Banco Santander (Brasil) S.A. Q4 FY2021 earnings call

Business Evolution - Moved loan portfolio from R$142 billion to ~R$500 billion organically. - Focused on organic growth, cost efficiency, with cost income ratio strong. - Initiated Agro investment, ESG agenda years ago. - Innovated in areas like energy trading and commodity desk. ### Customer Growth - Reached 53.4 million total customers by end-2021, added 2.7 million in last quarter. - Digital customer acquisition through channels increased 185%, with 18.3 million digital customers by end-2021. ### Omni-Channel Strategy - Emphasized co-existence of branches, remote coverage, and digital channels for seamless customer experience. - Launched Bank To Go concept, serving customers at ATMs. ### Asset Quality - Short-term delinquency healthy; 90-day NPL at 2.7%, under control. - Loan loss provisions within reasonable levels, cost of risk 2.7% for full year.

The company delivered a record net profit of R$16.3 billion in 2021, a 7% increase. NII rose nearly 9% for the year, with customer NII up almost 10%. Fees increased 14% over the year. Loan portfolio grew almost 3% in the quarter and over 12% year-on-year to R$462 billion, largely driven by retail. Provisions grew 10% in 2021. Efficiency ratio improved to 35%, the best in the industry. Return on equity was 21.2% for the full year.

Asset Quality - Expected cost of credit in 2022 to return to pre-pandemic levels closer to 2018-2019. ### Profitability - Targeting risk-weighted asset growth in high-single to low-double digits. - Aim for ROE in 20%-21% range, with payout around 50%. ### Loan Portfolio - Expected credit portfolios to grow in high-single digits, aligning with GDP and inflation trends.

Macro Factors - Inflation, interest rates, and open finance could impact credit competitiveness. - Government-sponsored programs that helped indebtedness may wane, affecting credit quality. ### Competitive - Potential new players entering the market could pressure credit spreads.

Q: Comment on expectation of asset quality dynamics for 2022?

A: Sergio Rial said cost of credit in 2022 likely to return to pre-pandemic levels, with cautionary measures taken in Q3 2021. Angel Santodomingo mentioned 67% of retail individual portfolios collateralized, with cost of risk expected to gradually deteriorate but remain under control.

Q: Did the bank sell loan portfolio in the quarter?

A: Sergio Rial said the bank did sell loan portfolios in quarters, but it's part of business as usual, with no specific amount detailed.

Q: Given additional provision decreased R$1.1 billion in the quarter and NPL trended up, any change in credit concession or risk policies?

A: Sergio Rial said they used generic provision due to risk modeling updates, with credit portfolios expected to grow in high-single digits, and cost of risk to accompany growth.

Q: Regarding operating expenses for customer acquisition, should we expect these investments to continue?

A: Sergio Rial said Mario, the new CEO, is committed to profitable growth, with revenue growth remaining an important north star, and expenses to continue under control.

Q: Comment on competitive environment and impact on credit spreads?

A: Sergio Rial said on wholesale and corporate investment banking, potential pressure on spreads due to low credit demand, but on consumer side, no significant pressure seen yet; digital banks and inflation/interest rate implications also discussed.