111,913) 

(775,316) 

2,061,612 

Available-for-sale financial assets

(873,548) 

(2,410,113) 

3,956,626 

(161,478) 

(1,703,396) 

3,968,802 

Income taxes

374,487 

1,252,762 

(1,907,192) 

49,565 

928,080 

(1,907,190) 

Cash flow hedges

5,159 

(133,691) 

(37,803) 

18,723 

(120,127) 

(38,259) 

Cash flow hedges

(170,249) 

(70,835) 

123,134 

(156,685) 

(57,271) 

120,598 

Income taxes

175,408 

(62,856) 

(160,937) 

175,408 

(62,856) 

(158,857) 

Other Comprehensive Income that won't be reclassified for Net income:

(107,441)

572,062 

(679,298)

(107,441)

572,062 

(679,299)

Defined Benefits plan

(107,441) 

572,062 

(679,298) 

(107,441) 

572,062 

(679,299) 

Defined Benefits plan

(148,160) 

1,130,271 

(1,366,688) 

(148,160) 

1,130,271 

(1,366,688) 

Income taxes

40,719 

(558,209) 

687,390 

40,719 

(558,209) 

687,389 

Comprehensive Income for the Period

7,511,927 

13,337,168 

15,420,823 

7,469,187 

13,145,999 

15,525,041 

Attributable to parent company

7,396,147 

13,012,612 

15,132,612 

Attributable to non-controlling interests

73,040 

133,387 

392,429 

Total

7,469,187 

13,145,999 

15,525,041 

The accompanying notes from Management are an integral part of these financial statements.


Statements of Changes in Stockholders' Equity – Bank

Profit Reserves

Adjustment to Fair Value

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Total

Balances as of December 31, 2018

57,000,000 

140,707 

3,113,605 

6,506,949 

1,885,972 

114,491 

(3,071,043)

(461,432)

65,229,249 

Employee Benefit Plans

(679,298) 

(679,298) 

Treasury Shares

(218,814) 

(218,814) 

Result of Treasury Shares

5,796 

5,796 

Reservations for Share - Based Payment

  

50,866 

50,866 

Adjustment to Fair Value - Securities and Derivative Financial Instruments

  

2,034,742 

(23,111) 

2,011,631 

Emission Costs of Treasury Shares

(889) 

(889) 

Net Income

14,088,490 

14,088,490 

Allocations:

Legal Reserve

 21.c

704,459 

(704,459) 

Dividends

21.b

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6.790.000) 

 

 

 

(6.790.000) 

Interest on Capital

 21.b

(4,010,000) 

(4,010,000) 

Reserve for Dividend Equalization

 21.c

2,584,723 

(2,584,723) 

Others

 21.c

692 

692 

Balances as of December 31, 2019

57,000,000 

197,369 

3,818,064 

9,091,672 

3,920,714 

91,380 

(3,750,341)

(681,135)

69,687,723 

Changes in the Period

56,662 

704,459 

2,584,723 

2,034,742 

(23,111)

(679,298)

(219,703)

4,458,474 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit Reserves

Adjustment to Fair Value

 

 

 

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Total

Balances as of December 31, 2019

  

57,000,000 

197,369 

3,818,064 

9,091,672 

3,920,714 

91,380 

(3,750,341)

(681,135)

69,687,723 

Employee Benefit Plans

572,062 

572,062 

Treasury Shares

(110,223) 

(110,223) 

Emission Costs of Treasury Shares

Result of Treasury Shares

 21.a

(15,068) 

(15,068) 

Reservations for Share - Based Payment

  

120,364 

120,364 

Adjustment to Fair Value - Securities and Derivative Financial Instruments

  

(1,323,847) 

32,805 

(1,291,042) 

Net Income

14,056,148 

14,056,148 

Allocations:

Legal Reserve

 21.c

702,807 

(702,807) 

Interest on Capital

 21.b

(3,325,000) 

(3,325,000) 

Minimum Mandatory Dividend

33 

(512,087) 

(512,087) 

Reserve for Dividend Equalization

 21.c

9,516,254 

(9,516,254) 

Balances as of December 31, 2020

57,000,000 

302,665 

4,520,871 

18,607,926 

2,596,867 

124,185 

(3,178,279)

(0)

(791,358)

79,182,877 

Changes in the Period

105,296 

702,807 

9,516,254 

(1,323,847)

32,805 

572,062 

(0)

(110,223)

9,495,154 

 

 

 

 

 

 

 

 

 

 

Profit Reserves

Adjustment to Fair Value

 

 

 

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Total

Balances as of June 30, 2020

  

57,000,000 

197,961 

4,115,208 

13,847,406 

3,089,744 

125,210 

(3,070,838)

(792,508)

74,512,183 

Employee Benefit Plans

(107,441) 

(107,441) 

Treasury Shares

1,150 

1,150 

Emission Costs of Treasury Shares

Result of Treasury Shares

 21.a

1,678 

1,678 

Reservations for Share - Based Payment

  

103,026 

103,026 

Adjustment to Fair Value - Securities and Derivative Financial Instruments

  

(492,877) 

(1,025) 

(493,902) 

Net Income

8,113,270 

8,113,270 

Allocations:

Legal Reserve

 21.c

405,663 

(405,663) 

Interest on Capital

 21.b

(2,435,000) 

(2,435,000) 

Minimum Mandatory Dividend

33 

(512,087) 

(512,087) 

Reserve for Dividend Equalization

 21.c

4,760,520 

(4,760,520) 

Balances as of December 31, 2020

57,000,000 

302,665 

4,520,871 

18,607,926 

2,596,867 

124,185 

(3,178,279)

(791,358)

79,182,877 

Changes in the Period

104,704 

405,663 

4,760,520 

(492,877)

(1,025)

(107,441)

1,150 

4,670,694 

1.      

 

 


Statements of Changes in Stockholders' Equity – Consolidated

Profit Reserves

Adjustment to Fair Value

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Stockholders' Equity

Minority  Interest

Total Stockholders' Equity

Balances as of December 31, 2018

57,000,000 

142,414 

3,113,606 

6,509,735 

1,885,972 

114,491 

(3,071,043)

(461,432)

65,233,743 

2,007,334 

67,241,077 

Employee Benefit Plans

(679,299) 

(679,299) 

(679,299) 

Treasury Shares

(218,814) 

(218,814) 

(218,814) 

Result of Treasury Shares

5,795 

5,795 

5,795 

Reservations for Share - Based Payment

  

45,906 

45,906 

45,906 

Fair Value Adjustment - Securities and Derivative Financial Instruments

2,046,464 

(23,111) 

2,023,353 

2,023,353 

Emission Costs of Treasury Shares

(889) 

(889) 

(889) 

Net Income

14,180,987 

14,180,987 

14,180,987 

Allocations:

Legal Reserve

 21.c

704,459 

(704,459) 

Dividends

 21.b

(6,790,000) 

(6,790,000) 

(6,790,000) 

Provision of Interest on Capital

 21.b

(4,010,000) 

(4,010,000) 

(4,010,000) 

Reserve for Dividend Equalization

 21.c

2,584,721 

(2,584,721) 

Unrealized Profit

74,257 

(92,497) 

(18,240) 

(18,240) 

Non Controlling Interest Results

 21.e

(311,973) 

(311,973) 

Others

690 

690 

690 

Balances as of December 31, 2019

57,000,000 

194,115 

3,818,065 

9,168,713 

3,932,436 

91,380 

(3,750,342)

(681,135)

69,773,232 

1,695,361 

71,468,593 

Changes in the Period

51,701 

704,459 

2,658,978 

2,046,464 

(23,111)

(679,299)

(219,703)

4,539,489 

(311,973)

4,227,516 

 


 

 

 

Profit Reserves

Adjustment to Fair Value

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Stockholders' Equity

Minority  Interest

Total Stockholders' Equity

Balances as of December 31, 2019

  

57,000,000 

194,115 

3,818,065 

9,168,713 

3,932,436 

91,380 

(3,750,342)

(681,135)

69,773,232 

1,695,361 

71,468,593 

Employee Benefit Plans

572,062 

572,062 

572,062 

Treasury Shares

(15,068) 

(110,223) 

(125,291) 

(125,291) 

Reservations for Share - Based Payment

  

119,266 

119,266 

119,266 

Adjustment to Fair Value - Securities and Derivative Financial Instruments

(928,249) 

32,806 

(895,443) 

(895,443) 

 

Net Income

13,469,380 

13,469,380 

13,469,380 

Allocations:

Legal Reserve

 21.c

702,807 

(702,807) 

Interest on Capital

 21.b

(3,325,000) 

(3,325,000) 

(3,325,000) 

Minimum Mandatory Dividend                          33

(512,087) 

(512,087) 

(512,087) 

 

Reserve for Dividend Equalization

 21.c

9,516,254 

(9,516,254) 

Unrealized Profit

(586,768) 

586,768 

Non-Controlling Interest

 21.e

(133,387) 

(133,387) 

Others

(107,936) 

(107,936) 

(411,266) 

(519,202) 

Balances as of December 31, 2020

57,000,000 

298,313 

4,520,872 

17,990,263 

3,004,187 

124,186 

(3,178,280)

(0)

(791,358)

78,968,183 

1,150,708 

80,118,891 

 

Changes in the Period

104,198 

702,807 

8,821,550 

(928,249)

32,806 

572,062 

(0)

(110,223)

9,194,951 

(544,653)

8,650,298 

 

 

 

 

 

 

 

 

 

 

 

Profit Reserves

Adjustment to Fair Value

 

 

 

Notes

Capital

Capital Reserves

Legal Reserve

Reserve for Dividend Equalization

Own Position

Affiliates and Subsidiaries

Others Adjustment to Fair Value

Retained  Earnings Retained

(-)Treasury Shares

Stockholders' Equity

Minority  Interest

Total Stockholders' Equity

Balances as of June 30, 2020

  

57,000,000 

196,337 

4,115,209 

13,782,819 

3,096,353 

125,210 

(3,070,839)

(792,508)

74,452,581 

1,103,345 

75,555,926 

Employee Benefit Plans

(107,441) 

(107,441) 

(107,441) 

Treasury Shares

1,678 

1,150 

2,828 

2,828 

Reservations for Share - Based Payment

  

100,298 

100,298 

100,298 

Adjustment to Fair Value - Securities and Derivative Financial Instruments

(92,166) 

(1,024) 

(96,190) 

(93,190) 

Net Income

7,669,818 

7,669,818 

7,669,818 

Allocations:

Legal Reserve

 21.c

(405,663) 

(405,663) 

Interest on Capital

 21.b

(2,435,000) 

(2,435,000) 

(2,435,000) 

Minimum Mandatory Dividend                          33

(512,087) 

(512,087) 

(512,087) 

Reserve for Dividend Equalization

 21.c

4,760,520 

(4,760,520) 

Unrealized Profit

(445,140) 

445,140 

Non-Controlling Interest

 21.e

(60,347) 

(60,347) 

Others

(107,936) 

(1,688) 

(109,624) 

107,710 

(1,914) 

Balances as of December 31, 2020

57,000,000 

298,313 

4,520,872 

17,990,263 

3,004,187 

124,186 

(3,178,280)

(791,358)

78,968,183 

1,150,708 

80,118,891 

Changes in the Period

101,976 

405,663 

4,207,444 

(92,166)

(1,024)

(107,441)

1,150 

4,515,602 

47,363 

4,562,965 

 

 

 

 

 

 

 

 

 

 

 

 

 



Cash Flows Statements

 

Bank

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

07/01 a 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

07/01 a 12/31/2020

01/01 to 12/31/2020

01/01 to 12/31/2019

 

Notes

 

Operational Activities

 

 

Net Income

8,113,270 

14,056,148 

14,088,490 

7,669,818 

13,469,380 

14,180,987 

 

Adjustment to Net Income

(9,828,910)

(7,202,429)

11,835,376 

(4,905,210)

1,387,494 

17,725,239 

 

Allowance for Loan Losses

8.e

4,559,041 

13,216,424 

13,431,661 

6,113,570 

16,476,171 

16,066,253 

 

Provision for Legal Proceedings and Administrative and Legal Obligations

20.c

700,896 

1,394,832 

1,584,617 

1,070,540 

1,859,133 

1,826,305 

 

Monetary Adjustment of Provision for Legal Proceedings and Administrative and Legal Obligations

20.c

118,212 

316,431 

481,577 

 

137,416

366,578 

586,692 

 

Deferred Tax Credits and Liabilities

11.a & b

5,731,365 

(7,500,998) 

(3,220,298) 

5,750,469 

(7,641,153) 

(3,749,750) 

 

Equity in Affiliates and Subsidiaries

14 

(1,148,980) 

(3,007,124) 

(2,724,415) 

(42,170) 

(51,718) 

(44,364) 

 

Depreciation and Amortization

25 

1,384,414 

2,641,934 

2,217,366 

1,582,497 

3,094,511 

2,778,756 

 

Recognition (Reversal) Allowance for Other Assets Losses

28 

(874) 

(11,534) 

(46,292) 

(4,221) 

(24,629) 

36,852 

 

Gain (Loss) on Sale of Other Assets

28 

(42,208) 

(72,815) 

(60,002) 

(42,958) 

(64,108) 

(69,058) 

 

Gain (Loss) on Sale of Investments

28 

(168,588) 

(168,588) 

(6,257) 

 

Provision for Financial Guarantees

27 

(22,140) 

(35,333) 

(22,140) 

(35,333) 

 

Monetary Adjustment of Escrow Deposits

26 

7,941 

(186,159) 

(501,067) 

(13,360) 

(235,800) 

(582,282) 

 

Recoverable Taxes

26 

(15,070) 

(119,320) 

(148,173) 

(44,957) 

(166,091) 

(185,403) 

 

Effects of Changes in Foreign Exchange Rates on Cash and Cash Equivalents

(2,432) 

99 

(2,432) 

99 

 

Effects of Changes in Foreign Exchange Rates on Assets and Liabilities

(19,588,268) 

(12,150,805) 

614,174 

(19,588,268) 

(12,150,805) 

614,174 

 

Others

(1,510,807) 

(1,554,707) 

130,996 

200,804 

93,993 

378,089 

 

Changes on Assets and Liabilities

(1,931,333)

19,131,193 

(20,021,280)

(165,420)

29,383,588 

(16,325,977)

 

Decrease (Increase) in Interbank Investments

(15,157,337) 

(30,183,420) 

(4,051,571) 

(27,664,648) 

(28,351,422) 

11,666,505 

 

Decrease (Increase) in Securities and Derivative Financial Instruments

(17,076,363) 

(53,026,271) 

9,445,129 

(19,558,353) 

(57,196,435) 

7,329,574 

 

Decrease (Increase) in Lending and Leasing Operations

(34,759,563) 

(79,248,979) 

(38,153,003) 

(24,449,884) 

(70,360,447) 

(49,807,706) 

 

Decrease (Increase) in Deposits on Central Bank of Brazil

(1,285,603) 

10,951,716 

504,700 

(1,277,361) 

11,254,324 

439,375 

 

Decrease (Increase) in Other Receivables

70,247,709 

19,854,630 

(24,940,850) 

66,754,887 

18,559,349 

(27,559,203) 

 

Decrease (Increase) in Other Assets

172,248 

(107,645) 

219,922 

308,955 

55,524 

206,371 

 

Net Change on Other Interbank and Interbranch Accounts

(4,222,933) 

(7,476,244) 

1,394,199 

(10,450,079) 

(12,477,368) 

3,376,796 

 

Increase (Decrease) in Deposits

31,213,355 

118,259,315 

15,125,724 

31,990,490)

117,123,807 

20,855,747 

 

Increase (Decrease) in Money Market Funding

29,084,082 

30,339,013 

(7,317,732) 

30,076,796 

31,056,027 

(7,878,594) 

 

Increase (Decrease) in Borrowings

261,336 

7,318,412 

8,473,611 

3,3232,094 

9,892,353 

7,573,524 

 

Increase (Decrease) in Other Liabilities

(60,492,391) 

2,398,424 

20,786,356 

(48,903,665) 

11,133,060 

20,849,066 

 

Increase (Decrease) in Change in Deferred Income

84,127 

52,242 

(3,236) 

(120,358) 

70,308 

(51,826) 

 

Income Tax Recovered/(Paid)

(1,504,529) 

(195,294) 

(1,375,492) 

(3,325,606) 

 

 

 

 

 

 

 

Net Cash Provided by (Used in) Operational Activities

(3,646,973)

25,984,912 

5,902,586 

2,599,188 

44,240,462 

15,580,249 

Investing Activities

 

Increase in Equity at Affiliates and Subsidiaries

14 

(108,056) 

(493,156) 

(2,613,249) 

6,000 

Purchase of Investment

(15) 

(145) 

(130) 

Purchase of Fixed Assets

(569,742) 

(1,076,414) 

(1,447,680) 

(840,962) 

(1,437,665) 

(2,000,335) 

Purchase of Intangible Assets

(1,266,052) 

(1,740,278) 

(1,826,828) 

(1,153,959) 

(1,958,678) 

(1,997,301) 

Net Cash Received on Sale/Reduction of Investments

(266,100) 

(171,214) 

6,630 

Acquisition of Minority Residual Interest in Subsidiary

2.c

(600,000) 

(1,606,000) 

(1,291,630) 

(6,000) 

(1,606,000) 

(1,299,630) 

Acquisition of Temporary Investments

(55,244) 

Proceeds from Assets not in Use

384,308 

639,346 

752,653 

397,881 

668,206 

841,626 

Proceeds from Property for Own Use

45,539 

101,729 

16,060 

103,636 

163,750 

65,079 

Proceeds from Affiliates and Subsidiaries

6,294,769 

6,294,769 

7,254 

171,213 

171,213 

7,254 

Dividends and Interest on Capital Received

1,003,921 

1,293,445 

1,299,937 

(157,926) 

(5,165) 

58,181 

Net Cash Provided by (Used in) Investing Activities

5,512,572 

3,413,296 

(5,103,483)

(1,651,331)

(4,004,463)

(4,373,740)

Financing Activities

 

Purchase of Own Share

21.d

1,150 

(110,223) 

(218,814) 

1,150 

(110,223) 

(218,814) 

Issuance of Long - Term Emissions

24,312,318 

71,204,332 

45,052,823 

25,661,722 

62,324,678 

61,352,968 

Long - Term Payments

(33,590,138) 

(82,628,491) 

(32,930,091) 

(35,645,365) 

(84,683,718) 

(58,630,040) 

Subordinated Debts - Payments

(9,924,747) 

(9,924,747) 

Debt Instruments Eligible to Compose Capital - Payments

436,407 

(328,892) 

436,407 

(328,892) 

Dividends and Interest on Capital Paid

(1,733,974) 

(10,094,087) 

(6,882,799) 

(1,785,165) 

(10,211,084) 

(7,010,117) 

Increase (decrease) in Minority Interest

(389,087) 

Capital Increase in Controlled Companies Held by Minority Interest

14 

100,000 

Net Cash Provided by (Used in) Financing Activities

(10,574,237)

(21,628,469)

(5,232,520)

(11,331,251)

(32,680,347)

(15,048,729)

Exchange Variation on Cash and Cash Equivalents

2,432 

(99)

2,432 

(99)

Increase (Decrease) in Cash and Cash Equivalents

(8,706,206)

7,769,739 

(4,433,516)

(10,380,962)

7,555,652 

(3,482,319)

Cash and Cash Equivalents at the Beginning of Period

37,897,377 

21,421,432 

25,854,948 

39,380,277 

21,443,663 

25,285,982 

Cash and Cash Equivalents at the End of Period

29,191,171 

29,191,171 

21,421,432 

28,999,315 

28,999,315 

21,443,663 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Value Added

Bank

Consolidated

01/07 a 31/12/2020

01/01 to

12/31/2020

01/01 to

12/31/2019

01/07 a 31/12/2020

01/01 to

12/31/2020

01/01 to

12/31/2019

Notes

Income Related to Financial Operations

25.197.617 

99.165.058 

74.721.192 

29.424.800 

108.988.273 

82.740.412 

Income Related to Bank Charges and Banking Service Fees

23 

7.469.042 

14.126.335 

14.668.997 

9.879.625 

18.463.970 

18.684.452 

Allowance for Loans Losses

8.f

(4.559.041) 

(13.216.424) 

(13.431.661) 

(6.113.570) 

(16.476.171) 

(16.066.253) 

Other Revenues and Expenses

(16.097.563) 

(4.969.816) 

(6.949.541) 

(17.612.083) 

(6.870.197) 

(8.353.704) 

Financial Expenses

(1.004.191) 

(69.957.729) 

(36.664.696) 

(1.728.277) 

(71.274.781) 

(35.693.489) 

Third-party Input

4.062.007 

434.939 

(4.841.695) 

2.256.080 

(1.961.251) 

(5.780.462) 

Materials, Energy and Others

(114.394) 

(253.865) 

(255.961) 

(123.411) 

(269.900) 

(269.660) 

Third-Party Services

25 

(1.184.767) 

(2.067.985) 

(1.951.254) 

(1.451.146) 

(2.623.065) 

(2.483.282) 

Impairment of Assets

(3.489) 

(3.489) 

(110.466) 

(3.489) 

(3.489) 

(110.466) 

Others

5.364.657 

2.760.278 

(2.524.014) 

3.834.126 

935.203 

(2.917.054) 

Gross Added Value

15.067.871 

25.582.363 

27.502.596 

16.106.575 

30.869.843 

35.530.956 

Retentions

Depreciation and Amortization

25 

(1.384.414) 

(2.641.934) 

(2.217.366) 

(1.582.497) 

(3.094.511) 

(2.778.756) 

Added Value Produced Net

13.683.457 

22.940.429 

25.285.230 

14.524.078 

27.775.332 

32.752.200 

Added Value Received from Transfer Investments in Affiliates and Subsidiaries

14 

1.184.901 

3.007.124 

2.724.415 

42.170 

51.718 

44.364 

Added Value to Distribute

14.868.358 

25.947.553 

28.009.645 

14.566.248 

27.827.050 

32.796.564 

Added Value Distribution

Employee

3.478.541 

7.093.344 

27,3% 

7.619.942 

27,2% 

4.000.186 

8.105.835 

29,1% 

8.626.450 

26,3% 

Compensation

24 

1.796.332 

3.623.045 

3.978.454 

2.036.288 

4.102.940 

4.438.158 

Benefits

24 

612.561 

1.243.870 

1.351.522 

703.976 

1.428.339 

1.537.821 

Government Severance Indemnity Funds for Employees - FGTS

170.351 

315.165 

430.344 

207.543 

383.024 

504.626 

Others

899.297 

1.911.264 

1.859.622 

1.052.379 

2.191.532 

2.145.845 

Taxes and Contributions

2.877.379 

4.003.628 

15,4% 

5.523.566 

19,7% 

4.347.455 

7.206.954 

25,9% 

8.795.568 

26,8% 

Federal

2.513.786 

3.312.646 

4.900.468 

3.885.391 

6.334.980 

7.707.230 

State

401 

567 

855 

672 

907 

993 

Municipal

363.192 

690.415 

622.243 

461.392 

871.067 

1.087.345 

Compensation of Third-Party Capital - Rental

25 

399.168 

794.433 

3,1% 

777.648 

2,8% 

407.738 

811.875 

2,9% 

801.130 

2,4% 

Remuneration of Interest on Capital

8.113.270 

14.056.148 

54,2% 

14.088.489 

50,2% 

5.810.869 

11.702.386 

42,1% 

14.573.416 

44,4% 

Dividends

21.b

512.087 

512.087 

6.790.000 

512.087 

512.087 

6.790.000 

Interest on Equity

21.b

2.435.000 

3.325.000 

4.010.000 

2.435.000 

3.325.000 

4.010.000 

Profit Reinvestment

5.166.183 

10.219.061 

3.288.489 

2.924.129 

7.998.686 

4.165.845 

Participation Results of Non-Controlling Stockholders

21.f

(60.347) 

(133.387) 

(392.429) 

Total

14.868.358 

25.947.553 

100,0% 

28.009.645 

99,9% 

14.566.248 

27.827.050 

100,0% 

32.796.564 

99,9% 


2.     General Information

Banco Santander (Brasil) S.A. (Banco Santander or Bank), directly and indirectly controlled by Banco Santander, S.A., based in Spain (Banco Santander Spain), is the lead institution of the Financial and Prudential Conglomerate (Conglomerate Santander) under the authority of the Brazilian Central Bank (Bacen), established as a corporation, with head headquarters at Avenida Presidente Juscelino Kubitschek, 2041 and 2235 - A Block - Vila Olímpia – São Paulo - SP. Banco Santander operates as a multiple service bank, conducting its operations by means of portfolios such as commercial, investment, loans and advances, mortgage loans, leasing and foreign exchange. Through its subsidiaries, the Bank also operates on the segments of payment industry, shares club management, securities and insurance brokerage operations, consumer finance, payroll-deductible loans, digital platforms, management and recovery of non-performing loans, capitalization and pension plans, and supply and management of food, meal and other vouchers. The Bank's activities are conducted within the context of a group of institutions that operate on an integrated basis in the financial market. The corresponding benefits and costs of providing services are absorbed between them and are conducted in the normal course of business and under commutative conditions.

3.     Presentation of Financial Statements

 

The individual and condensed consolidated interim financial statements of Banco Santander (Brasil) S.A., which include its dependence abroad (Bank) and the consolidated statements (Consolidated), were prepared in accordance with accounting practices adopted in Brazil, established by the Brazilian Corporation Law, National Monetary System (CMN), Central Bank of Brazil (Bacen) and the model of the document provided for in the Accounting Plan of the Institutions of the National Financial System (COSIF) of the Brazilian Securities and Exchange Commission (CVM), in which they do not conflict with the standards issued by the Central Bank and show all information relevant to the financial statements, which are consistent with those used by management in its management.

CMN Resolution No. 4,818/2020 and Resolution Bacen No. 2/2020 established general criteria and procedures for the preparation and disclosure of the Financial Statements. The Resolution BCB nº 2/2002, revoked the Circular Bacen n º 3959/2019 and is effective from January, 2021, being applicable in the preparation, publication and submission of Financial Statements as from its effective date, encompassing the Financial Statements of December 31, 2020. The mentioned regulation, among other requirements, determined the presentation in explanatory notes, on a segregated way, the recurrent and non-recurrent profits.

The consolidated financial statements include the Bank and its subsidiaries and investment funds are indicates in Note 14, where Santander Conglomerate companies are the main beneficiaries or holders of the main obligations. The portfolios of these investment funds are classified by type of operation and are distributed in the same categories in which they were originally allocated.

In the preparation of the consolidated financial statements, equity interests, relevant balances receivable and payable, income and expenses arising from transactions between branches in the country, foreign branches and subsidiaries, unrealized results between these companies were eliminated and the participation minority shareholders' equity and income.

Leasing operations have been reclassified in order to reflect its financial position according to the financial method.

The preparation of financial statements requires Management estimates that affect the reported amounts of assets and liabilities, disclosure of provision and contingent liabilities and the reported amounts of revenues and expenses for the reporting periods. Since Management’s judgment involves making estimates concerning the probability of future events, actual amounts could differ from those estimates. The main estimates are provision of allowance for loan losses, realization of the tax credit, provision for judicial, civil, tax and labor proceedings, pension plan and the fair value of financial assets.

The Board of Directors authorized the issuance of the Financial Statements of the period ended December 31, 2020 at the meeting held on February 02, 2021.

The consolidated financial statements based on international accounting standards issued by the International Accounting Standards Board (IASB) for the period ended on December 31, 2020, will be disclosed in a legal term, at the website www.santander.com.br/ri.

4.     Significant Accounting Policies

a) Income Statement

The income statement accounting method is determined based on the accrual method and include income, charges, monetary adjustment and exchange rate changes, calculated at official rates and rates, pro rata on assets and liabilities adjusted up to the balance sheet date.

b) Functional Currency

Functional Currency and Presentation Currency

CMN Resolution nº 4,524 of September 29, 2016, with prospective application as of January 1, 2017, established accounting procedures for recognition by financial institutions and other institutions authorized to operate by the Central Bank that hold investments abroad: I - effects of exchange rate variations resulting from the conversion of transactions carried out in foreign currency by investees abroad to the respective functional currencies; II - the effects of exchange rate variations resulting from the translation of the balances of the financial statements of investees abroad of the respective functional currencies into the national currency; and III - of operations for hedge purposes of foreign exchange variation of investments abroad. These changes did not impact the financial statements Banco Santander in the year 2019. The functional currency is considered the currency of the main economic environment in which the entity operates.

The financial statements are presented in Brazilian Real (R$), which is the functional and presentation currency of Banco Santander and its subsidiaries, including its overseas subsidiary and branch.

Assets and liabilities of foreign branchs and subsidiary are converted in real as follows:

·         Assets and liabilities are converted at the exchange rate on the balance sheet date; and                  

·         Revenues and expenses are converted at the monthly average exchange rates.   


c) Current and Long-Term Assets and Liabilities

They are stated at their realizable and/or settlement amounts and they include income, charges, monetary adjustments or changes in exchange rates earned or incurred through the end of the reporting period, calculated on a daily pro rata basis and, when applicable, the effect of adjustments to decrease the cost of assets at their market values (fair value) or realization.

Receivables and payables up to 12 months are classified in current assets and liabilities, respectively. Trading securities that, regardless of their maturity date, are classified in current asset, according to the Bacen rule Circular 3,068/2001.

d) Cash and Cash Equivalents

For the cash flows statement purposes, cash and cash equivalents correspond to the balances of cash and interbank investments immediately convertible into cash, with insignificant risk of change in its value or with original maturity equal to ninety days or less.

e) Interbank Investments and Credits Related to Bacen

They are stated at their settlement amounts and include income, charges, monetary adjustments or changes in exchange rates earned or incurred through the end of the reporting period, calculated on a daily pro rata basis.

e.1) Repurchase Agreement

Repurchase Agreement (Repo)

The bank’s own fixed income securities used as ballast in the repurchasing agreement are highlighted in specific accounts of the asset (linked securities), on transaction date, by the updated accounting average, by type and maturity of the security. The difference between the repurchase value and the sale is the expense of the operation.

To perform sales transactions with repurchase agreements the Bank also uses third-party securities as ballast. Those operations are registered as funded position in the balance sheet.

Reverse Repurchase Agreement (Reverse Repo)

The financing granted by ballast with fixed-income securities (third-parties) are recorded on the financed position at liquidation value. The difference between the resale value and the purchase is recognized as the income of the operation. The securities acquired in a reverse repurchase agreement are transferred to the funded status when used as ballast for the sale transactions with repurchase agreements.

Repurchasing Performed With Free Movement Agreements

For the operations with free movement agreements, at the moment of the definitive sale of the securities acquired with resale agreement, the liability account referred to this operation must be evaluated by the securities' market value.

f) Securities

According to the Bacen rule Circular 3,068, securities are stated and classified into the following categories and accounting evaluation:

     I.   Trading securities;

    II.   Available-for-sale securities; and

   III.   Held-to-maturity securities.

Trading securities include securities purchased for the purpose of being actively and frequently traded while held-to-maturity securities include those for which the Bank has intention and financial capacity to hold to maturity. Available-for-sale securities include those which cannot be classified in categories I (trading) and III (held-to-maturity). Securities classified into categories I and II are stated at acquisition cost plus income earned through the balance sheet date, calculated on a daily pro rata basis, and adjusted to fair value, with gains or losses on such adjustment being recorded against:

(1)    The corresponding income or expense account, net of tax effects, in income statement for the period, when relating to securities classified into the trading category; and

(2)    A separated account in stockholders’ equity, net of taxes effects, when related to securities classified into the available-for-sale category. The adjustments to market value recorded on sale of these securities are transferred to the income statement for the period.

Securities classified into the held-to-maturity category are stated at acquisition cost plus income earned through the balance sheet, calculated on a daily pro rata basis.

Any permanent losses recorded on the sale value of securities classified into available-for-sale and held-to-maturity are recognized in the income statement of the period.

g) Derivatives Financial Instruments

According to the Bacen rule Circular 3,082 derivatives are classified according to Management's intent to use them for hedging purposes or not. Transactions made by customers' request, as self-employed, or that are not qualify as hedge accounting, especially derivatives used to manage the global risk exposure, are recorded at market value, with realized and unrealized gains and losses recorded in the income statement for the period.

Derivative financial instruments designated as part of a framework of protection against risks (hedge) can be classified as:

  I.   Fair value hedge; and

II.    Cash flow hedge.

Derivatives designated as hedge and the respective hedged items are adjusted to market value, considering the following:

(1) For those classified in category I, the valuation or devaluation is recorded as a contra entry to the appropriate income or expense account, net of tax effects, in the income for the period; and

(2) For those classified in category II, the increase or decrease in their amount of the effective portion is recorded against a separated account in stockholders’ equity, net of tax effects.

Some hybrid financial instruments contain both derivative financial instrument and non-derivative asset or liability. In these cases, the derivative financial instrument represents an embedded derivative. Embedded derivatives are recorded separately from the host contracts.

We don’t have net investment hedge in foreign operations as defined by the resolution CMN nº 4,524.

h) Credit portfolio and provision for losses

The credit portfolio includes credit operations, leasing operations, advances on foreign exchange contracts and other credits with credit granting characteristics. It is stated at present value, considering the indexes, interest rates and agreed charges, calculated pro rata day until the balance sheet date. For operations overdue from 60 days, the recognition in revenue will only occur when it is actually received.

Normally, the Bank writes off credits for losses when they are overdue for more than 360 days. In the case of long-term credit operations (over 3 years), they are written off when they are 540 days overdue. The credit operation written off for loss is recorded in a memorandum account for a minimum period of 5 years and while all collection procedures have not been exhausted.

Credit assignments without risk retention result in the write-off of the financial assets subject to the transaction, which are now kept in a memorandum account. The result of the assignment is fully recognized when it is realized.

As of January 2012, as determined by CMN Resolution No. 3,533 / 2008 and CMN Resolution No. 3,895 / 2010, all credit assignments with substantial risk retention will have their results recognized for the remaining terms of the operations, and financial assets assignment objects remain recorded as credit operations and the amount received as obligations for sale or transfer of financial assets.

Provisions for credit operations are based on the analysis of outstanding credit operations (past due and falling due), past experience, future expectations and specific risks of the portfolios and the risk assessment policy of Management in setting up provisions, as established by CMN Resolution No. 2,682 / 1999.

CMN Resolution No. 4,855 of September 24, 2020, is effective from January 2021, determines that, for the criteria for the provision of operations carried out within the scope of programs instituted with the purpose of facing the effects of the COVID-19 pandemic on the economy, in which resources are shared or of risks between the Union and participating institutions or guarantee provided by the Union, the percentages defined in Resolution No. 2,682, should be applied only to the portion of the book value of the operation, whose credit risk is held by the institution. In cases of transfer to loss, the amount taken to clearing accounts must be 100% of the balance of the transaction.

h.1) Credit Operation Restructuring

CMN Resolution 4,803, subsequently amended by CMN Resolution No. 4,855 mentioned above, allowed Financial Institutions to reclassify operations renegotiated between March 1 to December 31, 2020 to the level at which they were classified on February 29, 2020 (redaction given by Resolution 4,855), not including those operations with a delay equal to or greater than fifteen days on February 29, 2020 and which present evidence of inability to honor the obligation under the new conditions agreed.

i) Non-Current Assets Held for Sale and Other Assets

Non-current assets held for sale includes the carrying amount of individual items, disposal groups, or items forming part of a business unit earmarked for disposal (“discontinued operations”), whose sale in their present condition is highly probable and is expected to occur within one year.

Other assets refer mainly to assets not for own use, being composed basically of properties and vehicles received as payment.

Non-current assets held for sale and assets not for own use are generally recorded at the lower amount between the fair value less sale costs and their carrying amount at the date of classification in this category, and they are not depreciated.

j) Prepaid Expenses

Funds used in advance payments, whose benefits or services will be provided in future years, are allocated to profit in accordance to the terms of the related agreements.                                             

 

j.1) Commissions Paid to Banking Correspondents

In accordance with CMN Resolution nº 4,294 and Central Bank Circular 3,693 issued in December 2013, from January 2015 the commissions paid to intermediate agents responsible for origination of new credit operations are limited to maximum percentages of: (i) 6% of the value of new credit operation originated and (ii) 3% of the transferred value (portability).

Such commissions must be fully recognized as expenses when they are incurred.

k) Investments

Adjustments to investments in affiliates and subsidiaries are measured by equity method of accounting and recorded as investments results in affiliates and subsidiaries. Other investments are stated at cost, method reduced to their recoverable value, when applicable.

Change in Scope of Consolidation - Consists of the disposal, acquisition or change of control of an investment.

l) Fixed Assets

It is stated at acquisition cost, net of the respective accumulated depreciations and is subject to the assessment of the recoverable value in annual periods.

The depreciation of fixed assets is determined under the straight-line method, based on the following annual rates: buildings - 4%, facilities, furniture, equipment in use, security systems and communications - 10%, data processing systems and vehicles - 20%, and leasehold improvements - 10% or through the maturity of the rental contracts.

m) Intangible Assets        

Goodwill on acquisition of subsidiaries is amortized until 10 years, based on expected future earnings and it is tested for impairment annually or more frequently if conditions or circumstances indicate that the asset may be impaired.

The rights over the acquisition of payroll services are registered by the amount paid. Those services are related to payroll processing and payroll loans, maintenance of collection portfolio, supplier payment services and other banking services. The amount paid is allocated to income statement according to the terms of the respective agreements.

Software acquisition and development expenses are amortized over a maximum of 5 years.

n) Technical Reserves Related to the Activities of Pensions and Capitalization

Technical reserves are recognized and calculated in accordance with the provisions and criteria established in the National Council of Private Insurance (CNSP) and Superintendence of Private Insurance (Susep).        

Technical Reserves to Pensions

Technical provisions are mainly recognized in accordance with the criteria below:

• Mathematical Provisions for Benefits to Grant and Granted (PMBaC and PMBC)

The PMBaC are estimated based on the contributions collected through the financial regime of capitalization. The PMBC represents obligations taken in the form of continued income plans, being constituted based on the actuarial calculations for traditionals types of plans.

• Complementary Coverage Provision (PCC)

The PCC shall be estimated when the insufficiency is detected in the technical provisions due to the Test of Adequacy of Liabilities (TAP).

Technical Provisions for Capitalization

Technical provisions are elaborated according to the following criteria:

·       Mathematical provisions for redemption results from the accumulation of percentages applicable on payments made, capitalized with the interest rate predicted in the plan and updated through the Basic Reference Rate (TR);

·       Provision for redemption of anticipated securities is estimated from the cancellation for non-payment or redemption request, based on the value of the mathematical provision of redemption estimated at the time of securities cancellation and the provision for redemption of the matured securities is estimated after the end of the securities validity;

·       Provision for raffles to be held is estimated based on a percentage of the installment paid and it aims to cover the raffles which the securities will compete, but that they have not been carried out yet. The provision of raffles payable is estimated for the securities raffled, but which have not been paid yet; and

·       Administrative expenses provision aims to reflect the present value of future expenses of capitalization securities whose duration extends from the date of its constitution.

o) Employees Benefit Plans                                                                                                                                         

Post-employment benefit plans include the following commitments taken by the Bank: (i) addition to the benefits of public pension plan; and (ii) medical assistance in case of retirement, permanent disability or death of eligible employees, and their direct beneficiaries.

Defined Contribution Plans

Defined benefit plans is the post-employment benefit plan which the Bank and its subsidiaries, as the sponsoring entity pays fixed contributions to a pension fund during the duration of the beneficiary's employment contract, not having a legal or constructive obligation to pay additional contributions if the fund does not hold sufficient assets to pay all benefits relating to services provided in the current and in previous periods.

The contributions made in this connection are recognized under personnel expenses in the income statement.

Defined Benefit Plans

Defined benefit plan is the post-employment benefit plan which is not a defined contribution plan and is showed in Note 34. For this type of plan, the sponsoring entity's obligation is to provide the employees with the agreed benefits, assuming the potential actuarial risk that benefits might cost more than estimated.

Since January 2013, Banco Santander applies the CPC 33 (R1) which establishes the full recognition in a liability account when actuarial losses not recognized (actuarial deficit) will occur, with the counterpart in a equity´s account (other valuation adjustments).

Main Definitions

-      The present value of the defined benefit obligation is the present value of expected future payments required to settle the obligation resulting from employee´s service in the current and past periods, without deducting any plan´s assets.

-      Deficit or surplus is: (a) the present value of the defined benefit obligation, minus (b) the fair value of plan´s assets.

-      The sponsoring entity may recognize the plan's assets in the balance sheet when they meet the following characteristics: (i) the assets of the fund are sufficient to pay all benefits for plan´s employees or a sponsoring entity´s obligations; or (ii) the assets are returned to the sponsoring entity in order to reimburse it for employee benefits already paid.

-      Actuarial gains and losses are changes in present value of defined benefit obligation resulting from: (a) adjustments by experience (the effects of differences between the actuarial assumptions adopted and what has actually occurred); and (b) effects of changes in actuarial assumptions.

-      Current service cost is the increase in the present value of the defined benefit obligation resulting from employee service in the current period.

-      The past service cost is the change in present value of defined benefit obligation for employee service in prior periods resulting from a change in the plan or reductions in the number of employees covered.

Post-employment benefits are allocated to the income statement in the lines of other operating expenses - actuarial losses - retirement plans (Note 31) and personnel expenses (Note 27).    

The defined benefit plans are recorded based on an actuarial study, conducted annually by an external specialized consulting entity and approved by Management at the end of each year to be effective for the subsequent period.

p) Share Based Compensation

The Bank has compensation plans with long-term conditions for acquisition. The main conditions for acquisition are: (1) conditions of service, provided if the participant remains employed during the period of the Plan to acquire a position to exercise their rights; (2) performance conditions, the amount of investment in Certificates of Deposit Shares (Units) exercisable by the participants will be determined according to the result of a performance measurement parameter of the Bank: Total Shareholder Return (TSR) and it may be reduced, if it does not achieve the goals of the Return on Risk Weighted Assets (RoRWA) modifier, comparison between realized and budgeted in each year, as determined by the Board of Directors and (3) market conditions, since some parameters are conditioned to the value of the shares of the Bank. The Bank measures the fair value of the services rendered by reference to the fair value of the equity instruments granted at the grant date, taking into consideration the market conditions for each plan when the fair value is estimated.

Settlement in Share

The fair value of services is measured by reference to the fair value of the equity instruments granted at the grant date, taking into consideration the market conditions for each plan when the fair value is estimated. In order to recognize the staff costs in contrast with the capital reserves during the period covered, as the services are received, it is considered the treatment of conditions of service and the amount recognized for services received over the period of assessment based on the best estimative for the number of equity instruments expected to grant.

Settlement in Cash

For share-based payments settled in cash (in the form of share appreciation), the Bank measures the services rendered and the corresponding liabilities incurred in the fair value appreciation of the shares at grant date and until the liability is settled. The fair value of liability is revaluated at the end of each reporting period and at the date of settlement, with any changes in fair value recognized in the income statement. In order to recognize the staff costs with the counterparty on the wages payable provisions throughout the validity period, reflecting how the services are rendered, the Bank registers the total liability measurement based on the best estimative of the right of the shares appreciation that will be acquired at the end of the validity period and recognizes the value of the services rendered during the validity period based on the best available estimative. Periodically, the Bank evaluates its estimative over the number of stock appreciation rights to be acquired at the end of the grace period.

Variable Compensation Referenced in Shares         

In addition to managers, all employees in position of risk takers receive at least 40% of their variable compensation deferred by at least three years and 50% of the total variable compensation in shares (SANB11), conditioned to their permanence in the Group throughout the duration of the plan.

The plan is subject to Malus and Clawbackclauses application, according to which deferred installment of variable compensation may be reduced or canceled in the event of non-compliance internal rules and exposure to excessive risks.

The fair value of the shares is calculated by the average of the final daily quotation of the shares in the last 15 (fifteen) trading sessions immediately preceding the first business day of the granting month.

q) Funding, Notes Issued and Other Liabilities

Financial liabilities instruments are recognized initially at fair value, considered as the trade price. They are subsequently measured at amortized cost with expenses recognized as a financial cost (Note 17.d).

Among the liabilities initial recognition methods, it is important to emphasize those compound financial instruments which are recognized as such due to the fact that they contain both a debt instrument (liability), and an equity component (embedded derivative).

The recognition of a compound instrument consists in a combination of (i) a main instrument, which is recognized as an entity’s genuine liability (debt) and (ii) an equity component (derivative convertible into common shares).

In accordance to the COSIF, the hybrid capital and debt instruments represents obligations of issuers (financial institutions) and should be recorded in specific accounts of the liabilities adjusted according for the effect of exchange rate variation, when denominated in foreign currency. All the yield related to these instruments, such as interest and exchange variation (difference between the functional currency and the currency in which the instrument was denominated) shall be accounted as expenses of the period, in compliance with the accrual basis method.

Related to the stockholders' equity component, your registration occurs at the initial moment based in its fair value, if it is different from zero.

The relevant details of the nature of these compound instruments issued are described in Note 20.

r) Provisions, Contingent Assets and Liabilities and Legal Obligations - Tax and Social Security  

Banco Santander and its subsidiaries are involved in judicial and administrative lawsuits related to tax, labor and civil, in the normal course of their activities.

The provisions include legal obligations, judicial and administrative lawsuits related to tax and social security obligations, whose matter is to challenge their legality or constitutionality where, regardless the assessment of their loss probability, the amounts are fully recognized in the financial statements.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate and may be fully or partially reversed or reduced when the financial outflows and obligations relevant to the process are no longer probable, including decay of legal deadlines, among others.

Judicial and administrative provisions are constituted when the risk of loss of the judicial or administrative action is assessed as probable and the amounts involved are measurable with sufficient security, based on the nature, complexity, and history of the actions and the opinion of the internal legal counsel and the best information available. For lawsuits for which the risk of loss is possible, provisions are not recorded and the information is disclosed in the notes to the financial statements (Note 22.h) and for proceedings for which the risk of loss is remote, no disclosure is made.

Contingent assets are not recognized, except when there are guarantees or favorable judicial decisions in lawsuits from the past with the same matter, when no further claims are applicable, characterizing the success in such litigation. Contingent assets with the risk of success as probable, if any, are only disclosed in the financial statements.

In lawsuits with favorable decisions to Santander, the counterparty has the right, in the event of specific legal requirements attended, to file a rescission action within a period determined by current legislation. Rescission actions are considered new lawsuits and will they be evaluated for contingent liability purposes if and when they are filed.

s) Social Integration Program (PIS) and Contribution for the Financing of Social Security (COFINS)

The PIS (0.65%) and COFINS (4.00%) are calculated on the gross revenue related to the main activity of the legal entity. The financial institutions may deduct funding expenses in the establishment of the amount base for calculation. PIS and COFINS expenses are recorded in tax expenses. For non-financial companies the rates are 1.65% for PIS and 7.6% for COFINS.

t) Income Tax (IRPJ) and Social Contribution on Net Income (CSLL)

IRPJ is calculated at the rate of 15% plus a surtax of 10% applied on profit, after adjustments determined by tax legislation. The Social Contribution Tax on Net Profit (CSLL) is calculated at the rate of 15% for financial institutions, insurance and capitalization companies and 9% for other companies, applied on profit, after adjustments required by tax legislation. The rate of Social Contribution Tax on Net Profit (CSLL), for banks of any kind, was increased from 15% to 20% effective as of March 1, 2020, pursuant to article 32 of Constitutional Amendment 103, published on November 13, 2019.

Deferred tax credits and liabilities are basically calculated on the temporary differences between the accounting and taxable income, tax losses, negative basis of social contribution and adjustments to market value of securities and derivative financial instruments. The recognition of deferred tax credits and liabilities is made at the rates applicable to the period in which the asset is realized and / or the liability is settled.

According to the current regulation, the tax credits are recognized to the extent that it is probable its recovery with the base of future taxable income generation. The expected realization of the tax credits according to Note 11.b is based on the projections of future earnings supported by a technical study.

u) Interest on shareholders' equity

Published on December 19, 2018, effective as of January 1, 2019, the CMN Resolution nº 4,706 has prospective application and determines procedures for the accounting of capital remuneration. The Resolution decides that Interest on Shareholders 'Equity should be recognized as soon as they are declared or proposed and thus constitute a present obligation at the balance sheet date and, in compliance with this determination, this capital remuneration must be recorded in a specific account in Shareholders' Equity.

v) Impairment of Assets

The financial and non-financial assets are valued at the end of each period in order to identify evidence of impairment in its accounting value. If there is any indication, the entity shall estimate the recoverable amount of the asset and that loss shall be recognized immediately in the income statement. The recoverable amount of an asset is defined as the highest amount between its fair value net of selling expenses and its value in use.

w) Results-based Payments and Advances

Resolution No. 4,797 was revoked, and replaced by Resolution No. 4820, which takes effect from May 29, 2020 and determines that financial institutions and other institutions authorized to operate by the Central Bank of Brazil are prevented from:

 

(i)             remunerate own capital, including in the form of prepayment, above:

(a)    amount equivalent to the minimum mandatory dividend, including in the form of interest on capital, in the case of institutions incorporated in the form of a joint stock company;

(b)    amount equivalent to the minimum profit distribution established in the articles of association in the case of institutions incorporated in the form of limited liability companies

(ii)            repurchase own shares (it will only be allowed if through stock exchanges or an organized over-the-counter market, up to the limit of 5% (five percent) of the shares issued, including the shares recorded in treasury at the entry into force of this Resolution);

(iii)           Reduce the social capital, except in cases that are mandatory, in accordance with the governing legislation or when approved by the Central Bank;

(iv)           increase any remuneration, fixed or variable, of directors and members of the board of directors, in the case of corporation, administrators, in the case of limited companies;

The amounts subject to the aforementioned prohibitions cannot be subject to a future disbursement obligation, and these prohibitions apply as of the publication date of Resolution No. 4,797 (on April 6, 2020) and December 31, 2020 and must be observed regardless of the maintenance of funds in an amount higher than the Additional Principal Capital (ACP), which are dealt with in Resolutions No. 4,193, of March 1, 2013, and 4,783, of March 16, 2020.

Any anticipation of the amounts mentioned in items "a" and "b" of item I must be carried out onservatively, consistent and compatible with the uncertainties of the current economic situation.

x) Deferred Income

It refers to income received before the maturity of the underlying obligation and include non-refundable income, primarily related to guarantees provided and credit card annual fees. The allocation to income statement is made ​​in accordance with the terms of the agreements.

y) Minority Interest

The non-controlling interests (minority interests) is recorded in a separate equity account of the controlling entity in the consolidated financial statements.

z) Financial Guarantees

CMN Resolution nº 4,512 of July 28, 2016 and Circular Letter Bacen 3,782 of September 19, 2016 established accounting procedures to be applied, determining on the constitution of a provision to cover losses associated with financial guarantees provided in any form, applied prospectively as from January 1, 2017. Losses associated with the likelihood of future disbursements linked to financial guarantees provided are measured in accordance with recognized credit risk management models and practices and based on consistent information and criteria, verifiable. The provision should be sufficient to cover probable losses over the term of the guarantee provided and are evaluated periodically.

z) Subsequent Event

Corresponds to the event occurring between the date of the financial statements and the date on which it was authorized to issue such statements, and comprise by:

·         Events that originate adjustments: are those that evidence of condition that existed at the date of the financial statements; and;

·         Events that don't originate adjustments: are those that evidence of conditions that did not exist on the base date of the financial statements.

 

ab) Recurring and Non-Recurring Income

 

BCB Resolution No. 2, of November 27, 2020, in its article 34, started to determine the segregated disclosure of recurring and non-recurring income. The non-current income of the period is then defined as: I - is not related or is incidentally related to typical activities of the institution; and II - not expected to occur frequently in future years.

 

The nature and financial effect of events considered non-recurring are shown in Note 32.

 

 

 

 

 

 

 

 

 

 

 

5.     Cash and Cash Equivalents

Bank

12/31/2020

12/31/2019

12/31/2018

Cash

19,522,250 

9,543,649 

11,358,459 

Interbank Investments

9,668,922 

11,877,783 

14,496,489 

Money Market Investments

7,348,568 

110,746 

4,925,769 

Interbank Deposits

1,131,436 

1,465,065 

1,702,653 

Foreign Currency Investments

1,188,917 

10,301,972 

7,868,067 

Total

29,191,171 

21,421,432 

25,854,948 

Consolidated

12/31/2020

12/31/2019

12/31/2018

Cash

19,512,315 

9,924,644 

11,629,112 

Interbank Investments

9,487,000 

11,519,019 

13,656,870 

Money Market Investments

7,306,408 

110,746 

4,925,769 

Interbank Deposits

991,675 

1,105,446 

862,449 

Foreign Currency Investments

1,188,917 

10,302,827 

7,868,652 

Total

28,999,315 

21,443,663 

25,285,982 

 

6.     Interbank Investments

Bank

12/31/2020

12/31/2019

Up to 3 Months

From 3 to 12 Months

Over 12 Months

Total

Total

Money Market Investments

60,337,084 

2,307,062 

62,644,146 

28,703,365 

Own Portfolio

12,597,164 

236,300 

12,833,464 

821,425 

Financial Treasury Bills - LFT

2,869,850 

2,869,850 

10,500 

National Treasury Bills - LTN

2,215,209 

3,251 

2,218,460 

National Treasury Notes - NTN

7,512,105 

233,049 

7,745,154 

810,925 

Third-party Portfolio

6,203,774 

6,203,774 

9,011,703 

National Treasury Bills - LTN

457,427 

National Treasury Notes - NTN

6,203,774 

6,203,774 

8,554,276 

Sold Position

41,536,146 

2,070,762 

43,606,908 

18,870,237 

National Treasury Bills - LTN

8,121,021 

348,213 

8,469,234 

2,906,634 

National Treasury Notes - NTN

31,916,441 

1,722,549 

33,638,990 

15,963,603 

Letras Financeiras do Tesouro - LFT

1,498,684 

1,498,684 

Interbank Deposits

18,906,015 

30,224,851 

30,940,159 

80,071,025 

76,924,193 

Foreign Currency Investments

1,188,917 

1,188,917 

10,301,972 

Total

80,432,016 

32,531,913 

30,940,159 

143,904,088 

115,929,530 

Consolidated

12/31/2020

12/31/2019

Up to 3 Months

From 3 to 12 Months

Over 12 Months

Total

Total

Money Market Investments

60,294,924 

2,307,062 

62,601,986 

28,703,365 

Own Portfolio

12,597,164 

236,300 

12,833,464 

821,425 

Financial Treasury Bills - LFT

2,869,850 

2,869,850 

10,500 

National Treasury Bills - LTN

2,215,209 

3,251 

2,218,460 

National Treasury Notes - NTN

7,512,105 

233,049 

7,745,154 

810,925 

Third-party Portfolio

6,203,774 

6,203,774 

9,011,703 

National Treasury Bills - LTN

457,427 

National Treasury Notes - NTN

6,203,774 

6,203,774 

8,554,276 

Sold Position

41,493,986 

2,070,762 

43,564,748 

18,870,237 

National Treasury Bills - LTN

8,121,021 

348,213 

8,469,234 

2,906,634 

National Treasury Notes - NTN

31,916,441 

1,722,549 

33,638,990 

15,963,603 

Financial Treasury Bills - LFT

1,456,524 

1,456,524 

Interbank Deposits

1,718,022 

2,607,709 

1,581,619 

5,907,350 

4,361,302 

Foreign Currency Investments

1,188,917 

1,188,917 

10,302,827 

Total

63,201,863 

4,914,771 

1,581,619 

69,698,253 

43,367,494 


7.     Securities and Derivatives Financial Instruments

a)     Securities

I) By Category

Bank

Consolidated

12/31/2020

12/31/2019

12/31/2020

12/31/2019

Effect of Adjustment to Fair Value on:

Effect of Adjustment to Fair Value on:

Amortized Cost

Income

Equity

Carrying Amount

Carrying Amount

Amortized Cost

Income

Equity

Carrying Amount

Carrying Amount

Trading Securities

64,541,983 

838,876 

65,380,859 

32,557,896 

73,951,570 

1,054,706 

75,006,276 

35,977,471 

Government Securities

63,792,139 

829,459 

64,621,598 

30,755,634 

70,992,973 

1,045,289 

72,038,263 

33,158,573 

Private Securities

749,844 

9,417 

759,261 

1,802,262 

2,958,596 

9,417 

2,968,013 

2,818,898 

Available-for-Sale Securities

128,771,835 

2,698,095 

2,649,376 

134,119,306 

118,508,274 

136,416,007 

2,698,095 

2,810,055 

141,924,157 

128,296,445 

Government Securities

100,741,868 

2,617,077 

2,104,277 

105,463,222 

89,526,633 

108,678,024 

2,617,077 

2,253,949 

113,549,050 

98,943,695 

Private Securities

28,029,967 

81,018 

545,099 

28,656,084 

28,981,641 

27,737,983 

81,018 

556,106 

28,375,108 

29,352,750 

Held-to-Maturity Securities

16,317,905 

16,317,905 

11,739,597 

16,317,905 

16,317,905 

11,739,597 

Government Securities

14,739,539 

14,739,539 

11,275,488 

14,739,539 

14,739,539 

11,275,488 

Private Securities

1,578,365 

1,578,365 

464,109 

1,578,365 

1,578,365 

464,109 

Total Securities

209,631,722 

3,536,972 

2,649,376 

215,818,070 

162,805,767 

226,685,482 

3,752,801 

2,810,055 

233,248,338 

176,013,513 


 

II) Trading Securities

 

Bank

12/31/2020

12/31/2019

By Maturity

12/31/2020

Trading Securities

Amortized Cost

Adjustment to Fair Value -  Income

Carrying Amount

Carrying Amount

Without Maturity

Up to 3 Months

From 3 to 12 Months

From 1 to 3 Years

Over 3 Years

Total

Government Securities

63,792,139 

829,459 

64,621,598 

30,755,634 

4,277,044 

12,193,356 

17,580,836 

30,570,362 

64,621,598 

Financial Treasury Bills - LFT

2,207,290 

840 

2,208,130 

3,158,889 

558,806 

119,352 

493,315 

1,036,656 

2,208,130 

National Treasury Bills - LTN

23,241,521 

197,999 

23,439,521 

6,838,515 

8,739,061 

3,711,900 

10,988,560 

23,439,521 

National Treasury Notes - NTN

37,555,953 

630,488 

38,186,441 

20,687,308 

3,702,238 

2,645,084 

13,361,736 

18,477,384 

38,186,441 

Agricultural Debt Securities - TDA

41,412 

3,408 

44,820 

70,922 

11,967 

9,513 

13,632 

9,708 

44,820 

Brazilian Foreign Debt Notes

680,057 

(1,524) 

678,533 

677,855 

253 

426 

678,533 

Debentures

65,905 

(1,752) 

64,153 

4,033 

2,491 

57,629 

64,153 

Private Securities

749,844 

9,417 

759,261 

1,802,262 

369,041 

9,396 

17,182 

88,596 

275,046 

759,261 

Investment Fund Shares

356,192 

12,849 

369,041 

834,063 

369,041 

369,041 

Debentures

275,780 

(2,109) 

273,671 

439,819 

9,396 

17,182 

12,267 

234,826 

273,671 

Eurobonds

492,774 

Certificates of Real Estate Receivables - CRI

23,380 

(372) 

23,008 

22,869 

1,222 

21,786 

23,008 

Certificates of Agribusiness Receivables - CRA

24,241 

(376) 

23,866 

12,737 

5,432 

18,434 

23,866 

Financial Bills - LF

70,251 

(576) 

69,675 

69,675 

69,675 

Total

64,541,983 

838,876 

65,380,859 

32,557,896 

369,041 

4,286,439 

12,210,538 

17,669,431 

30,845,409 

65,380,859 

*For Financial Statements purposes, Securities Held for Trading are presented in the Balance Sheet in full in the short term.


 

Consolidated

12/31/2020

12/31/2019

By Maturity

12/31/2020

Trading Securities

Amortized Cost

Adjustment to Fair Value -  Income

Carrying Amount

Carrying Amount

Without Maturity

Up to 3 Months

From 3 to 12 Months

From 1 to 3 Years

Over 3 Years

Total

Government Securities

70,992,973 

1,045,289 

72,038,263 

33,158,573 

5,651,083 

12,674,424 

21,326,029 

32,386,727 

72,038,263 

Financial Treasury Bills - LFT

7,318,355 

(2,242) 

7,316,112 

3,530,356 

1,445,764 

444,272 

4,238,509 

1,187,568 

7,316,112 

National Treasury Bills - LTN

23,252,588 

198,270 

23,450,858 

6,838,515 

11,337 

8,739,061 

3,711,900 

10,988,560 

23,450,858 

National Treasury Notes - NTN

39,634,657 

849,130 

40,483,786 

22,718,780 

4,177,981 

2,801,231 

13,361,736 

20,142,838 

40,483,786 

Agricultural Debt Securities - TDA

41,412 

3,408 

44,820 

70,922 

11,967 

9,513 

13,632 

9,708 

44,820 

Brazilian Foreign Debt Notes

680,057 

(1,524) 

678,533 

677,855 

253 

426 

678,533 

Debentures

65,905 

(1,752) 

64,153 

4,033 

2,491 

57,629 

64,153 

Private Securities

2,958,596 

9,417 

2,968,013 

2,818,898 

1,741,333 

9,396 

49,800 

88,596 

1,078,889 

2,968,013 

Shares

1,339,892 

1,339,892 

665,075 

1,339,892 

1,339,892 

Investment Fund Real Estate

388,592 

12,849 

401,442 

1,068,068 

401,442 

401,442 

Investment Fund Shares

36,067 

Debentures

1,079,622 

(2,109) 

1,077,513 

439,819 

9,396 

17,182 

12,267 

1,038,669 

1,077,513 

Eurobonds

492,774 

Certificates of Real Estate Receivables - CRI

23,380 

(372) 

23,008 

22,869 

1,222 

21,786 

23,008 

Certificates of Agribusiness Receivables - CRA

24,241 

(376) 

23,866 

12,737 

5,432 

18,434 

23,866 

Bill of Exchange

32,618 

32,618 

81,489 

32,618 

32,618 

Financial Bills - LF

70,251 

(576) 

69,675 

69,675 

69,675 

Total

73,951,570 

1,054,706 

75,006,276 

35,977,471 

1,741,333 

5,660,478 

12,724,224 

21,414,625 

33,465,616 

75,006,276 


 

III) Available-for-Sale Securities

Bank

12/31/2020

12/31/2019

By Maturity

12/31/2020

Effect of Adjustment to Fair Value on:

Available-for-Sale Securities

Amortized Cost

Income

Equity

Carrying Amount

Carrying Amount

Without Maturity

Up to 3 Months

From 3 to 12 Months

From 1 to 3 Years

Over 3 Years

Total

Government Securities

100,741,868 

2,617,077 

2,104,277 

105,463,222 

92,837,828 

7,549,490 

11,428,773 

23,558,184 

62,926,776 

105,463,222 

Treasury Certificates - CFT

1,338 

103 

1,441 

1,165 

834 

607 

1,441 

Securitized Credit

456 

460 

 

170 

290 

460 

Financial Treasury Bills - LFT

20,741,412 

(108,198) 

20,633,213 

11,151,613 

 

3,231,715 

6,998,413 

10,403,086 

20,633,213 

National Treasury Bills - LTN

33,786,410 

421,443 

143,086 

34,350,939 

30,984,931 

 

11,415,864 

7,615,029 

15,320,046 

34,350,939 

National Treasury Notes - NTN (2)

41,756,230 

2,195,634 

1,933,900 

45,885,764 

47,388,924 

 

4,057,784 

11,785 

8,944,134 

32,872,061 

45,885,764 

Brazilian Foreign Debt Bonds (Global Bonds)

3,170,537 

 

 

135,391 

3,305,928 

 

3,311,195 

 

 

 

 

3,305,928 

 

3,305,928 

C-bonds

1,285,486 

 

(9) 

1,285,477 

 

259,821 

 

 

 

1,025,655 

 

1,285,477 

Private Securities

28,029,967 

81,018 

 

545,099 

28,656,084 

25,670,446 

2,172,156 

 

1,732,408 

 

5,904,074 

 

9,467,990 

 

9,379,457 

 

28,656,084 

Shares

325 

 

(273) 

53 

60 

53 

 

 

 

 

 

53 

Investment Funds

2,095,223 

 

2,095,223 

3,963,540 

2,095,223 

 

 

 

 

 

2,095,223 

Debentures (1)

14,377,511 

81,018 

 

509,625 

14,968,154 

11,915,052 

 

413,869 

 

953,051 

 

5,580,327 

 

8,020,907 

 

14,968,154 

Promissory Notes - NP

4,504,601 

 

20,563 

4,525,164 

4,696,855 

 

760,805 

 

1,969,212 

 

1,667,388 

 

127,759 

 

4,525,164 

Financial Bills - LF

263,891 

 

6,408 

270,298 

192,804 

 

 

 

270,298 

 

 

270,298 

Certificates of Real Estate Receivables - CRI

24,031 

 

(406) 

23,625 

36,680 

 

20,082 

 

 

 

3,542 

 

23,625 

Certificates of Agribusiness Receivables - CRA

171,165 

 

 

751 

171,916 

 

36,680 

 

 

 

41,353 

 

130,563 

 

171,916 

Rural Product Note - CPR

6,593,220 

 

8,431 

6,601,651 

 

4,828,775 

76,880 

 

537,652 

 

2,981,810 

 

1,908,624 

 

1,096,685 

 

6,601,651 

Total

128,771,835 

2,698,095 

 

2,649,376 

134,119,306 

 

118,508,274 

2,172,156 

 

9,281,898 

 

17,332,847 

 

33,026,173 

 

72,306,232 

 

134,119,306 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated

12/31/2020

12/31/2019

By Maturity

12/31/2020

Effect of Adjustment to Fair Value on:

Available-for-Sale Securities

Amortized Cost

Income

Equity

Carrying Amount

Carrying Amount

Without Maturity

Up to 3 Months

From 3 to 12 Months

From 1 to 3 Years

Over 3 Years

Total

Government Securities

108,678,024 

2,617,077 

2,253,949 

113,549,050 

102,254,890 

7,983,129 

12,336,767 

26,140,751 

67,088,402 

113,549,050 

Treasury Certificates - CFT

1,338 

103 

1,441 

1,165 

834 

607 

1,441 

Securitized Credit

456 

460 

170 

290 

460 

Financial Treasury Bills - LFT

22,795,039 

(110,634) 

22,684,405 

16,547,365 

3,536,168 

214,205 

8,278,228 

10,655,803 

22,684,405 

National Treasury Bills - LTN

35,809,385 

421,443 

192,499 

36,423,327 

32,500,648 

12,109,653 

8,642,694 

15,670,980 

36,423,327 

National Treasury Notes - NTN (2)

45,635,801 

2,195,634 

2,036,595 

49,868,030 

49,894,517 

4,186,970 

11,785 

9,219,221 

36,450,053 

49,868,030 

Brazilian Foreign Debt Bonds (Global Bonds)

3,150,519 

135,391 

3,285,910 

3,311,195 

3,285,910 

3,285,910 

C-bonds

1,285,486 

(9) 

1,285,477 

259,821 

1,025,655 

1,285,477 

Private Securities

27,737,983 

81,018 

556,106 

28,375,108 

26,041,555 

1,905,661 

1,732,408 

5,904,074 

9,155,521 

9,677,443 

28,375,108 

Investment Fund Shares in Participation - FIP

5,673 

(273) 

5,400 

82,387 

5,400 

5,400 

Investment Fund Shares

1,784,375 

1,784,375 

3,082,832 

1,784,375 

1,784,375 

Investment Fund Real Estate

34,026 

4,980 

39,006 

57,531 

39,006 

39,006 

Debentures (1)

14,357,002 

81,018 

515,653 

14,953,673 

13,063,691 

413,869 

953,051 

5,267,858 

8,318,894 

14,953,673 

Promissory Notes - NP

4,504,601 

20,563 

4,525,164 

4,696,855 

760,805 

1,969,212 

1,667,388 

127,759 

4,525,164 

Financial Bills - LF

263,891 

6,408 

270,298 

192,804 

270,298 

270,298 

Certificates of Real Estate Receivables - CRI

24,031 

(406) 

23,625 

36,680 

20,082 

3,542 

23,625 

Certificates of Agribusiness Receivables - CRA

171,165 

751 

171,916 

41,353 

130,563 

171,916 

Rural Product Note - CPR

6,593,220 

8,431 

6,601,651 

4,828,775 

76,880 

537,652 

2,981,810 

1,908,624 

1,096,685 

6,601,651 

Total

136,416,007 

2,698,095 

2,810,055 

141,924,157 

128,296,445 

1,905,661 

9,715,538 

18,240,841 

35,296,272 

76,765,846 

141,924,157 

(1) In the Bank and Consolidated, includes securities issued by a mixed capital company and R$287,736 (12/31/2019 - R$ 262,027) in securities available for sale.

(2) As of December 31, 2020, the amount of 1,040,000 in the amount of R$1,686,832 (12/31/2019 - 1,140,000 in the amount of R$ 1,229,297) of National Treasury Notes - NTN, is linked to the obligation assumed by Banco Santander to cover the reserves to be amortized under Plan V of the Social Security Fund (Banesprev).

IV) Held-to-Maturity Securities

Bank/Consolidated

By Maturity

12/31/2020

Amortized Cost

From 3 to 12 Months

From 1 to 3 Years

Over 3 Years

Held-to-Maturity Securities (1)

12/31/2020

12/31/2019

Up to 3 Months

Total

Government Securities

14,739,539 

11,275,488 

538,436 

1,308,149 

2,037,551 

10,855,403 

14,739,539 

National Treasury Notes - NTN

4,549,498 

3,414,897 

11,868 

4,537,629 

4,549,498 

Brazilian Foreign Debt Bonds

10,190,042 

7,860,591 

538,436 

1,296,281 

2,037,551 

6,317,774 

10,190,042 

Private Securities

1,578,365 

464,109 

296,759 

223,406 

1,058,201 

1,578,365 

Certificates of Agribusiness Receivables - CRA

1,578,365 

464,109 

296,759 

223,406 

1,058,201 

1,578,365 

Total

16,317,905 

11,739,597 

835,195 

1,531,555 

3,095,751 

10,855,403 

16,317,905 

(1) The market value of held to maturity securities is R$16,322,840 (12/31/2019 - R$12,514,855).

For the period ended December 31, 2020, there were no disposals of federal government securities and other securities classified in the category of securities held to maturity.

Given the provisions of Article 5 of Circular Bacen 3,068/2001, Banco Santander has the financial capacity and intention to hold to maturity securities classified as held-to-maturity.        

The market value of securities is estimated based on the average quotation on organized markets and their estimated cash flows, discounted to present value using the applicable interest rate curves, considered as representative of market conditions at the end of balance.

For the period ended December 31, 2020, there was a reclassification of securities available for sale to securities under negotiation for the Investment Fund Quotas of the company Banco Hyundai S.A. in the Santander Group investment fund SBAC Referenced DI Private Credit, due to the revision of the Administration's intention regarding this application. Said reclassification does not change the asset's pricing.

V) Financial Income - Securities Transactions

Bank

Consolidated

 01/01 to 12/31/2020

 01/01 to 12/31/2019

 01/01 to 12/31/2020

 01/01 to 12/31/2019

Income From Fixed-Income Securities (1)

53,672,358 

21,105,889 

53,732,942 

22,959,709 

Income From Interbank Investments

6,252,282 

8,479,523 

2,702,108 

3,341,381 

Income From Variable-Income Securities

(50,522) 

91,876 

133,661 

(462,560) 

Financial Income of Pension and Capitalization 

192,122 

148,791 

Provision for Impairment Losses (2)

(165,360) 

(557,328) 

(165,360) 

(465,189) 

Others (3)

(2,448,782) 

(370,874) 

(2,360,519) 

(609,970) 

Total

57,259,976 

28,749,086 

54,234,954 

24,912,162 

(1) Includes exchange variation revenue in the amount of R$29,463,679 in the Bank and in the Consolidated (2019 - revenue of R$473,791 in the Bank and in the Consolidated).

(2) Corresponds to the permanent loss record, referring to securities classified as available for sale.

(3) Includes the net valuation of investment fund shares and interest and exchange variation expenses in the amount of R$2,707,556 (2019 – expense R$ 473.619 in the Bank and in the Consolidated) and net valuation of investment fund shares in the amount of R $ 347,036 in the Bank and in the Consolidated (2019 - expense of R$144,262 in the Bank and in the Consolidated).

b) Derivatives Financial Instruments

The main risk factors associated to derivatives contracted are related to exchange rates, interest rates and stocks. To manage these and other market risk factors the Bank uses practices which include the measurement and follow up of the limit´s usage previously defined on internal committees, as well as the daily follow up of the portfolios values in risk, sensitivities and changes in the interest rate and exchange exposure, liquidity gaps, among other practices which allow the control and follow up on the main risk metrics that can affect the Bank´s position in the several markets which it acts. Based on this management model, the Bank has accomplished its goal, using operations with derivatives, in optimize the relation risk/benefits even in situation with great volatility.

The derivatives fair value is determined through quotation of market prices. The swaps contracts fair value is determined using discounted cash flow modeling techniques, reflecting suitable risk factors. The fair value of NDF and Future contracts are also determined based on the quotation of market prices for derivatives traded in specific chamber or using the same methodology applied for swap contracts. The fair value of options derivatives is determined based on the mathematical models, such as Black & Scholes, using yield rates, implied volatilities and the fair value of the corresponding asset. The current market prices are used to price the volatilities. For the derivatives which do not have prices directly disclosed by specific chamber, their fair values are obtained through pricing models which use market information, based on disclosed prices of more liquid assets. Interest rate curves and market volatilities are extracted from theses prices to be used as first input in these models.

I)    Summary of Derivative Financial Instruments

The swap operations are presented showing the balances of the differentials receivable and payable.

Below, the composition of the Derivative Financial Instruments portfolio (Assets and Liabilities) by type of instrument, demonstrated by their market value:

Bank

Consolidated

12/31/2020

12/31/2019

12/31/2020

12/31/2019

Assets

Liabilities

Assets

Liabilities

Assets

Liabilities

Assets

Liabilities

Swap - Differential Receivable

14,746,581 

17,925,675 

8,620,854 

10,167,632 

14,729,641 

18,652,196 

14,625,238 

16,701,678 

Options to Exercise Awards

4,448,585 

4,511,175 

886,927 

1,593,625 

4,979,011 

4,926,994 

1,065,752 

1,699,729 

Term Contract and Other Contracts

13,085,550 

12,690,276 

1,678,454 

2,221,955 

13,131,423 

12,690,275 

1,750,150 

2,221,955 

Total

32,280,716 

35,127,126 

11,186,235 

13,983,212 

32,840,075 

36,269,465 

17,441,140 

20,623,362 

 


 

II) Derivative financial instruments by type of contract and index

Bank

12/31/2020

12/31/2019