SECURITIES AND EXCHANGE COMMISSION
Commission File Number: 001-34476
Bloco A – Vila Olimpia
São Paulo, SP 04543-011
Federative Republic of Brazil
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SUMMARY |
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| Pages |
Management Report | 1 | |
Independent Auditor’s Report | 15 | |
Financial Statements | ||
Balance Sheets | 18 | |
Income Statements | 22 | |
Statements of Changes in Stockholders' Equity – Bank | 23 | |
Statements of Changes in Stockholders' Equity - Consolidated | 24 | |
Cash Flows Statements | 25 | |
Statements of Value Added | 26 | |
Notes to the Financial Statements | ||
Amount of Shares or Quotas Owned, Direct and Indirect Participation | ||
Provisions, Contingent Assets and Liabilities and Legal Obligations - Tax and Social Security | ||
Executive’s Report of Financial Statements | 102 | |
Executive’s Report of Independent Auditors' Report | ||
Summary of the Audit Committee Report | 106 |
Individual and Consolidated Financial Statements - June 30, 2019
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
MANAGEMENT REPORT | |
In thousands of Brazilian Real - R$, unless otherwise stated |
Dear Stockholders:
We present the Management Report to Individual and Consolidated Financial Statements of Banco Santander (Brasil) S.A. (Banco Santander or Bank) related to the period ended June 30, 2019, 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 period ended June 30, 2019, will be disclosed simultaneously, on the website www.santander.com.br/ri.
1) Macroeconomic Environment
In the second quarter, despite a relatively volatile trajectory, prices of Brazilian financial assets closed the period with prices more favorable than those observed at the end of the first quarter of the year. Santander estimates that both domestic and international factors were responsible for this volatile performance with good performance at the end of the period. The exchange rate reversed the devaluation observed in the first quarter when it fell from R$3.92/US$ at the end of March 2019 to R$3.84/US$ at the end of June 2019 - also lower than the R$3.88/US$ registered at the end of last year. By the end of 2019, we currently project the exchange rate to return to the level of R$3.90/US$. This movement was followed by the sovereign risk indicator, as the Brazilian CDS for the 5 year period fell from 180bps to 150bps between March 2019 and June 2019, signaling a greater appetite on the part of foreign investors with assets of the country. The Bovespa index has risen from the approximate level of 95,400 points in March, 2019 to a level above 100,000 points, breaking a symbolic barrier that is very important for the Brazilian stock market. Last but not least, prices of fixed income instruments also registered a rise in the period, which translated into a fall in the implicit interest rate over all the terms of the term structure of the interest rate - for example, the future interest rate with maturity on January 1, 2020 fell from approximately 6.5% per year in March 2019 to 6.0% pa. in June 2019. As mentioned before, although all financial assets recorded price improvement at the end of the second quarter of the year, the Bank points out that such performance did not follow a smooth path in some moments, both by domestic factors and outside.
From the international point of view, Santander understands that there was an increase in the tensions arising from the so-called "Trade War" between China and the United States, which continued to weigh on the perception of economic agents around the globe as to the magnitude of the negative impact that such situation may have on world economic performance. Moreover, the appearance of more concrete signs of a slowdown in the economic growth of the American and Chinese economies has raised even more caution, and even led the US monetary authority to substantially change the signage regarding the next actions to be implemented in the conduct of the monetary policy in the USA. At the same time, there have been comments from Chinese officials that further stimulus measures could be adopted later this year to sustain the expansion of the economy. If, at the beginning of the year, there were still those who thought that the FOMC (Federal Open Market Committee – a division of the Federal Reserve) could raise the base interest rate in the US this year, there seems to be a conviction that it will need to be reduced sometime within the next six months - a shared vision, including , by members of the FOMC. This is to say that, rather than anticipating the continuity of a robust growth rate in the US, the US monetary authority has come to fear that there will be a substantial loss in the country's pace of economic expansion. Despite the anxiety generated by the uncertainty regarding the robustness of the world economic expansion, the fact that the other major global economies signaled a similar position to the FOMC, raised the attractiveness of assets of other countries considered to be higher risk, which benefited Brazilian financial assets between March 2019 and June 2019.
In the domestic environment, the second quarter of 2019 was marked by progress in the process of the structural reform agenda, especially the progress in the analysis of the constitutional amendment referring to the reformulation of the Brazilian social security system, which was approved in the first round by the House of Representatives. Deputies in mid-July 2019. The fact is important, since it signaled the possibility of containing the process of worsening public accounts. That is, the perception that the transformations necessary for fiscal balance are on the way to being implemented ended up improving the mood for increased exposure to Brazilian financial assets. However, the process was also not linear, with comings and goings, meetings and disagreements between congressmen aligned with the government and members of the federal administration bringing volatility to asset prices - mainly to the stock market, the exchange rate and the sovereign risk.
In addition to the observed political environment, the Bank noted a new round of frustration with the performance of indicators of economic activity, which generated a wave of revisions and reductions in GDP growth projections for 2019. Santander revised its projection for performance of the Brazilian economy this year and, instead of working with an expectation of expansion of 2.3% for the GDP of 2019, now considers that the country's economy is likely to advance 0.8% this year. Maintaining a more gradual pace of growth has reinforced the favorable dynamics of price indices, with underlying inflation measures signaling broad comfort to meet the targets set by the National Monetary Council for the coming years. In view of this situation, the Bank understands that there has been an expansion of space so that the Central Bank of Brazil can reduce the basic interest rate of the current level of 6.50% pa. to a level of 5.50% a.a. still in 2019, without prejudice to its mission to keep the inflationary dynamics compatible with the convergence of current inflation to the targets. In this way, Santander began to consider that after reaching 5.50% pa. in 2019, the Selic rate target should remain unchanged by the end of 2020 - previously, the indication was that it would remain stable at 6.50% a.a. both this year and next.
Individual and Consolidated Financial Statements - June 30, 2019 1
These low projections for growth, inflation and interest rates made by Banco Santander are based on the continuity of the reform agenda in the Brazilian economy, especially in the fiscal field. Santander reiterates its assessment that the willingness and commitment of the current government to seek stabilization of the public debt as well as to maintain a sustainable economic policy will be fundamental for the country to achieve long-term economic and social development.
2) Performance
2.1) Corporate Net Income
CONSOLIDATED INCOME STATEMENTS | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Financial Income | 38,580.6 | 39,604.9 | -2.6 | 18,030.0 | 20,550.5 | -12.3 |
Financial Expenses | (21,530.2) | (30,239.9) | -28.8 | (8,973.5) | (12,556.6) | -28.5 |
Gross Profit From Financial Operations (a) | 17,050.4 | 9,365.0 | 82.1 | 9,056.5 | 7,993.9 | 13.3 |
Other Operating (Expenses) Income (b) | (5,671.0) | (4,462.9) | 27.1 | (3,028.6) | (2,642.4) | 14.6 |
Operating Income | 11,379.4 | 4,902.1 | 132.1 | 6,027.9 | 5,351.5 | 12.6 |
Non-Operating Income | (111.4) | 27.3 | -508.4 | (111.9) | 0.5 | -23356.3 |
Income Before Taxes on Income and Profit Sharing | 11,268.0 | 4,929.4 | 128.6 | 5,916.0 | 5,352.0 | 10.5 |
Income Tax and Social Contribution (a) | (3,336.4) | 1,936.1 | -272.3 | (1,960.3) | (1,376.1) | 42.5 |
Profit Sharing | (925.3) | (900.1) | 2.8 | (456.8) | (468.4) | -2.5 |
Non-Controlling Interest | (181.2) | (173.4) | 4.5 | (89.1) | (92.0) | -3.2 |
Consolidated Net Income | 6,825.2 | 5,791.9 | 17.8 | 3,409.8 | 3,415.4 | -0.2 |
For a better understanding of the results in BRGAAP, below is the Gross Profit from Financial Operations, disregarding the hedge effect (according to item 1):
ADJUSTED GROSS PROFIT FROM FINANCIAL OPERATIONS | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Gross Profit From Financial Operations | 17,050.4 | 9,365.0 | 82.1 | 9,056.5 | 7,993.9 | 13.3 |
Income Tax and Social Contribution (hedge) | (367.7) | 5,420.4 | -106.8 | (520.5) | 152.8 | -440.6 |
Adjusted Gross Profit From Financial Operations | 16,682.7 | 14,785.4 | 12.8 | 8,536.0 | 8,146.7 | 4.8 |
INCOME TAX AND SOCIAL CONTRIBUITION | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Income Tax and Social Contribution | (3,336.4) | 1,936.1 | -272.3 | (1,960.3) | (1,376.1) | 42.5 |
Income Tax and Social Contribution (hedge) | 367.7 | (5,420.4) | -106.8 | 520.5 | (152.8) | -440.6 |
Adjusted Income Tax and Social Contribution | (2,968.7) | (3,484.3) | -14.8 | (1,439.8) | (1,528.9) | -5.8 |
(1) The variation, after the effects of the hedge, refers mainly to the higher volume of Interest on Own Capital deliberated and the change in the CSLL rate from 20% to 15%.
a) Foreign Exchange Hedge of the Grand Cayman and Luxembourg Branches and the Subsidiary Santander Brasil EFC
Banco 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.
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), considering the negative exchange variation of 1% and 1.8% for Dollar and Euro, respectively (2018 - 17% and 15%), as demonstrated below:
FOREIGN EXCHANGE HEDGE OF THE GRAND CAYMAN AND LUXEMBOURG BRANCHS | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Exchange Variation - Profit From Financial Operations | (554.5) | 6,566.1 | -108.4 | (780.0) | 225.5 | -445.9 |
Derivative Financial Instruments - Profit From Financial Operations | 967.1 | (12,462.9) | -107.8 | 1,363.9 | (396.8) | -443.7 |
Income Tax and Social Contribution | (367.7) | 5,420.4 | -106.8 | (520.5) | 152.8 | -440.6 |
PIS/Cofins - Tax Expenses | (45.0) | 476.4 | -109.4 | (63.4) | 18.4 | -444.6 |
Individual and Consolidated Financial Statements - June 30, 2019 2
b) Other Operating (Expenses) Income
Income from Services Rendered and Banking Fees- The highlights are: (a) credit/debit card commission and Acquiring Services, with growth of 13,4% in relation to the same period of the previous year, mainly due to the increase in both card; (b) Current Account Services, an increase of 16,5% in relation to the same period of the previous year, influenced by the increase in the number of active account holders, which grew 49 consecutive months; (c) Insurance Commissions, with an increase of 13,2% in relation to the same period of the previous year, following the credit dynamics; and (d) Placement of Securities, Custody and Brokerage, an increase of 35.2% in relation to the same period of the previous year, mainly due to the increase of activities with the capital market.
Revenues from commissions on credit operations and guarantees provided fell by comparison with the same period of the previous year, mainly in accordance with the revision of some fee policies, in line with the market guidelines.
Fees | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Asset Management | 516.4 | 509.8 | 1.3 | 265.6 | 250.8 | 5.9 |
Checking Account Services | 1,892.8 | 1,624.0 | 16.5 | 983.3 | 909.5 | 8.1 |
Lending Operations and Income from Guarantees Provided | 665.6 | 784.5 | -15.2 | 341.3 | 324.3 | 5.2 |
Lending Operations | 390.9 | 465.3 | -16.0 | 201.3 | 189.6 | 6.2 |
Income Guarantees Provided | 274.7 | 319.2 | -13.9 | 140.0 | 134.7 | 3.9 |
Insurance Fees | 1,514.2 | 1,337.8 | 13.2 | 775.0 | 739.2 | 4.8 |
Cards (Debit and Credit) and Acquiring Services | 3,086.4 | 2,722.6 | 13.4 | 1,477.5 | 1,608.9 | -8.2 |
Collection | 752.6 | 752.5 | 0.0 | 377.2 | 375.4 | 0.5 |
Brokerage, Custody and Placement of Securities | 477.4 | 353.1 | 35.2 | 285.6 | 191.8 | 48.9 |
Others | 278.4 | 324.4 | -14.2 | 149.4 | 129.0 | 15.8 |
Total | 9,183.8 | 8,408.8 | 9.2 | 4,654.9 | 4,528.9 | 2.8 |
General Expenses - Total expenses, which include expenses with personnel, other administrative expenses and expenses with profit sharing, excluding the effects of goodwill amortization, increased by 6,7%, and personnel expenses and profit sharing, increased by 0,8% and other administrative expenses increased by 12,0%. Changes in administrative expenses are mainly due to the increase in expenses with data processing, associated with greater transactionality and growth in the customer base and expenses with specialized technical services and third parties, mainly through the contracting of technology services.
General Expenses | 1S19 | 1S18 | annual changes% | 2Q19 | 1Q19 | quarter changes % |
Personnel Expenses | (4,631.1) | (4,594.9) | 0.8 | (2,312.1) | (2,319.0) | -0.3 |
Other Administrative Expenses, excluding the effects of goodwill amortization | (5,685.1) | (5,077.2) | 12.0 | (2,901.6) | (2,783.5) | 4.2 |
General Expenses, excluding the effects of goodwill amortization | (10,316.2) | (9,672.1) | 6.7 | (5,213.7) | (5,102.5) | 2.2 |
2.2) Assets and Liabilities
CONSOLIDATED BALANCE SHEETS | Jun/19 | Jun/18 | jun/19 vs. jun/18 changes % | ||
Current and Long-Term Assets | 823,718.0 | 728,300.3 | 13.1 | ||
Permanent Assets | 12,539.6 | 10,770.8 | 16.4 | ||
TOTAL ASSETS | 836,257.6 | 739,071.1 | 13.1 | ||
Current and Long-Term Liabilities | 763,715.9 | 673,247.6 | 13.4 | ||
Deferred Income | 279.8 | 423.0 | -33.9 | ||
Non-Controlling Interest | 1,760.1 | 2,075.8 | -15.2 | ||
Stockholders' Equity | 70,501.8 | 63,324.8 | 11.3 | ||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 836,257.6 | 739,071.1 | 13.1 |
Total assets are mainly represented:
(R$ Millions) | Jun/19 | Jun/18 | jun/19 vs. jun/18 changes % | ||
Loan Portfolio | 317,624.8 | 290,478.6 | 9.3 | ||
Securities and Derivative Financial Instruments (1) | 202,990.9 | 187,416.6 | 8.3 | ||
Interbank Investments | 38,898.7 | 53,294.6 | -27.0 | ||
Interbank Accounts | 94,849.5 | 90,695.2 | 4.6 |
(1) Given the provisions of Circular Bacen 3,068/2001, Banco Santander has the financial capacity and intention to hold to maturity, securities classified as held-to-maturity, in the amount of R$10.721,1 million on June 30, 2019 (06/30/2018 - R$11.226,7 million).).
Individual and Consolidated Financial Statements - June 30, 2019 3
2.3) Loan Portfolio
MANAGEMENT DISCLOSURE OF LOAN PORTFOLIO BY SEGMENT | Jun/19 | Jun/18 | jun/19 vs. jun/18 changes % | ||
Individuals (1) | 141,431.5 | 119,836.7 | 18.0 | ||
Consumer Finance | 53,156.2 | 45,368.6 | 17.2 | ||
Individuals (1) | 46,512.2 | 40,338.8 | 15.3 | ||
Corporate | 6,644.0 | 5,029.8 | 32.1 | ||
Small and Medium-sized Entities | 37,131.3 | 33,757.4 | 10.0 | ||
Large-sized Entity | 85,905.8 | 91,515.9 | -6.1 | ||
Total Loan portfolio (gross) | 317,624.8 | 290,478.6 | 9.3 | ||
Other Operations with Credit Risk | 76,507.1 | 77,766.1 | -1.6 | ||
Total Extended Portfolio (gross) | 394,131.9 | 368,244.7 | 6.9 | ||
Allowance for Loan Losses (2) | (18,491.1) | (18,096.1) | 2.2 | ||
Total Loan portfolio (net) | 375,640.8 | 350,148.6 | 7.3 |
(1) Including the loans to individual in the consumer finance segment, the individual portfolio reached R$187.943,7 on June 30, 2019 (06/30/2018 - R$160.175,5).
(2) Includes debentures, FIDC, CRI, promissory notes, promissory notes for placement abroad, assets related to acquiring activities and sureties and sureties.
On June 30, 2019, the main highlights were the following segments: (a) "Individuals", which presented growth in both comparison periods, 18,0% compared to December 31, 2018, influenced mainly by the payroll growth, due to the good adherence of the digital channels by the customers and strong commercial dynamics of the network; (b) "Consumer Finance", also with growth in both periods, being 17,2% compared to June 2018. (c) "Small and Medium Enterprises (SMEs)", with a reduction of 5.1% compared to June 2018.
Delinquency
The over-90 delinquency ratio reached 3.0% of the total credit portfolio on June 30, 2019, 0.2% above in relation to June 30, 2018 (2.8%). The ratio remains at a controlled level, as a result of the risk management and assertive models of Banco Santander.
Allowance for loan losses represents 5,8% of the loan portfolio on June 30, 2019, 6.4% on June 30, 2018.
The allowance for loan losses expenses, net of revenues with recovery of loans previously written off for the period ended on June 30, 2019 is R$ R$5.313,3 million and R$ R$5.361,3 million in 2018, increasing 0,9%.
2.4) Funding by Customers
FUNDING BY CUSTOMERS | Jun/19 | Jun/18 | jun/19 vs. jun/18 changes % | ||
Demand Deposits | 20,521.5 | 17,369.3 | 18.1 | ||
Saving Deposits | 46,574.5 | 42,571.0 | 9.4 | ||
Time Deposits | 197,300.8 | 177,610.7 | 11.1 | ||
Debentures/LCI/LCA/LIG (1) | 50,477.2 | 53,979.6 | -6.5 | ||
Treasury Bills/Structured Operations Certificates | 36,635.7 | 33,348.3 | 9.9 | ||
Total Funding | 351,509.7 | 324,878.9 | 8.2 |
(1) Debentures repurchase agreement, Real Estate Credit Notes (LCI), Agribusiness Credit Notes (LCA) and Guaranteed Real State Credit Notes (LIG).
The total funding resources increased 8.2%, compared to December, 2018, with steady and more pronounced Time Deposit growth in Debentures.
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 | jun-19 |
| jun-18 | |
Specific features | Tier I (1) | Tier II (1) | Tier I (1) | Tier II (1) |
Issuance | nov/18 | nov/18 | jan/14 | jan/14 |
Amount (Million) | US$1.250 | US$1.250 | R$3.000 | R$3.000 |
Interest Rate (p.a.) (2) | 7,250% | 6,125% | 7,375% | 6,000% |
Maturity | No Maturity (Perpetual) | nov/28 | No Maturity (Perpetual) | jan/24 |
Periodicity of | semiannually, as of May 8, 2019 | semiannually, as of May 8, 2019 | quarterly, as of April 29, 2014 | semiannually, as of July 29, 2014 |
Individual and Consolidated Financial Statements - June 30, 2019 4
(1) Notes repurchased in 2019; As authorized by Bacen on December 17, 2018, as of the date of their issuance, Level I and II of PR must be excluded.
(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.
Notes 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 Banco 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
On June 30, 2019, Banco Santander consolidated stockholders’ equity presented an increase of 11.3% compared to June 30, 2018.
The variation in the Stockholders' Equity balance between June 30, 2019 and 2018 was, mainly, due to the negative variation of the asset valuation adjustment (securities and derivative financial instruments) in the amount of R$1,424.5 million and the net income for the period in the amount of R$6,825.2 million and reduced, mainly, by the established of Interest on Capital in the amount of R$2 billion.
Treasury Shares
In the meeting held on November 1, 2018, the Bank’s Board of Directors approved, in continuation of the buyback program that expired on November 1, 2017, the buyback program of its Units and ADRs, by the Bank or its agency in Cayman, to be held in treasury or subsequently sold.
The Buyback Program will cover the acquisition up to 37,753,760 Units, representing 37,753,760 common shares and 37,753,760 preferred shares, or the ADRs, which, on December 31, 2018, corresponded to approximately 1% of the Bank’s share capital. On December 31, 2018, the Bank held 362,227,661 common shares and 390,032,076 preferred shares being traded.
The Buyback has the purpose to (1) maximize the value creation to stockholders by means of an efficient capital structure management; and (2) enable the payment of officers, management level employees and others Bank’s employees and companies under its control, according to the Long Term Incentive Plans. The term of the Buyback Program is 12 months counted from November 6, 2018, and will expire on November 5, 2019.
Jun/19 | Jun/18 | ||||
Quantity | Quantity | ||||
Units | Units | ||||
Treasury shares at beginning of the fiscal year | 13,316 | 1,773 | |||
Shares Acquisitions | 4,975 | 13,478 | |||
Payment - Share-based compensation | (3,065) | (4,336) | |||
Treasury shares at end of the fiscal year | 15,226 | 10,915 | |||
Subtotal - Treasury Shares in thousands of reais | R$ 612,398 | R$ 356,672 | |||
| R$ 2,410 | R$ 219 | |||
Balance of Treasury Shares in thousands of reais | R$ 614,808 | R$ 356,891 | |||
Cost/Share price | Units | Units | |||
Minimum cost | R$ 7.55 | R$ 7.55 | |||
Weighted average cost | R$ 31.51 | R$ 27.51 | |||
Maximum cost | R$ 49.55 | R$ 36.98 | |||
Share price | R$ 45.46 | R$ 27.64 |
In the periods ended June 30, 2019 and 2018, there were highlights of Dividends and Interest on Capital, as below:
DIVIDENDS AND INTEREST ON CAPITAL | Jun/19 | Mar/18 | |||
Interest on capital | 2,000.0 | 600.0 | |||
Dividends | 0.0 | 600.0 | |||
Total | 2,000.0 | 1,200.0 |
Individual and Consolidated Financial Statements - June 30, 2019 5
2.7) Basel Index
Financial institutions are required by Bacen to maintain Regulatory Capital (PR), Tier I and Principal Capital consistent with their risk activities, higher than the minimum requirement of the Regulatory Capital Requirement, represented by the sum of the partial credit risk, market risk and operational risk.
As required by Resolution CMN 4,193/2013, the requirement for PR in 2018 was 11.0%, composed of 8.625% of Reference Equity Minimum plus 1.875% of Capital Conservation Additional. Considering this additional, PR Level I increased to 8.375% and Minimum Principal Capital to 6.875%.
For the base year 2019, the PR requirement remains at 10.5% (since January, 2019), including 8.0% of Minimum of Reference Equity and a further 2.5% of Capital Conservation Additional. The PR Level I reaches 8.5% and the Principal Capital Minimum 7.0%.
The Basel ratio is determined 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 bellow:
BASEL INDEX % | Jun/19 | Jun/18 | |||
Tier I Regulatory Capital | 67,550.0 | 57,152.8 | |||
Principal Capital | 62,709.6 | 52,271.1 | |||
Supplementary Capital | 4,840.4 | 4,881.7 | |||
Tier II Regulatory Capital | 4,832.6 | 4,953.4 | |||
Regulatory Capital (Tier I and II) | 72,382.6 | 62,106.2 | |||
Credit Risk | 371,140.8 | 354,413.8 | |||
Market Risk | 29,463.7 | 28,802.2 | |||
Operational Risk | 46,527.0 | 37,372.3 | |||
Total RWA | 447,131.5 | 420,588.3 | |||
Basel I Ratio | 15.1 | 13.6 | |||
Basel Principal Capital | 14.0 | 12.4 | |||
Basel Regulatory Capital | 16.2 | 14.8 |
2.8) Main Subsidiaries
The table below presents the balances of total assets, net assets, net income and credit operations for the period ended June 30, 2019 for the main subsidiaries of Banco Santander portfolio:
SUBSIDIARIES | Total Assets | Stockholders' Equity | Net | Loan | Ownership / Interest (%) |
Aymoré Crédito, Financiamento e Investimento S.A. | 45,670.7 | 2,098.7 | 617.7 | 41,194.4 | 100.00% |
Getnet Adquirência e Serviços para Meios de Pagamento S.A. | 24,448.9 | 2,466.2 | 301.1 | 0.0 | 100.00% |
Santander Leasing S.A. Arrendamento Mercantil | 7,042.7 | 5,739.4 | 3.1 | 1,872.2 | 99.99% |
Banco Bandepe S.A. | 6,300.4 | 4,185.6 | 146.2 | 0.0 | 100.00% |
Santander Brasil, Establecimiento Financiero de Credito, S.A. | 3,561.5 | 3,423.2 | 3.1 | 777.4 | 100.00% |
Santander Corretora de Seguros, Investimento e Serviços S.A. | 3,187.0 | 2,765.6 | 203.5 | 0.0 | 100.00% |
Santander Corretora de Câmbio e Valores Mobiliários S.A. | 3,994.2 | 638.4 | 41.8 | 0.0 | 100.00% |
(1) Includes Leasing portfolio and other loans.
Balances reported above are in accordance with accounting practices established by Brazilian Corporate Law and standards established by the CMN, the Bacen and document template provided in the Accounting National Financial System Institutions (Cosif) and the CVM, that does not conflict with the rules issued by Bacen.
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) Recoverable Value Assessment
In the first half of 2018, Banco Santander recognized impairment losses in the amount of R$341 million on intangible assets in the acquisition and development of systems. The loss was recorded based on the performance of technical analysis, which demonstrated a significant reduction in expected future economic benefits on these assets, without material effects as of June 30, 2019.
Individual and Consolidated Financial Statements - June 30, 2019 6
3.3) Opening of the branch in Luxembourg
On June 9, 2017, Banco Santander obtained authorization from the Central Bank to set up an agency in Luxembourg with a capital of US$1 billion, with the objective of complementing the foreign trade strategy for corporate clients (large Brazilian companies and their operations abroad) and offer financial products and services through an offshore entity that is not established in a jurisdiction with favored taxation and that allows for the increase of funding capacity. The opening of the agency was authorized by the Luxembourg Minister of Finance on March 5, 2018. On April 3, 2018, after the reduction of the capital of the Cayman agency in the equivalent amount, the value of US$1 billion was allocated to capital of the Luxembourg branch.
3.4) Corporate Restructuring
Several social movements were implemented in order to reorganize the operations and activities of entities according to the business plan of the Conglomerate Santander.
a) Acquisition of Summer Empreendimentos Ltda.
On May 14, 2019, Banco Santander and its wholly owned subsidiary Santander Holding Imobiliária S.A. executed a binding agreement with the partners of Summer Empreendimentos Ltda. defining the negotiation terms for the purchase and sale of shares fully representing the capital of Summer Empreendimentos. The operation closing is subject to accomplishment of conditions precedent usual to this type of transaction, including the previous authorization by the Bacen.
b) Put option of equity interest in Banco Olé Bonsucesso Consignado 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 Aymoré CFI. The closing of the transaction is conditioned to implementation of the proceedings set forth in the Investment Agreement.
c) Acquisition of residual equity interest in Getnet S.A.
On December 19, 2018, Banco Santander and the Minority shareholders of Getnet S.A. executed an amendment to the Shares’ Sale and Purchase Agreement and Other Covenants of Getnet S.A., in which Banco Santander commits to acquire all of the Minority shareholders’ shares, corresponding to 11.5% of Getnet S.A. capital stock, per the amount of R$1,431,000. The acquisition was approved by Bacen on February 18, 2019 and closed on February 25, 2019, as a consequence Santander Brasil has become the holder of 100% of the shares representatives of the capital stock of Getnet S.A.
d) Formation of Esfera Fidelidade S.A.
On August 14, 2018, Esfera Fidelidade was incorporated, with equity fully owned by Banco Santander. Esfera Fidelidade will act in the development and management of customer loyalty programs. On November 26, 2018, Esfera Fidelidade had its capital stock increased in the amount of R$10,000, amounting the full share capital of R$10,000, divided into 10,001,000 (ten million and one thousand) nominative common shares without par value, entirely held by Banco Santander. The company started its operation in November 2018.
e) Investment in Loop Gestão de Pátios S.A.
On June 26, 2018, Webmotors S.A., company with 70% interest indirectly owned by Banco Santander, signed an investment agreement with Allpark Empreendimentos, Participações e Serviços S.A. and Celta LA Participações S.A., in order to acquire an equity interest corresponding to 51% of the capital stock of Loop Gestão de Pátios S.A., through capital increase and issuance of new shares of Loop to be fully subscribed and paid-in by Webmotors. Loop operates in the segment of commercialization and physical and virtual auction of motor vehicles. On September 25, 2018, the transaction was completed with increase of the capital stock, in the amount of R$23,900, through issuance of shares representing 51% of equity interest in Loop, which were fully subscribed and paid-in by Webmotors.
f) Formation of BEN Benefícios e Serviços S.A.
On June 11, 2018,BEN Benefícios,with equity fully owned by Banco Santander,was incorporated, toact in the supply and administration of meal, food, transportation, cultural and similar vouchers, via printed or electronic and magnetic cards.
In the EGM held on August 1, 2018, BEN Benefícios had its capital increased in R$ 45,000, passing the capital stock to the amount of R$ 45,001, divided into 45,001,000 (forty-five million and one hundred thousand) registered common shares without par value, fully owned by Banco Santander.
Individual and Consolidated Financial Statements - June 30, 2019 7
In the EGM held on March 27, 2019, Santander Brasil approved the capital increase in the amount of R$44,999, totalizing R$90,000 of capital stock distributed into 90,000,000 (ninety million) common shares without par value, fully held by Banco Santander.
BEN Benefícios started its activities in the first quarter of 2019.
g) Acquisition of Isban Brasil S.A. and Produban Serviços de Informática S.A.
On February 19 and 28, 2018, Banco Santander purchased, respectively, the totality of shares of Isban Brasil, formerly held by Ingeniería de Software Bancário, S.L., and of Produban Serviços de Informática, formerly held by Produban Servicios Informáticos Generales, S.L., for the amount of R$61,078 and R$42,731, respectively. The parties involved in the transactions had Banco Santander, S.A. (Santander Spain) as common indirect controller, being such transactions carried-out under market conditions. At the EGM held on February 19, 2018, was approved the capital increase of Isban Brasil in the amount of R$33,000, through the issuance of 11,783,900 (eleven million, seven hundred and eighty-three thousand and nine hundred) shares, without par value, entirely subscribed and paid in by Banco Santander. On February 28, 2018, the company Isban Brasil was merged into Produban Serviços de Informática S.A. and on the same date, Produban Serviços de Informática had its corporate name changed to Santander Brasil Tecnologia S.A. In continuity, on February 28, 2018, Produban Servicios Informáticos Generales, S.L. (currently named Santander Global Technology, S.L.) approved the merger of the spin-off share of Produban Serviços de Informática into Produban Brasil Tecnologia e Serviços de Informática Ltda. (currently named Santander Global Technology Brasil Ltda.).
h) Formation of Santander Auto S.A.
On December 20, 2017, Banco Santander and HDI Seguros S.A. (HDI Seguros), executed documents to form a partnership for the issuance, offering and sale of auto insurance, in a 100% digital way, through creation of a new insurance company - Santander Auto, to be held 50% by Sancap, a company controlled by Banco Santander, and 50% by HDI Seguros. On February 2, 2018 the partnership was approved by the Administrative Council of Economic Defense (Conselho Administrativo de Defesa Econômica – CADE), on April, 30, 2018, was approved by the Brazilian Central Bank and, on May, 15, 2018, SUSEP's prior approval was obtained. On October 9, 2018, through transformation of the corporate vehicle L.G.J.S.P.E. Investments and Participations S.A., Sancap and HDI Seguros formed Santander Auto S.A., with capital of R$15,000. On January 9, 2019, Susep granted to Santander Auto the authorization to operate insurance throughout national territory.
i) Formation of Gestora de Inteligência de Crédito S.A.
On April 14, 2017, the definitive documents necessary for the creation of a new credit bureau, Gestora de Inteligência de Crédito, were signed by the stockholders, whose control will be shared among the stockholders who will hold 20% of the its share capital each. In the EGM held on October 5, 2017, the capital increase of Gestora de Crédito was approved in the total amount of R$285,205, so that the capital stock increased from R$65,823 to R$351,028. The Company will develop a database with the objective of aggregating, reconciling and processing registration and credit information of individuals and legal entities, in accordance with the applicable standards, providing a significant improvement in the processes of granting, pricing and directing credit lines. The Company began operations in 2019 on a partial basis (negative and positive), and the Bank estimates that it will be fully operational by the end of 2019.
j) Formation of Banco Hyundai Capital Brasil S.A.
On April 28, 2016, Aymoré CFI and Banco Santander executed with Hyundai Capital Services, Inc. (Hyundai Capital) the necessary documents for the formation of Banco Hyundai and an insurance brokerage company with the purpose to provide, respectively, auto finance and financial and insurance brokerage services to clients and dealers of Hyundai in Brazil.
On April 11, 2018, the parties incorporated, with an equity interest of 50% held by Aymoré CFI and 50% held by Hyundai Capital, a non-operational entity named BHJV Assessoria e Consultoria em Gestão Empresarial Ltda. On May 8, 2018, Aymoré CFI and Hyundai Capital took resolution on the conversion of BHJV Assessoria into the non-operational joint-stock corporation named Banco Hyundai Capital Brasil S.A., as well as the capital stock increase in R$99,995, passing to the amount of R$100,000, divided into 100,000,000 (one hundred million) nominative common shares without par value. On December 13, 2018, the incorporation procedure of Banco Hyundai Capital Brasil S.A. was concluded.
In the EGM held on February 19, 2019, the shareholders of Banco Hyundai approved the capital increase in the amount of R$200,000, summing the total value of R$300,000 distributed into 300,000,000 (three hundred million) common shares without par value, held in the proportion of 50% by Aymoré CFI and 50% by Hyundai Capital.
On February 21, 2019, the authorization to operate granted by Bacen for the functioning of Banco Hyundai was published in the Federal Official Gazette. The Banco Hyundai starts operating on April, 2019.
On May 13, 2019, the Central Bank authorized Banco Santander to hold an indirect interest in a company to be incorporated under the name Hyundai Corretora de Seguros Ltda. Hyundai Corretora was incorporated on July 22, 2019, with the beginning of its operations subject to registration of the company as insurance brokerage with SUSEP.
k) Creation of PI Distribuidora de Títulos e Valores Mobiliários S.A.
On May 3, 2018, Santander Finance Arrendamento Mercantil S.A., an indirectly controlled subsidiary of Banco Santander, was converted into a distribution company of bonds and securities and had its corporate name changed to SI Distribuidora de Títulos e Valores Mobiliários S.A. The conversion process of approved by Bacen on November 21, 2018. On December 17, 2018, SI Distribuidora de Títulos e Valores Mobiliários S.A. had its corporate name changed to PI Distribuidora de Títulos e Valores Mobiliários S.A., being the corporate name change process approved by Bacen on January 22, 2019. The company started its operations on March 14, 2019.
Individual and Consolidated Financial Statements - June 30, 2019 8
3.5) Subsequent Event
On July 22, 2019, was legally incorporated the limited liability company Hyundai Corretora de Seguros Ltda. (Hyundai Insurance Brokerage). Hyundai Insurance Brokerage has a capital stock in the amount of R$2,000 divided into 2,000,000 (two million) quotas, with individual par value of R$1.00, fully subscribed and pending of payment, divided between its quotaholders Santander Corretora de Seguros, Investimentos e Serviços S.A. and Hyundai Capital Services, Inc. in the proportion of 50% to each.
4) Strategy
Banco Santander Brasil is the only international bank with scale in the country. The Banco Santander are convinced that the best way to grow in a profitable, recurring and sustainable manner is by providing excellent services to enhance customer satisfaction levels and attract more customers, making them more loyal. The actions are based on establishing close and long-lasting relationships with customers, suppliers and shareholders. To accomplish that goal, the purpose is to help people and businesses prosper by being a Simple, Personal and Fair Bank, guided by the following strategic priorities:
| · | Increase customer preference and loyalty by offering targeted, simple, digital, innovative and high value-added products and services through a multi-channel platform. |
| · | Generate results in a sustainable and profitable manner, with greater revenue diversification, aiming to strike a balance between loans, funding and services, while maintaining a preemptive risk management approach and rigorous cost control. |
| · | Be disciplined with capital and liquidity to preserve the solidity, face regulatory changes and seize growth opportunities. |
| · | Achieve profitable market share gains through the robust portfolio, optimize the ecosystem and launch new ventures, consistently improving the customer experience. |
Thebusiness model focused on enhancing customer service and strengthening loyalty continues to provide recurring earnings generation, with an outstanding level of profitability. In the first half of the year, the Banco Santander enjoyed consistent growth in thecustomer base, accompanied by profitable market share gains. These factors, allied to the strong capital and liquidity base, place in a prime position to capture market opportunities. The Banco Santander highlight the following accomplishments:
Named Best Bank in Brazil and Best Bank in Latin America in Euromoney’s 2019 Awards for Excellence.
Retail
| · | Cards: themarket share reached 13.4% (+0.9 p.p. YoY, Source: Brazilian Central Bank, as of May/19.), while thetotal turnover expanded by 22% YoY in this quarter. The Banco Santander partnered with one of the leading online travel agencies in the nation to issue cards providing services and benefits to travelers. Regarding Santander’s credit plan for card customers, the Banco Santander are carrying out several actions to raise consumer awareness about this new alternative for installment payment purchases. Additionally, the Santander Way app totaled more than 6.9 million active customers and continues to receive high ratings in app stores. Moreover, it is worth noting that travel stores. Moreover, it is worth noting that travel insurance can now be purchased directly through the app, allowing for greater convenience. The AAdvantage® card continues to experience good customer acceptance and is running a campaign that offers extra miles when purchasing this product.All these initiatives stimulate turnover and customer loyalty. |
| · | Payroll Loans: the market share in the loan portfolio came to 10.5% (+1.2 p.p. YoY, Source: Brazilian Central Bank, as of May/19.). Digital channels, which saw a 78% rise in the number of contracts generated in twelve months, along with new agreements and differentiated offers, contribute to the customers’ financial management and are levers that support the growth. |
| · | Real Estate: the Banco Santander partnered with the biggest group of real estate portals in the country, offering a pioneering online property purchase experience, supporting customers from property selection to payment. Furthermore, the Banco Santander launched a joint campaign with a large retailer to present an appealing offer for mortgage loans, at competitive terms. As a result, the number of simulations has doubled over the previous month. |
Agro
During the quarter, the Banco Santander participated in several industry fairs, including the biggest of them, Agrishow, where the Banco Santander put forward exclusive offers. In addition, the Banco Santander also continued to expand the agro-oriented stores, which saw the opening of another unit in the South region of Brazil. Thus, the Banco Santander now have a total of 24 stores in the country. Customer proximity is one of the factors that contributes to increasing the customer base and generating sustainable growth in the loan portfolio. In the issuance of agribusiness credit notes (“LCA”), the market share hit 9.2% (+2.7 p.p. YoY, Source: Brazilian Central Bank, as of May/19.).
Getnet
SuperGet’s offering, geared towards individuals and micro entrepreneurs, is already reflecting in a customer base increase, with 200 thousand new customers in the segment. This offer gives greater transparency to the customer relationships and puts in a competitive position to further expand the presence in this market niche. In the period, the Banco Santander launched split payments on Getnet’s digital platform, with the goal of improving payment management. The market share reached 11.5% (Source: ABECS - Acquirer Monitor, as of 1Q19, new criterion), while total revenue climbed by 11.2% YoY in 1S19.
SMEs
The Banco Santander announced a new service model with a differentiated offer for small entrepreneurs, Santander DUO, which unifies the individual and business accounts, putting it in the hands of just one manager with a single fee, including the 10-day interest-free benefit provided by Santander Master. Also, as a cross-sell opportunity, when opening a “MEI” (individual micro entrepreneur) account, the customer receives advantages in the acquisition of SuperGet. Themarket share in the loan portfolio came to 8.3% (+0.3 p.p. YoY, Source: Brazilian Central Bank, as of May/19.), leveraged by customer base growth and greater loyalty.
Strengthening leading businesses
Consumer Finance: the Banco Santander maintained the leadership in the sector, with a market share of 25.3% among individuals (+0.3 p.p. in twelve months, Source: Brazilian Central Bank, as of May/19. Market share in vehicles considering only individuals). This evolution is sustained by the innovative offers, partnerships and the quality of the commercial service.
Webmotors: the Cockpit tool allows the Banco Santander to be present throughout the value chain, potentiating the Webmotors, Consumer Finance and Bank offers. This quarter, the Banco Santander finished the implementation of this platform in 100% of the customer base, featuring CRM Smart as one of its functionalities, which is already enjoying good adherence among dealerships. It should be noted that this CRM brings the end customer closer, improving the possibility of sealing the deal, besides enabling after-sales management.
Santander Corporate & Investment Banking (SCIB)
Holds the leadership in:
Financial advisory for financing and concession auctions and finance structuring, according to ANBIMA (Financial Advisory - leadership since 2008, ANBIMA 2018).
Project Finance Advisory (MLA) in the Americas and Latam, according to Dealogic (Dealogic, as of 2018)
The FX market, according to the Brazilian Central Bank (Cumulative figures from January to June of 2019).
Innovation
My Pocket: a new functionality available in the Santander On in the Santander app, which helps customers better manage their financial lives, displaying monthly income and expenses by category. This is yet another initiative that reinforces the commitment to financial education and transparency with the customers.
New ventures
Ben, a company that operates in the benefits industry, continues to make strides in partnering with food merchants, now totaling 143,000 commercial establishments. In addition to that, the Banco Santander also underscore the volume of active cards, which exceeded 77,000 in June 2019.
Pi, the digital investment platform, continues to grow its product portfolio and currently offers around 180 fixed-income products. Moreover, this quarter the Banco Santander started distributing investment funds..
Customer loyalty
All the aforementioned initiatives contribute to improving theservice and experience. Customer recognition can be confirmed by the Net Promoter Score (NPS), which is already recording high levels: 59 points in this quarter, rising 8 points YoY.
The customer base keeps expanding at a solid pace, highlighted by the number of active customers, who have been growing for the last 49 consecutive months.
Sustainability
The Banco Santander are committed to eradicating the single-use plastic consumption by 2020. This quarter, the Bank initiated a gradual move to phase-out this material from its units, starting with administrative buildings.
Furthermore, the Bank took on the challenge of consuming renewable energy in 100% of its operations by 2025. This commitment will reach the service units throughout the country by the end of 2021 and all administrative buildings and data processing center by 2025.
Through the Prospera microcredit program, the Banco Santander have positioned ourselves as the market leader among private banks in this segment. The Banco Santander launched 47 PROSPERA units in the first half of the year, contributing to financial inclusion in the nation. In June 2019, its loan portfolio totaled R$ 929 million, advancing 83% YoY.
In Higher Education, considered an important lever for the customer base, besides the financial offer, the Banco Santander have a non-financial offer based on training, employment and entrepreneurship. The Banco Santander have awarded more than 15,100 scholarships in Brazil since 2015.
With the purpose of fostering financial education in the communities where the Banco Santander operate, the Banco Santander opened some branches on Saturdays during a six-week period to offer free financial guidance to the population.
5) Rating Agencies
Banco Santander is rated by international ratings agencies and the ratings assigned reflect many factors including management quality, operating performance and financial strength, as well as other factors related to the financial sector and economic environment in which the Bank is inserted, having the long-term foreign currency rating limited to the sovereign rating. The table below presents the ratings assigned by the rating agencies Standard & Poor's and Moody's:
1) Last updated May 31, 2019.
2) Last updated June 05, 2019.
6) Corporate Governance
The Board of Directors of Banco Santander has met and resolved:
On July 22, 2019, to approve the Individual and Consolidated Financial Statements of Banco Santander, prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen and the Interim Condensed Consolidated Financial Statements of Banco Santander, prepared in accordance with the International Financial Reporting Standards (IFRS), respect to the period ended June 30, 2019.
On June 28, 2019, to approve the proposal for declaration and payment of interest on equity, in the gross amount of R$1 billion, for payment as of July 31, 2019, without any indexation.
On May 3, 2019, elect the members of the Audit Committee, for a one-year term, which shall extend until the investiture of the elected persons at the first meeting of the Board of Directors being held after the 2020 Ordinary Shareholders Meeting, the members of the Risk and Compliance Committee, the Sustainability Committee, the Nominating and Governance Committee and the Remuneration Committee for a new term of office entering in force until the investiture of the elected persons at the first meeting of the Board of Directors being held after the 2021 Ordinary Shareholders Meeting.
On May 3, 2019, know the resignation of Mr. Marcelo Malanga, Officer without specific designation of Banco Santander; and to elect the members of the Executive Board of Banco Santander for a new term of office entering in force until the investiture of the elected persons at the first meeting of the Board of Directors being held after the 2021 Ordinary Shareholders Meeting.
On April 30, 2019, approve the Annual Internal Audit Report for the year 2018 in compliance with Resolution 4588 of the Bacen.
On April 30, 2019, to approve the Individual and Consolidated Financial Statements of Banco Santander, prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen and the Interim Condensed Consolidated Financial Statements of Banco Santander, prepared in accordance with the International Financial Reporting Standards (IFRS), respect to the period ended March 31, 2019.
On March 27, 2019, to approve the proposal for declaration and payment of interest on equity, in the gross amount of R$1 billion, for payment as of April 29, 2019, without any indexation.
Individual and Consolidated Financial Statements - June 30, 2019 9
On March 27, 2019, to acknowledge the resignation of Mr. Fernando Carvalho Botelho de Miranda to the position of Officer without specific designation, as well as to approve the appointment of the following member to be part of the Board of Officers, as Officers without specific designation: Mr. Daniel Fantoni Assa; Mrs. Elita Vechin Pastorelo Ariaz; Mr. Franco Luigi Fasoli; Mr. Jran Paulo Kambourakis and Mr. Roberto Alexandre Borges Fischetti.
On March 20, 2019, to approve the 20-F Form of Banco Santander referred to the fiscal year ended December 31, 2018.
On February 25, 2019, to approve the Consolidated Financial Statements of Banco Santander referred to the fiscal year ended December 31, 2018, prepared in accordance with the International Financial Reporting Standards (IFRS).
On January 29, 2019, to approve the Individual and Consolidated Financial Statements of Banco Santander, prepared in accordance with accounting practices adopted in Brazil, applicable to institutions authorized to operate by Bacen, respect to the fiscal year ended December 31, 2018.
7) Risk Management
On February 23, 2017, Bacen published CMN Resolution n° 4,557, which provides for the risk and capital management structure (GIRC) and entered into force 180 days from the date of its publication. The resolution highlights the need to implement an integrated risk and capital management framework, definition of integrated stress testing program and Risk Appetite Statement (RAS), constitution of Risk Committee and appointment of director for management and director of capital. Banco Santander is continuously and progressively developing necessary actions aiming at adherence to the resolution. We haven´t identified relevant impacts resulting from this standard up to the date of publication of this note.
For further information, see explanatory note nº 35 of this publication.
Structure of Capital Management
Banco Santander’s structure of capital management has a robust governance framework that supports the process related to this theme and establishes the attributions of each teams involved. Furthermore, there is a clear definition that should be adopted to effective capital management. More details can be consult in “Structure Capital and Risk Management”, available on Investor Relations website.
Internal Audit
Internal Audit reports directly to the Board of Directors, whose activities are supervised by the Audit Committee.
Internal Audit is a permanent function, independent of any other functions or units, whose objective is to provide the Management Body and the senior management with independent assurance on the quality and effectiveness of internal control, risk management (current or emerging) and governance processes and systems, thereby helping to protect the company’s value, solvency and reputation. The Internal Audit has quality certificate issued by the Institute of Internal Auditors (IIA).
In order to perform its duties and reduce coverage risks inherent to Banco Santander's activities, the Internal Audit area has internally developed tools that are updated when necessary. These include the risk matrix, used as a planning tool, prioritizing each unit’s risk level, considering, among others, its inherent risks, the last audit rating, level of compliance with recommendations and their size. The work programs, which describe the audit tests to be performed, are reviewed periodically.
The Audit Committee and the Board of Directors favorably reviewed and approved the work plan of the Internal Audit for the year 2019
In the first semester of 2019, internal control procedures and controls on the information systems of the selected units were evaluated according to the work plan for the year, considering the effectiveness of the design and its operation. The Internal Audit informed the Audit Committee and the Board of Directors about the conclusions of the works done during that period, according to its annual plan.
8) People
The people are an essential element in the Organization. After all, it is they who think, project, develop, interact and build what the Banco Santander wants to be. This is why we invest in each of the 48.912 employees here in Brazil.
For the development of these people, the Corporate Academy - Academia Santander, works for a strong, transversal culture, allowing everyone, online and in person, to improve what they already know and explore new possibilities.
The Banco Santander supports leaders and managers so they are close and available. This action is based on three pillars: Feedback, Open Chat and Personalized Recognition, making alignment among all through recurrent and frank conversations, career guidance and special moments to reward team growth.
The Banco Santander values a diverse environment, where each competence and each difference is valued. Example is the Affinity Group, created to promote diversity and inclusion of all based on 5 pillars: Women's Leadership; Racial Equity; Disabled people; Diversity of Formations, Experiences and Generations and the LGBT + pillar. Another good example is our Talent Show, which this year reaches its 2nd edition. In it, we open space to know the most different performances and to explore the universe of abilities that exist here, allowing interaction and fraternization between the colleagues.
The result of all these actions is the high rate of engagement, as evidenced by two surveys that we conducted annually and which brought us excellent indicators. One of them points out that at least 91% of employees say they want to stay here for a long time. The Banco Santander believes that this satisfaction reflects positively on the interactions with the Clients, generating greater linkage, sustainable growth and investments in the Company, which leads the Banco Snatnder to be the best bank for all stakeholders.
Individual and Consolidated Financial Statements - June 30, 2019 10
9) Sustainable Development
Santander Brasil's Sustainability strategy is based on three pillars: (i) efficient and strategic use of Natural Capital; (ii) Potential Development; and (iii) Resilient and Inclusive Economy. The Bank's vision of the future, through these pillars, is to support Brazilian society in its transformation to Brazil of the 21st Century, maintaining excellence and responsibility in internal management, with ethical values as the basis and technology at the service of people and Business.
Banco Santander remained for the 9th consecutive year in the B³ (ISE) Business Sustainability Index portfolio and in 2019 was recognized by the Diversity EXAME Guide as the company of the year and the financial institution with the best practices of inclusion and diversity of the national market. Still in 2019, it received an AA rating (on an AAA-CCC scale) in the MSCI ESG Ratings assessment.
In the second half, Banco Santander disbursed R$417.6 million in Socio-environmental Business, with Prospera Santander Microcredit generated around R$947 million in production (82% more than the same period in 2018).
Through Santander Universities, Santander awarded more than 660 study grants in the first half of the year, from the Santander University-Business Program, where it contributes with a scholarship of R$700 to help the student to pay tuition and/or related costs and own programs , carried out directly with the Universities.
The Friend of Value Program allows Banco Santander, as well as employees and customers, to direct part of the income tax directly to the Child and Adolescent Rights Funds. In 2018, this program raised funds totaling more than R$13 million, which were directed to 67 projects in Brazil.
Additionally, for six weeks, some agencies were opened on Saturdays to offer free financial guidance to the population.
The Bank assumed the goal of consuming renewable energy in 100% of its operations by the year 2025. The commitment will reach the service units throughout the country by the end of 2021 and all administrative buildings and data processing center until 2025.
Also launched was the Plastic Free project whose initial objective is to reduce the consumption of quick-use plastic (cups and bottles) in our administrative buildings and by 2020 to impact all agencies.
10) Independent Audit
Banco Santander's policy of including its subsidiaries in contracting services not related to the external audit of its independent auditors is based on Brazilian and international auditing standards that preserve the auditor's independence. This reasoning provides as follows: (i) the auditor should not audit his own work, (ii) the auditor should not perform managerial duties on his client, (iii) the auditor should not promote the interests of his client, and (iv) need for approval of any services by the Bank's Audit Committee.
In compliance with the Instruction of the Securities Commission 381/2003, Banco Santander informs that in the period ended June 30, 2019, PricewaterhouseCoopers did not provide services not related to the independent audit of the Financial Statements of Banco Santander and subsidiaries above 5% of total fees related to independent auditing services.
In addition, the Bank confirms that PricewaterhouseCoopers has procedures, policies and controls to ensure its independence, which include an evaluation of the work performed, covering any service that is not independent of the Financial Statements of Banco Santander and its subsidiaries. This evaluation is based on the applicable regulations and accepted principles that preserve the independence of the auditor. The acceptance and provision of professional services not related to the external audit in the period ended June 30, 2019 did not affect the independence and objectivity in conducting the external audits carried out in Banco Santander and other entities of the Group, since the above principles were observed.
The Board of Directors
The Executive
(Authorized at the Meeting of the Board of July 22, 2019).
Individual and Consolidated Financial Statements - June 30, 2019 11
(A free translation of the original in Portuguese)
www.pwc.com.br
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Banco Santander (Brasil) S.A. Parent company and consolidated
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BCOSANTANDER619RL-PAR.DOCX
Independent auditor's report
To the Board of Directors and Stockholders
Banco Santander (Brasil) S.A.
Opinion
We have audited the accompanying parent company financial statements of Banco Santander (Brasil) S.A. ("Bank"), which comprise the balance sheet as at June 30, 2019 and the income statements, statements of changes in stockholder’s equity and cash flows statements for the six-month period then ended, as well as the accompanying consolidated financial statements of Banco Santander (Brasil) S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated balance sheets as at June 30, 2019 and the consolidated income statements, statements of changes in stockholder’s equity and cash flows statements for the six-month period then ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the parent company and consolidated financial statements referred to above present fairly, in all material respects, the financial position of Banco Santander (Brasil) S.A. and of Banco Santander (Brasil) S.A. and its subsidiaries as at June 30, 2019, and the financial performance and the cash flows, as well as the consolidated financial performance and cash flows, for the six-month period then ended, in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by the Brazilian Central Bank (BACEN).
Basis for opinion
We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Parent Company and Consolidated Financial Statements section of our report. We are independent of the Bank and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current six-month period. These matters were addressed in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Our audit for the six-month period ended June 30, 2019 was planned and performed taking into consideration that the Bank and the Consolidated operations did not present significant changes compared to the prior year. In this context, the key audit matters and our audit approach remained mainly aligned with those of the prior year. |
Why it is a Key Audit Matter | How the matter was addressed in the audit |
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Allowance for loan losses (Note 3(i) and 8) |
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The estimation of the allowance for loan losses involves a high level of judgment by management. The establishment of the allowance for loan losses involves the assessment of several assumptions and internal and external factors, including default levels and guarantees of the portfolios, renegotiation policy, and the current and prospective economic scenarios. Accordingly, we focused again on this area in our audit.
This judgment considers several assumptions in the determination of the allowances. The allowance for loan losses is recorded in accordance with the regulatory requirements of the National Monetary Council (CMN) and the Brazilian Central Bank (BACEN), especially CMN Resolution 2,682, and is based on the analyses of outstanding receivables (overdue and not yet due), according to the internal policies that consider the establishment of credit ratings (risk classification). Likewise, it considers the expectation of realization of the loan portfolio, in addition to the requirement of current legislation, based on past experience, current scenario and future expectations, specific portfolio risks, and management's assessment of risks in the recording of the allowance. | We updated our understanding and tested the internal controls that are significant in the calculation and recognition of the allowance for loan losses, mainly including the following processes: (i) approval of the credit policy; (ii) credit analysis; (iii) credit granting and renegotiated transactions; (iv) attribution of rating considering the risk of the recoverable value of transactions; (v) processing and recording of provisions; (vi) reconciliation of accounting balances with the analytical position; and (vii) preparation of the notes to the financial statements.
We have also tested the integrity of the database used to calculate the allowance for loan losses, in addition to tests to verify the application of the calculation methodology for this allowance in relation to the ratings assigned, the assumptions consistency, as well as the comparison of the account balances with the analytical reports.
We consider that the criteria and assumptions that management adopted to determine and record the allowance for loan losses are consistent with those adopted in the prior year, and reasonable, in all material respects, in the context of the financial statements. |
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Recognition and recoverable value of tax credits (Notes 3(s), and 11) |
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The income tax and social contribution credits arising from temporary differences in the calculation bases of these taxes, as well as income tax and social contribution losses, are recognized in the books based on the expectation that future taxable profits will be available for their realization.
The expectation of tax credit realization is based on projections of future results that require judgment by management, including the use of assumptions.
Considering the subjectivity inherent to this process and the significance of the amounts involved, we focused again on this area in our audit. | We updated our understanding and tested the significant internal controls over the calculation of these tax credits, as well as the estimates of their recoverable value, in accordance with the applicable standards of CMN and BACEN.
We obtained an understanding and assessed the reasonableness of the critical assumptions included in financial projections and compared them with both external and internal data. We also performed tests regarding the mathematical accuracy of the amounts estimated. In addition, we compared the historical results projected with those actually obtained.
We performed tests to confirm the nature and amounts of the temporary differences and income tax and social contribution losses that could be deducted from the future tax bases with the assistance of our experts in the tax area.
We discussed with Management and the Audit Committee and confirmed the approval of the technical study that supports the realization of the tax credits by the appropriate management bodies.
We consider that the criteria and assumptions that management used to determine and record the aforementioned tax credits are reasonable, in all material respects, in the context of the financial statements. |
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Provisions for contingent liabilities |
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The Bank and its subsidiaries are parties in legal and administrative tax, labor, and civil proceedings arising from the normal course of their business.
In general, these proceedings are terminated after a long period and involve not only discussions on merits, but also complex procedural aspects, in accordance with applicable legislation.
The decision to recognize a contingent liability and the measurement bases require the judgment of the Bank's management, which is periodically reassessed, including when preparing the financial statements, and considering new events. In these circumstances, we focused again on this area in our audit. | We updated our understanding and we tested the relevant internal controls over the identification and recording of contingent liabilities (tax, civil, and labor) and the disclosures in accompanying notes, including, among others, the internal controls related to the calculation template used to account for the provisions for labor and civil contingencies that are carried out under the historical average loss criteria for actions that are considered as common and similar in nature.
We tested the application of the mathematical models of historical average loss calculation, when applicable, related to labor and civil contingencies. We also tested the ongoing proceedings at the base date of the financial statements.
We performed confirmation procedures with the law firms responsible for the most significant judicial and administrative proceedings to confirm the assessment of the prognosis, also considering the new events that occurred during the six-month period, the completeness of the information, and the correct amount of the provisions.
With the support of our experts, we assessed the reasonableness of the estimate of loss in the significant new proceedings taking into account its individual progress as well as similar decisions taken, when applicable.
We consider that the criteria and assumptions that management adopted to determine and record the provisions for contingent liabilities are consistent with those adopted in the prior year, and reasonable, in all material respects, in the context of the financial statements. |
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Post-employment benefit plans (Notes 3(n) and 34) |
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We focused again on this area in our audit because changes in assumptions may result in significant impacts on the obligations related to defined benefit plans. |
We updated our understanding of the methodologies of the effective plans and the corresponding amendments during the year as well as the methodologies and judgments used by management to determine the assumptions applied in the calculation of the obligations in comparison with market parameters and effective accounting practices.
We updated our understanding and tested the significant internal controls that involve the recording and measurement of liabilities arising from post-employment benefit plans. Among others, our tests considered the controls related to the completeness and adequacy of the databases, the existence and correct amount of the assets of the benefit plans, and the approval of assumptions considered in the actuarial calculations.
We confirmed the consistency of the most significant assumptions adopted in the actuarial calculations with those adopted in the last annual actuarial assessment and evaluated the reasonableness of the changes in assumptions made by management.
Also, on a sample basis, we tested the existence and the recalculation of the fair value of the plan assets.
We consider that the criteria and assumptions that management adopted to determine the provision for post-employment benefit plans are reasonable, in all material respects, in the context of the financial statements. |
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Measurement of the fair value of certain financial instruments and derivatives with low liquidity and without an active market (Notes 3(g), 3(h) and 6) |
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In our audit, we focused again on the measurement of the fair value of financial instruments with low liquidity and no active market due to its significance in the context of the financial statements and the involvement of a high level of judgment by management, since a portion of these instruments depend on valuation techniques carried out through internal models, which are based on certain assumptions for the valuation of instruments with low liquidity and without an active market and/or observable data. These financial instruments with low liquidity and no active market mostly comprise derivative contracts and investments in certain government and private securities. | We updated our understanding and tested the significant internal controls that involve the measurement, recognition, and disclosure of the fair value of financial instruments and derivatives.
With the assistance of our experts in the pricing of financial instruments, we updated our understanding of the pricing calculation methodologies, analyzed the reasonableness of the assumptions used by management to prepare pricing curves and internal models, and also verified the alignment of these assumptions and models with the practices adopted in the market.
We performed independent valuation tests of certain transactions, selected on sampling basis.
We consider that the criteria and assumptions adopted by management to measure the fair value of these financial instruments and derivatives are reasonable, taking into account market practices as well as effective accounting practices. |
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Information technology environment |
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The Bank has a business environment that is highly dependent on technology, requiring a complex infrastructure to support the high volume of transactions processed daily in its several systems.
The risks inherent to information technology, associated with deficiencies in processes and controls that support the processing of the technology systems, considering the legacy systems and existing technology environments, could result in the incorrect processing of critical information, including those used in the preparation of the financial statements. Therefore, we decided to focus again on this area in our audit. | With the assistance of our system experts, we updated our evaluation of the design and tested the operating effectiveness of the controls related to the management of the information technology environment, including the compensating controls established, when applicable.
The procedures carried out involved the combination of the control tests, and, when applicable, the testing of compensating controls, as well as the testing of the key processes related to information security, the development and maintenance of systems, and the operation of computers related to the infrastructure that supports the Bank's business.
As a result of this work, we considered that the technology environment processes and controls provided a reasonable basis to determine the nature, timing and extent of our audit procedures in relation to the financial statements. |
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Individual and Consolidated Financial Statements - June 30, 2019 13
Other matters
Statements of value added
The parent company and consolidated statements of value added for the six-month period ended June 30, 2019, prepared under the responsibility of the Bank's management and presented as supplementary information for purposes of the BACEN, were submitted to audit procedures executed in conjunction with the audit of the Bank's financial statements. The presentation of this statement is required by the Brazilian corporate legislation for listed companies. For the purposes of forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Added Value". In our opinion, these statements of value added have been properly prepared, in all material respects, in accordance with the criteria established in the Technical Pronouncement and are consistent with the financial statements taken as a whole.
Other information accompanying the parent company and consolidated financial statements and the auditor's report
The Bank's management is responsible for the other information that comprises the Management Report.
Our opinion on the parent company and consolidated financial statements does not cover the Management Report, and we do not express any form of audit conclusion thereon.
In connection with the audit of the parent company and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the parent company and consolidated financial statements
Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil applicable to institutions authorized to operate by BACEN, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the parent company and consolidated financial statements, management is responsible for assessing the ability of the Bank and its subsidiaries to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.
Individual and Consolidated Financial Statements - June 30, 2019 14
Those charged with governance are responsible for overseeing the financial reporting process of the Bank and its subsidiaries.
Auditor's responsibilities for the audit of the parent company and consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the parent company and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the parent company and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Bank and its subsidiaries.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Bank and its subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Bank and its subsidiaries to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether these parent company and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on these financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Individual and Consolidated Financial Statements - June 30, 2019 15
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current six-month period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
São Paulo, July 23, 2019
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Edison Arisa Pereira
Contador CRC 1SP127241/O-0
Individual and Consolidated Financial Statements - June 30, 2019 16
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
Bank | Consolidated | |||||||||
Notes | 06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||
Current Assets | 518,813,691 | 445,606,826 | 550,686,119 | 477,039,528 | ||||||
Cash | 4 | 13,239,305 | 11,517,424 | 13,335,575 | 11,884,321 | |||||
Interbank Investments | 5 | 69,807,408 | 76,505,416 | 38,449,315 | 52,907,091 | |||||
Money Market Investments | 31,406,536 | 40,289,675 | 31,406,536 | 40,289,675 | ||||||
Interbank Deposits | 34,731,387 | 26,634,375 | 3,372,744 | 3,035,406 | ||||||
Foreign Currency Investments | 3,669,485 | 9,581,366 | 3,670,035 | 9,582,010 | ||||||
Securities and Derivative Financial Instruments | 6 | 69,158,772 | 81,489,083 | 85,478,245 | 93,278,964 | |||||
Own Portfolio | 44,004,889 | 24,488,727 | 52,370,130 | 36,142,404 | ||||||
Subject to Repurchase Commitments | 17,124,075 | 48,501,138 | 12,107,476 | 38,079,816 | ||||||
Derivative Financial Instruments | 3,571,045 | 6,930,424 | 12,559,632 | 13,870,394 | ||||||
Deposited in the Central Bank | 7,150 | 6,421 | 7,150 | 64,301 | ||||||
Privatization Currencies | 542 | 740 | 542 | 740 | ||||||
Pledged in Guarantees |
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| 945,980 |
| 1,561,633 |
| 4,928,224 |
| 5,121,309 |
Securities Obtained from Commitments with Free Mover | 3,505,091 | - | 3,505,091 | - | ||||||
Interbank Accounts | 7 | 85,535,005 | 78,923,626 | 94,565,314 | 90,429,473 | |||||
Payments and Receipts Pending Settlement | 11,146,158 | 9,889,456 | 19,693,161 | 20,989,075 | ||||||
Restricted Deposits: | 74,364,025 | 68,999,075 | 74,857,621 | 69,421,123 | ||||||
Central Bank Deposits | 74,364,024 | 68,993,634 | 74,857,620 | 69,415,682 | ||||||
National Housing System (SFH) | 1 | 5,441 | 1 | 5,441 | ||||||
Interbank Transfers | 10,290 | 15,820 | - | - | ||||||
Correspondents | 14,532 | 19,275 | 14,532 | 19,275 | ||||||
Lending Operations | 8 | 97,534,660 | 82,728,461 | 124,677,485 | 107,122,473 | |||||
Public Sector | 3,361 | 4,415 | 3,361 | 4,415 | ||||||
Private Sector | 101,228,459 | 86,548,135 | 129,294,633 | 111,695,867 | ||||||
Lending Operations Assignment | - | - | - | 62,649 | ||||||
(Allowance for Loan Losses) | 8.f | (3,697,160) | (3,824,089) | (4,620,509) | (4,640,458) | |||||
Leasing Operations | 8 | - | - | 1,195,711 | 1,272,714 | |||||
Private Sector | - | - | 1,217,903 | 1,295,869 | ||||||
(Allowance for Lease Losses) | 8.f | - | - | (22,192) | (23,155) | |||||
Other Receivables | 181,978,876 | 112,994,832 | 191,030,082 | 118,125,389 | ||||||
Credits for Avals and Sureties Honored | 18,695 | 86,834 | 18,695 | 86,834 | ||||||
Foreign Exchange Portfolio | 9 | 123,175,872 | 62,449,630 | 123,175,872 | 62,449,630 | |||||
Income Receivable | 1,970,847 | 2,274,800 | 2,022,913 | 1,759,744 | ||||||
Trading Account | 10 | 1,220,239 | 482,476 | 4,695,651 | 1,001,741 | |||||
Deferred Taxes | 11 | 6,912,254 | 7,502,416 | 7,944,956 | 8,217,342 | |||||
Others | 12 | 49,104,992 | 40,788,308 | 53,661,974 | 45,268,830 | |||||
(Allowance for Other Receivables Losses) | 8.f | (424,023) | (589,632) | (489,979) | (658,732) | |||||
Other Assets | 1,559,665 | 1,447,984 | 1,954,392 | 2,019,103 | ||||||
Other Assets | 1,255,526 | 1,083,423 | 1,614,611 | 1,510,684 | ||||||
(Allowance for Valuation) | (163,652) | (291,296) | (337,921) | (343,451) | ||||||
Prepaid Expenses | 467,791 | 655,857 | 677,702 | 851,870 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 17
Bank | Consolidated | |||||||||
Notes | 06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||
Long-Term Assets | 254,878,614 | 250,616,119 | 273,031,889 | 251,260,807 | ||||||
Interbank Investments | 5 | 28,506,389 | 29,116,462 | 449,376 | 387,512 | |||||
Interbank Deposits | 28,506,389 | 29,116,462 | 449,376 | 387,512 | ||||||
Securities and Derivative Financial Instruments | 6 | 113,367,537 | 102,059,619 | 117,512,630 | 94,137,649 | |||||
Own Portfolio | 27,722,775 | 21,299,409 | 29,177,137 | 21,960,720 | ||||||
Subject to Repurchase Commitments | 58,263,216 | 62,928,628 | 58,263,216 | 52,552,759 | ||||||
Derivative Financial Instruments | 8,263,081 | 4,882,785 | 8,292,038 | 4,942,571 | ||||||
Deposited with the Central Bank | 2,032,805 | 1,879,096 | 2,032,805 | 1,879,096 | ||||||
Privatization Currencies | 597 | 999 | 597 | 999 | ||||||
Pledged in Guarantees | 15,990,371 | 9,937,412 | 18,652,145 | 11,670,214 | ||||||
Securities Obtained from Commitments with Free Mover | 1,094,692 | 1,131,290 | 1,094,692 | 1,131,290 | ||||||
Interbank Accounts | 7 | 284,206 | 265,764 | 284,206 | 265,764 | |||||
Restricted Deposits: | 284,206 | 265,764 | 284,206 | 265,764 | ||||||
National Housing System (SFH) | 284,206 | 265,764 | 284,206 | 265,764 | ||||||
Lending Operations | 8 | 80,883,784 | 85,102,661 | 115,404,157 | 114,672,423 | |||||
Public Sector | 833,743 | 290,587 | 833,743 | 290,587 | ||||||
Private Sector | 91,809,163 | 96,206,498 | 127,446,098 | 126,605,634 | ||||||
Lending Operations Related to Assignment | - | - | - | - | ||||||
(Allowance for Loan Losses) | 8.f | (11,759,122) | (11,394,424) | (12,875,684) | (12,223,798) | |||||
Leasing Operations | 8 | - | - | 1,426,130 | 1,258,624 | |||||
Public Sector | - | - | 269 | - | ||||||
Private Sector | - | - | 1,473,725 | 1,309,338 | ||||||
(Allowance for Lease Losses) | 8.f | - | - | (47,864) | (50,714) | |||||
Other Receivables | 31,480,651 | 33,549,966 | 37,496,375 | 39,903,564 | ||||||
Receivables for Guarantees Honored | 278,811 | 403,735 | 278,811 | 403,735 | ||||||
Foreign Exchange Portfolio | 9 | 918,631 | 3,486,161 | 918,631 | 3,486,161 | |||||
Income Receivable | 149,971 | 165,099 | 149,971 | 165,099 | ||||||
Deferred Taxes | 11 | 17,731,728 | 17,696,948 | 20,279,142 | 20,344,286 | |||||
Others | 12 | 12,722,623 | 12,199,301 | 16,304,694 | 16,003,485 | |||||
(Allowance for Other Receivables Losses) | 8.f | (321,113) | (401,278) | (434,874) | (499,202) | |||||
Other Assets | 356,047 | 521,647 | 459,015 | 635,271 | ||||||
Temporary Assets | 1,622 | 1,622 | 1,631 | 1,631 | ||||||
(Allowance for Losses) | (1,622) | (1,622) | (1,631) | (1,631) | ||||||
Prepaid Expenses | 356,047 | 521,647 | 459,015 | 635,271 | ||||||
Permanent Assets | 33,796,175 | 28,339,591 | 12,539,577 | 10,770,777 | ||||||
Investments | 24,241,819 | 19,388,047 | 352,079 | 298,697 | ||||||
Investments in Affiliates and Subsidiaries: | 14 | 24,221,052 | 19,367,222 | 331,301 | 277,837 | |||||
Domestic | 20,797,847 | 15,892,224 | 331,301 | 277,837 | ||||||
Foreign | 3,423,205 | 3,474,998 | - | - | ||||||
Other Investments | 45,064 | 45,351 | 50,286 | 50,964 | ||||||
(Allowance for Losses) | (24,297) | (24,526) | (29,508) | (30,104) | ||||||
Fixed Assets | 15 | 5,994,912 | 5,661,377 | 6,806,749 | 6,345,521 | |||||
Real Estate in Use | 2,466,848 | 2,490,789 | 2,752,408 | 2,691,175 | ||||||
Others Fixed Assets | 13,122,924 | 11,846,302 | 14,532,842 | 13,089,156 | ||||||
(Accumulated Depreciation) | (9,594,860) | (8,675,714) | (10,478,501) | (9,434,810) | ||||||
Intangible Assets | 16 | 3,559,444 | 3,290,167 | 5,380,749 | 4,126,559 | |||||
Goodwill | 26,419,016 | 26,419,016 | 29,106,874 | 27,899,414 | ||||||
Others Intangible Assets | 9,786,888 | 8,902,538 | 10,507,444 | 9,486,098 | ||||||
(Accumulated Amortization) | (32,646,460) | (32,031,387) | (34,233,569) | (33,258,953) | ||||||
Total Assets | 807,488,480 | 724,562,536 | 836,257,585 | 739,071,112 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 18
Bank | Consolidated | |||||||||
Notes | 06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||
Current Liabilities | 551,050,859 | 484,310,394 | 569,016,596 | 488,040,495 | ||||||
Deposits | 17.a | 206,675,660 | 181,626,788 | 203,970,799 | 178,365,269 | |||||
Demand Deposits | 20,702,993 | 17,280,179 | 20,521,469 | 17,369,253 | ||||||
Savings Deposits | 46,574,515 | 42,570,994 | 46,574,515 | 42,570,994 | ||||||
Interbank Deposits | 5,253,506 | 6,350,438 | 2,969,669 | 3,649,296 | ||||||
Time Deposits | 134,144,646 | 115,425,177 | 133,898,918 | 114,771,443 | ||||||
Other Deposits | - | - | 6,228 | 4,283 | ||||||
Money Market Funding | 17.b | 88,880,791 | 129,821,578 | 84,106,885 | 114,400,258 | |||||
Own Portfolio | 74,684,943 | 111,201,854 | 69,911,037 | 100,780,476 | ||||||
Third Parties | 7,001,131 | 17,274,900 | 7,001,131 | 12,274,957 | ||||||
Linked to Trading Portfolio Operations | 7,194,717 | 1,344,824 | 7,194,717 | 1,344,825 | ||||||
Funds from Acceptance and Issuance of Securities | 17.c | 45,145,066 | 34,301,909 | 47,345,049 | 36,018,745 | |||||
Exchange Acceptances | - | - | 671,678 | 596,685 | ||||||
Real Estate Credit Notes, Mortgage Notes, Credit and Similar Notes | 40,651,895 | 31,088,981 | 42,213,830 | 32,209,132 | ||||||
Securities Issued Abroad | 3,353,465 | 1,760,065 | 3,319,835 | 1,760,065 | ||||||
Funding by Structured Operations Certificates | 1,139,706 | 1,452,863 | 1,139,706 | 1,452,863 | ||||||
Interbank Accounts | 7 | 1,823,250 | 1,534,258 | 2,103,507 | 1,731,662 | |||||
Receipts and Payments Pending Settlement | 1,683,753 | 1,393,747 | 1,964,010 | 1,591,151 | ||||||
Interbank Transfers | - | - | - | - | ||||||
Correspondents | 139,497 | 140,511 | 139,497 | 140,511 | ||||||
Interbank Accounts | 3,173,039 | 2,854,073 | 3,173,039 | 2,854,073 | ||||||
Third-Party Funds in Transit | 3,169,302 | 2,852,944 | 3,169,302 | 2,852,944 | ||||||
Internal Transfers of Assets | 3,737 | 1,129 | 3,737 | 1,129 | ||||||
Borrowings | 17.e | 48,837,281 | 39,169,376 | 46,484,860 | 37,952,795 | |||||
Local Borrowings - Other Institutions | - | - | 44,314 | 43,670 | ||||||
Foreign Borrowings | 48,837,281 | 39,169,376 | 46,440,546 | 37,909,125 | ||||||
Domestic Onlendings - Official Institutions | 17.e | 3,810,009 | 2,397,258 | 3,810,009 | 2,397,258 | |||||
National Economic and Social Development Bank (BNDES) | 1,580,886 | 1,258,287 | 1,580,886 | 1,258,287 | ||||||
Federal Savings and Loan Bank (CEF) | 78,956 | 3,413 | 78,956 | 3,413 | ||||||
National Equipment Financing Authority (FINAME) | 1,909,385 | 976,144 | 1,909,385 | 976,144 | ||||||
Other Institutions | 240,782 | 159,414 | 240,782 | 159,414 | ||||||
Derivative Financial Instruments | 6 | 3,036,001 | 5,670,093 | 12,073,234 | 12,648,861 | |||||
Derivative Financial Instruments | 3,036,001 | 5,670,093 | 12,073,234 | 12,648,861 | ||||||
Other Payables | 149,669,762 | 86,935,061 | 165,949,214 | 101,671,574 | ||||||
Collected Taxes and Other | 1,678,307 | 1,421,840 | 1,707,877 | 1,447,734 | ||||||
Foreign Exchange Portfolio | 9 | 120,740,999 | 56,596,809 | 120,740,999 | 56,596,809 | |||||
Social and Statutory | 1,301,880 | 1,042,580 | 1,348,000 | 1,077,993 | ||||||
Tax and Social Security | 18 | 3,311,360 | 571,134 | 4,346,279 | 1,126,503 | |||||
Trading Account | 10 | 376,143 | 713,581 | 4,082,389 | 1,718,671 | |||||
Subordinated Debt | 19 | - | - | - | - | |||||
Debt Instruments Eligible to Compose Capital | 20 | 162,529 | 112,990 | 162,529 | 112,990 | |||||
Others | 21 | 22,098,544 | 26,476,127 | 33,561,141 | 39,590,874 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 19
Bank | Consolidated | |||||||||
Notes | 06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||
Long-Term Liabilities | 185,665,169 | 176,642,353 | 195,194,699,316 | 185,207,065 | ||||||
Deposits | 17.a | 65,334,855 | 65,323,760 | 64,284,720 | 63,388,817 | |||||
Interbank Deposits | 302,100 | 970,717 | 882,801 | 549,590 | ||||||
Time Deposits | 65,032,755 | 64,353,043 | 63,401,919 | 62,839,227 | ||||||
Money Market Funding | 17.b | 18,496,247 | 18,754,581 | 18,408,964 | 18,754,580 | |||||
Own Portfolio | 111,530 | 217,820 | 24,247 | 217,820 | ||||||
Linked to Trading Portfolio Operations | 18,384,717 | 18,536,761 | 18,384,717 | 18,536,760 | ||||||
Funds from Acceptance and Issuance of Securities | 17.c | 38,599,322 | 38,079,698 | 40,802,134 | 41,026,367 | |||||
Exchange Acceptances | - | - | 834,422 | 669,354 | ||||||
Real Estate Credit Notes, Mortgage Notes, Credit and Similar Notes | 32,905,217 | 33,961,052 | 35,014,834 | 36,238,367 | ||||||
Securities Issued Abroad | 3,803,891 | 3,318,964 | 3,062,664 | 3,318,964 | ||||||
Funding by Structured Operations Certificates | 1,890,214 | 799,682 | 1,890,214 | 799,682 | ||||||
Borrowings | 17.e | 1,993,319 | 8,529,028 | 2,019,525 | 8,606,232 | |||||
Local Borrowings - Other Institutions | - | - | 26,206 | 77,204 | ||||||
Foreign Borrowings | 1,993,319 | 8,529,028 | 1,993,319 | 8,529,028 | ||||||
Domestic Onlendings - Official Institutions | 17.e | 8,679,902 | 11,931,370 | 8,679,902 | 11,931,370 | |||||
National Economic and Social Development Bank (BNDES) | 5,301,244 | 6,557,987 | 5,301,244 | 6,557,987 | ||||||
Federal Savings and Loan Bank (CEF) | 73,013 | 81,508 | 73,013 | 81,508 | ||||||
National Equipment Financing Authority (FINAME) | 3,305,645 | 5,290,466 | 3,305,645 | 5,290,466 | ||||||
Other Institutions | - | 1,409 | - | 1,409 | ||||||
Derivative Financial Instruments | 6 | 10,406,503 | 5,064,745 | 10,711,907 | 5,144,288 | |||||
Derivative Financial Instruments | 10,406,503 | 5,064,745 | 10,711,907 | 5,144,288 | ||||||
Other Payables | 42,155,021 | 28,959,171 | 49,792,164 | 36,355,411 | ||||||
Foreign Exchange Portfolio | 9 | 761,304 | 2,256,051 | 761,304 | 2,256,051 | |||||
Tax and Social Security | 18 | 3,717,936 | 1,747,755 | 4,220,387 | 2,144,089 | |||||
Debt Instruments Eligible to Compose Capital | 20 | 9,510,516 | 9,722,041 | 9,510,516 | 9,722,041 | |||||
Others | 21 | 28,165,265 | 15,233,324 | 35,299,957 | 22,233,230 | |||||
Deferred Income | 232,650 | 291,144 | 279,781 | 422,983 | ||||||
Deferred Income | 232,650 | 291,144 | 279,781 | 422,983 | ||||||
Stockholders' Equity | 23 | 70,539,802 | 63,318,645 | 70,501,769 | 63,324,763 | |||||
Capital: | 57,000,000 | 57,000,000 | 57,000,000 | 57,000,000 | ||||||
Brazilian Residents | 4,808,186 | 4,808,186 | 4,808,186 | 4,808,186 | ||||||
Foreign Residents | 52,191,814 | 52,191,814 | 52,191,814 | 52,191,814 | ||||||
Capital Reserves | 109,479 | 95,122 | 111,035 | 97,696 | ||||||
Profit Reserves | 14,492,891 | 8,645,598 | 14,449,434 | 8,649,142 | ||||||
Adjustment to Fair Value | (447,760) | (2,065,184) | (443,892) | (2,065,184) | ||||||
Retained Earnings | - | - | - | - | ||||||
(-) Treasury Shares | (614,808) | (356,891) | (614,808) | (356,891) | ||||||
Non Controlling Interest | 23.f | - | - | 1,760,123 | 2,075,806 | |||||
Total Stockholders' Equity | 70,539,802 | 63,318,645 | 72,261,892 | 65,400,569 | ||||||
Total Liabilities | 807,488,480 | 724,562,536 | 836,257,585 | 739,071,112 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 20
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
Bank | Consolidated | ||||
Notes | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Income Related to Financial Operations | 34,007,282 | 36,018,824 | 38,580,561 | 39,604,937 | |
Loan Operations | 19,122,351 | 21,904,252 | 25,319,639 | 28,171,391 | |
Leasing Operations | - | - | 139,460 | 175,341 | |
Securities Transactions | 6.a | 13,125,385 | 15,016,557 | 11,532,740 | 12,423,693 |
Derivatives Transactions | (3,026,391) | (3,735,939) | (3,290,429) | (4,010,089) | |
Foreign Exchange Operations | 2,770,793 | 1,020,491 | 2,850,804 | 1,016,717 | |
Operations of Sale or Transfer of Financial Assets | - | 6,771 | - | 9,762 | |
Compulsory Deposits | 2,015,144 | 1,806,692 | 2,028,347 | 1,818,122 | |
Expenses on Financial Operations | (20,475,467) | (29,295,375) | (21,530,150) | (30,239,891) | |
Funding Operations Market | 17.d | (13,774,151) | (16,184,406) | (13,713,011) | (15,498,229) |
Borrowings and Onlendings Operations | (1,481,904) | (7,498,808) | (1,426,854) | (8,107,708) | |
Leasing Operations | - | (6) | - | - | |
Operations of Sale or Transfer of Financial Assets | (17,383) | (138,268) | (31,691) | (143,494) | |
Allowance for Loan Losses | 8.f | (5,202,029) | (5,473,887) | (6,358,594) | (6,490,460) |
Gross Income Related to Financial Operations | 13,531,815 | 6,723,449 | 17,050,411 | 9,365,046 | |
Other Operating Revenues (Expenses) | (3,389,366) | (2,618,242) | (5,671,040) | (4,462,946) | |
Banking Service Fees | 26 | 5,073,687 | 4,595,073 | 6,699,838 | 6,044,776 |
Income Related to Bank Charges | 26 | 2,169,623 | 1,996,314 | 2,483,927 | 2,364,049 |
Personnel Expenses | 27 | (3,285,744) | (3,366,665) | (3,705,827) | (3,694,757) |
Other Administrative Expenses | 28 | (4,987,157) | (4,486,726) | (5,862,686) | (5,216,345) |
Tax Expenses | 29 | (1,592,902) | (1,039,769) | (2,313,121) | (1,512,092) |
Investments in Affiliates and Subsidiaries | 14 | 1,609,047 | 1,288,129 | 21,720 | 8,999 |
Other Operating Revenues | 30 | 2,178,461 | 2,765,199 | 2,579,475 | 3,078,902 |
Other Operating Expenses | 31 | (4,554,381) | (4,369,797) | (5,574,366) | (5,536,478) |
Operating Income | 10,142,449 | 4,105,207 | 11,379,371 | 4,902,100 | |
Non-Operating Income | 32 | 14,596 | 20,995 | (111,382) | 27,276 |
Income Before Taxes on Income and Profit Sharing | 10,157,045 | 4,126,202 | 11,267,989 | 4,929,376 | |
Income Tax and Social Contribution | 33 | (2,443,720) | 2,505,015 | (3,336,392) | 1,936,078 |
Provision for Income Tax | (1,279,541) | (13,134) | (2,115,525) | (373,932) | |
Provision for Social Contribution Tax | (769,665) | 4,123 | (1,151,350) | (233,043) | |
Deferred Tax Credits | (394,514) | 2,514,026 | (69,517) | 2,543,053 | |
Profit Sharing | (841,678) | (839,779) | (925,262) | (900,141) | |
Non Controlling Interest | 23.f | - | - | (181,163) | (173,367) |
Net Income | 6,871,647 | 5,791,438 | 6,825,172 | 5,791,946 | |
Number of Shares (Thousands) | 23.a | 7,468,079 | 7,476,701 | ||
Net Income per Thousand Shares (R$) | 920.14 | 774.60 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 21
Profit Reserves | Adjustment to Fair Value | ||||||||||||||||||||
Reserve for | Others | ||||||||||||||||||||
Capital | Legal | Dividend | Own | Affiliates and | Adjustment | Retained | (-)Treasury | ||||||||||||||
Notes | Capital | Reserves | Reserve | Equalization | Position | Subsidiaries | to Fair Value | Earnings | Shares | Total | |||||||||||
Balances as of December 31, 2017 | 57,000,000 | 172,398 | 2,505,285 | 1,548,875 | 1,030,563 | 89,648 | (2,704,383) | - | (148,440) | 59,493,946 | |||||||||||
Employee Benefit Plans | - | - | - | - | - | - | 342,970 | - | - | 342,970 | |||||||||||
Treasury Shares | - | - | - | - | - | - | - | - | (208,426) | (208,426) | |||||||||||
Result of Treasury Shares | 23.d | - | (8,112) | - | - | - | - | - | - | - | (8,112) | ||||||||||
Reservations for Share - Based Payment | - | (69,164) | - | - | - | - | - | - | - | (69,164) | |||||||||||
Adjustment to Fair Value - Securities and Derivative Financial Instruments | - | - | - | - | (790,906) | (33,076) | - | - | - | (823,982) | |||||||||||
Net Income | - | - | - | - | - | - | - | 5,791,438 | - | 5,791,438 | |||||||||||
Allocations: | |||||||||||||||||||||
Legal Reserve | 24.c | - | - | 289,572 | - | - | - | - | (289,572) | - | - | ||||||||||
Dividends | 24.b | - | - | - | - | - | - | - | (600,000) | - | (600,000) | ||||||||||
Interest on Capital | 23.b | - | - | - | - | - | - | - | (600,000) | - | (600,000) | ||||||||||
Reserve for Dividend Equalization | 24.c | - | - | - | 4,301,866 | - | - | - | (4,301,866) | - | - | ||||||||||
Balances as of June 30, 2018 | 57,000,000 | 95,122 | 2,794,857 | 5,850,741 | 239,657 | 56,572 | (2,361,413) | - | (356,866) | 63,318,670 | |||||||||||
Changes in the Semester | - | (77,276) | 289,572 | 4,301,866 | (790,906) | (33,076) | 342,970 | - | (208,426) | 3,824,724 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 22
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
Profit Reserves | Adjustment to Fair Value | ||||||||||||||||||||
Reserve for | Others | ||||||||||||||||||||
Capital | Legal | Dividend | Own | Affiliates and | Adjustment | Retained | (-)Treasury | ||||||||||||||
Notes | Capital | Reserves | Reserve | Equalization | Position | Subsidiaries | to Fair Value | Earnings | 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 | - | - | - | - | - | - | (801,683) | - | - | (801,683) | |||||||||||
Treasury Shares | - | - | - | - | - | - | - | - | (151,848) | (151,848) | |||||||||||
Treasury Shares Result | 23.d | - | 3,898 | - | - | - | - | - | - | - | 3,898 | ||||||||||
Reservations for Share - Based Payment | - | (35,126) | - | - | - | - | - | - | - | (35,126) | |||||||||||
Adjustment to Fair Value - Securities and Derivative Financial Instruments | - | - | - | - | 1,445,346 | (20,843) | - | - | - | 1,424,503 | |||||||||||
Restructuring of Capital | - | - | - | - | - | - | - | - | (1,528) | (1,528) | |||||||||||
Net Income | - | - | - | - | - | - | - | 6,871,647 | - | 6,871,647 | |||||||||||
Allocations: | |||||||||||||||||||||
Interest on Capital | 23.b | - | - | - | - | - | - | - | (2,000,000) | - | (2,000,000) | ||||||||||
Others | - | - | - | - | - | - | - | 690 | - | 690 | |||||||||||
Balances as of June 30, 2019 | 57,000,000 | 109,479 | 3,457,187 | 11,035,704 | 3,331,318 | 93,648 | (3,872,726) | - | (614,808) | 70,539,802 | |||||||||||
Changes in the Period | - | (31,228) | 343,582 | 4,528,755 | 1,445,346 | (20,843) | (801,683) | - | (153,376) | 5,310,553 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 23
Profit Reserves | Adjustment to Fair Value | ||||||||||||
Reserve for | Others | Total | |||||||||||
Capital | Legal | Dividend | Own | Affiliates and | Adjustment | Retained | (-)Treasury | Stockholders' | Minority | Stockholders' | |||
Notes | Capital | Reserves | Reserve | Equalization | Position | Subsidiaries | to Fair Value | Earnings | Shares | Equity | Interest | Equity | |
Balances as of December 31, 2017 | 57,000,000 | 174,616 | 2,505,286 | 1,552,664 | 1,030,563 | 89,648 | (2,704,383) | - | (148,440) | 59,499,954 | 1,896,692 | 61,396,646 | |
Employee Benefit Plans | - | - | - | - | - | - | 342,970 | - | - | 342,970 | - | 342,970 | |
Treasury Shares | - | - | - | - | - | - | - | - | (208,426) | (208,426) | - | (208,426) | |
Result of Treasury Shares | - | (8,112) | - | - | - | - | - | - | - | (8,112) | - | (8,112) | |
Reservations for Share - Based Payment | - | (68,808) | - | - | - | - | - | - | - | (68,808) | - | (68,808) | |
Adjustment to Fair Value - Securities and Derivative Financial Instruments | - | - | - | - | (790,906) | (33,076) | - | - | - | (823,982) | - | (823,982) | |
Restructuring of Capital | - | - | - | - | - | - | - | - | (25) | (25) | - | (25) | |
Net Income | - | - | - | - | - | - | - | 5,791,946 | - | 5,791,946 | - | 5,791,946 | |
Allocations: | |||||||||||||
Legal Reserve | 23.c | - | - | 289,572 | - | - | - | - | (289,572) | - | - | - | - |
Dividends | 23.c | - | - | - | - | - | - | - | (600,000) | - | (600,000) | - | (600,000) |
Interest on Capital | 23.b | - | - | - | - | - | - | - | (600,000) | - | (600,000) | - | (600,000) |
Reserve for Dividend Equalization | 23.c | - | - | - | 4,301,620 | - | - | - | (4,302,374) | - | (754) | - | (754) |
Non Controlling Interest Results | 23.f | - | - | - | - | - | - | - | - | - | - | 173,367 | 173,367 |
Others | - | - | - | - | - | - | - | - | - | - | 5,747 | 5,747 | |
Balances as of June 30, 2018 | 57,000,000 | 97,696 | 2,794,858 | 5,854,284 | 239,657 | 56,572 | (2,361,413) | - | (356,891) | 63,324,763 | 2,075,806 | 65,400,569 | |
Changes in the Semester | - | (76,920) | 289,572 | 4,301,620 | (790,906) | (33,076) | 342,970 | - | (208,451) | 3,824,809 | 179,114 | 4,003,923 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 24
Profit Reserves | Adjustment to Fair Value | ||||||||||||
Reserve for | Others | Total | |||||||||||
Capital | Legal | Dividend | Own | Affiliates and | Adjustment | Retained | (-)Treasury | Stockholders' | Minority | Stockholders' | |||
Notes | Capital | Reserves | Reserve | Equalization | Position | Subsidiaries | to Fair Value | Earnings | Shares | Equity | Interest | 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 | 2,069,929 | 67,303,672 | |
Employee Benefit Plans | - | - | - | - | - | - | (801,683) | - | - | (801,683) | - | (801,683) | |
Treasury Shares | - | - | - | - | - | - | - | - | (151,848) | (151,848) | - | (151,848) | |
Result of Treasury Shares | - | 3,898 | - | - | - | - | - | - | - | 3,898 | - | 3,898 | |
Reservations for Share - Based Payment | - | (35,277) | - | - | - | - | - | - | - | (35,277) | - | (35,277) | |
Adjustment to Fair Value - Securities and Derivative Financial Instruments | - | - | - | - | 1,445,346 | (20,843) | - | - | - | 1,424,503 | - | 1,424,503 | |
Restructuring of Capital | - | - | - | - | - | - | - | - | (1,528) | (1,528) | - | (1,528) | |
Net Income | - | - | - | - | - | - | - | 6,825,174 | - | 6,825,174 | - | 6,825,174 | |
Allocations: | |||||||||||||
Legal Reserve | 23.c | - | - | 343,582 | - | - | - | - | (343,582) | - | - | - | - |
Dividends | 23.b | - | - | - | - | - | - | - | - | - | - | - | - |
Interest on Capital | 23.b | - | - | - | - | - | - | - | (2,000,000) | - | (2,000,000) | - | (2,000,000) |
Reserve for Dividend Equalization | 23.c | - | - | - | 4,528,755 | - | - | - | (4,528,755) | - | - | - | - |
Non Realized Gains | - | - | - | (46,244) | - | 3,868 | - | 46,481 | - | 4,105 | - | 4,105 | |
Non Controlling Interest Results | 23.f | - | - | - | - | - | - | - | - | - | - | 181,163 | 181,163 |
Others | - | - | - | - | - | - | - | 682 | - | 682 | (490,969) | (490,287) | |
Balances as of June 30, 2019 | 57,000,000 | 111,035 | 3,457,188 | 10,992,246 | 3,331,318 | 97,516 | (3,872,726) | - | (614,808) | 70,501,769 | 1,760,123 | 72,261,892 | |
Changes in the Semester | - | (31,379) | 343,582 | 4,482,511 | 1,445,346 | (16,975) | (801,683) | - | (153,376) | 5,268,026 | (309,806) | 4,958,220 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 25
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
Bank | Consolidated | ||||
Notes | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Operational Activities | |||||
Net Income | 6,871,647 | 5,791,438 | 6,825,172 | 5,791,946 | |
Adjustment to Net Income | 4,741,423 | 6,251,471 | 7,830,085 | 8,999,218 | |
Allowance for Loan Losses | 8.f | 5,202,029 | 5,473,887 | 6,358,594 | 6,490,460 |
Provision for Legal Proceedings and Administrative and Legal Obligations | 22.c | 885,513 | 773,041 | 989,409 | 825,148 |
Monetary Adjustment of Provision for Legal Proceedings and Administrative and Legal Obligations | 22.c | 249,482 | 506,602 | 304,253 | 594,396 |
Deferred Tax Credits and Liabilities | (67,736) | (2,100,252) | (329,233) | (2,133,740) | |
Equity in Affiliates and Subsidiaries | 14 | (1,609,047) | (1,288,129) | (21,720) | (8,999) |
Depreciation and Amortization | 28 | 1,078,880 | 981,025 | 1,351,054 | 1,242,880 |
Recognition (Reversal) Allowance for Other Assets Losses | 33 | 1,714 | 14,675 | 119,930 | 10,574 |
Gain (Loss) on Sale of Other Assets | 32 | (6,573) | (50,567) | (1,111) | (40,248) |
Gain (Loss) on Sale of Investments | 32 | - | - | (4,369) | (8,588) |
Provision for Financial Guarantees | 30 and 31 | (25,482) | (105,590) | (25,482) | (105,590) |
Monetary Adjustment of Escrow Deposits | 30 | (287,940) | (274,784) | (330,032) | (336,075) |
Recoverable Taxes | 30 | (34,525) | (87,996) | (52,685) | (113,559) |
Effects of Changes in Foreign Exchange Rates on Cash and Cash Equivalents | 7,952 | (1,068) | 7,952 | (1,068) | |
Effects of Changes in Foreign Exchange Rates on Assets and Liabilities | (704,062) | 2,119,334 | (704,062) | 2,119,334 | |
Others | 51,083 | (14,571) | 167,452 | 158,429 | |
Changes on Assets and Liabilities | (2,720,863) | (117,450) | (5,026,894) | (2,131,911) | |
Decrease (Increase) in Interbank Investments | 8,808,901 | (12,801,420) | 10,614,238 | (6,372,026) | |
Decrease (Increase) in Securities and Derivative Financial Instruments | (2,580,253) | 1,594,162 | (2,929,688) | (18,825,502) | |
Decrease (Increase) in Lending and Leasing Operations | (14,563,468) | (16,656,690) | (19,078,046) | (23,010,167) | |
Decrease (Increase) in Deposits on Central Bank of Brazil | (4,738,229) | (6,609,527) | (4,754,793) | (6,634,212) | |
Decrease (Increase) in Other Receivables | (18,111,539) | 5,530,407 | (21,752,667) | 4,496,772 | |
Decrease (Increase) in Other Assets | 166,065 | (309,069) | 158,640 | (328,535) | |
Net Change on Other Interbank and Interbranch Accounts | 244,404 | (3,043,239) | 3,874,250 | (1,510,354) | |
Increase (Decrease) in Deposits | 12,924,073 | 16,982,485 | 16,183,275 | 38,221,943 | |
Increase (Decrease) in Money Market Funding | (29,573,142) | 5,868,717 | (29,303,735) | 3,192,821 | |
Increase (Decrease) in Borrowings | 15,689,628 | 9,662,670 | 14,997,468 | 9,495,640 | |
Increase (Decrease) in Other Liabilities | 29,782,927 | 311,292 | 28,857,765 | 856,288 | |
Increase (Decrease) in Change in Deferred Income | (32,327) | (62,070) | (57,264) | (88,404) | |
Income Tax Recovered/(Paid) | (737,903) | (585,168) | (1,836,337) | (1,626,175) | |
Net Cash Provided by (Used in) Operational Activities | 8,892,207 | 11,925,459 | 9,628,363 | 12,659,253 | |
Investing Activities | |||||
Increase in Equity at Affiliates and Subsidiaries | 14 | (705,999) | (187,000) | - | - |
Purchase of Investment | - | (200) | - | (289) | |
Purchase of Fixed Assets | (670,106) | (487,211) | (943,473) | (599,330) | |
Purchase of Intangible Assets | (563,077) | (178,233) | (641,861) | (217,477) | |
Net Cash Received on Sale/Reduction of Investments | - | 1,405 | 4,800 | 10,305 | |
Acquisition of Minority Residual Interest in Subsidiary | 36.b | (1,291,630) | - | (1,291,630) | - |
Acquisition of Affiliates, less Net Cash in acquisition | 36.f | - | (111,224) | - | (111,224) |
Proceeds from Assets not in Use | 284,554 | 145,341 | 296,277 | 195,995 | |
Proceeds from Property for Own Use | 14,288 | 103,196 | 22,143 | 125,345 | |
Dividends and Interest on Capital Received | 1,136,676 | 592,885 | 52,807 | 63,269 | |
Net Cash Provided by (Used in) Investing Activities | (1,795,294) | (121,041) | (2,500,937) | (533,404) | |
Financing Activities | |||||
Purchase of Own Share | 23.d | (151,848) | (208,426) | (151,848) | (208,426) |
Issuance of Long - Term Emissions | 29,246,867 | 35,259,838 | 30,590,223 | 36,453,711 | |
Long - Term Payments | (26,234,584) | (40,764,759) | (27,402,237) | (41,643,656) | |
Subordinated Debts - Payments | (9,924,747) | (544,566) | (9,924,747) | (544,566) | |
Debt Instruments Eligible to Compose Capital - Payments | (328,892) | (318,659) | (328,892) | (318,659) | |
Dividends and Interest on Capital Paid | (5,188,878) | (4,935,666) | (5,317,302) | (5,012,880) | |
Increase (decrease) in Minority Interest | - | - | (277,510) | (138,588) | |
Capital Increase in Controlled Companies Held by Minority Interest | - | - | 100,000 | 98,000 | |
Net Cash Provided by (Used in) Financing Activities | (12,582,082) | (11,512,238) | (12,712,313) | (11,315,064) | |
Exchange Variation on Cash and Cash Equivalents | (7,952) | 1,068 | (7,952) | 1,068 | |
Increase (Decrease) in Cash and Cash Equivalents | (5,493,121) | 293,248 | (5,592,839) | 811,853 | |
Cash and Cash Equivalents at the Beginning of Period | 4 | 25,854,948 | 22,664,381 | 25,285,982 | 22,513,317 |
Cash and Cash Equivalents at the End of Period | 4 | 20,361,827 | 22,957,629 | 19,693,143 | 23,325,170 |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 26
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
Bank | Consolidated | |||||||||||||||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |||||||||||||
Notes | ||||||||||||||||
Income Related to Financial Operations | 34,007,282 | 36,018,824 | 38,580,561 | 39,604,937 | ||||||||||||
Income Related to Bank Charges and Banking Service Fees | 26 | 7,243,310 | 6,591,387 | 9,183,765 | 8,408,825 | |||||||||||
Allowance for Loans Losses | 8.f | (5,202,029) | (5,473,887) | (6,358,594) | (6,490,460) | |||||||||||
Other Revenues and Expenses | (2,361,324) | 1,236,287 | (3,106,273) | 418,617 | ||||||||||||
Financial Expenses | (15,273,438) | (23,821,488) | (15,171,556) | (23,749,431) | ||||||||||||
Third-party Input | (3,529,026) | (3,459,168) | (4,118,137) | (3,916,700) | ||||||||||||
Materials, Energy and Others | (129,815) | (118,909) | (134,506) | (122,442) | ||||||||||||
Third-Party Services | 28 | (964,954) | (888,511) | (1,206,162) | (1,096,786) | |||||||||||
Others | (2,434,257) | (2,145,884) | (2,777,469) | (2,391,608) | ||||||||||||
Gross Added Value | 14,884,775 | 11,091,955 | 19,009,766 | 14,275,788 | ||||||||||||
Retentions | ||||||||||||||||
Depreciation and Amortization | 28 | (1,078,880) | (981,025) | (1,351,054) | (1,242,880) | |||||||||||
Added Value Produced Net | 13,805,895 | 10,110,930 | 17,658,712 | 13,032,908 | ||||||||||||
Added Value Received from Transfer Investments in Affiliates and Subsidiaries | 14 | 1,609,047 | 1,288,129 | 21,720 | 8,999 | |||||||||||
Added Value to Distribute | 15,414,942 | 11,399,059 | 17,680,432 | 13,041,907 | ||||||||||||
Added Value Distribution | ||||||||||||||||
Employee | 3,792,723 | 24.6% | 3,742,291 | 32.8% | 4,227,308 | 23.9% | 4,073,895 | 31.2% | ||||||||
Compensation | 27 | 1,912,978 | 1,912,114 | 2,128,141 | 2,083,650 | |||||||||||
Benefits | 27 | 664,550 | 651,484 | 750,843 | 715,049 | |||||||||||
Government Severance Indemnity Funds for Employees - FGTS | 245,484 | 188,974 | 212,713 | 215,210 | ||||||||||||
Others | 969,711 | 989,719 | 1,135,611 | 1,059,986 | ||||||||||||
Taxes and Contributions | 4,371,321 | 28.4% | 1,512,933 | 13.3% | 6,053,294 | 34.2% | 2,640,070 | 20.2% | ||||||||
Federal | 4,031,373 | 1,164,081 | 5,432,736 | 2,189,432 | ||||||||||||
State | 258 | 432 | 299 | 473 | ||||||||||||
Municipal | 339,690 | 348,420 | 620,259 | 450,165 | ||||||||||||
Compensation of Third-Party Capital - Rental | 28 | 379,251 | 2.5% | 352,397 | 3.1% | 393,495 | 2.2% | 362,629 | 2.8% | |||||||
Remuneration of Interest on Capital | 6,871,647 | 44.6% | 5,791,438 | 50.7% | 7,006,335 | 39.6% | 5,965,313 | 45.7% | ||||||||
Dividends | 23.b | - | 600,000 | - | 600,000 | |||||||||||
Interest on Equity | 23.b | 2,000,000 | 600,000 | 2,000,000 | 600,000 | |||||||||||
Profit Reinvestment | 4,871,647 | 4,591,438 | 5,187,498 | 4,938,680 | ||||||||||||
Participation Results of Non-Controlling Stockholders | 23.f | - | - | (181,163) | (173,367) | |||||||||||
Total | 15,414,942 | 100.1% | 11,399,059 | 99.9% | 17,680,432 | 99.9% | 13,041,907 | 99.9% |
The accompanying notes from Management are an integral part of these financial statements.
Individual and Consolidated Financial Statements - June 30, 2019 27
(Free Translation into English from the Original Previously Issued in Portuguese). | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
NOTES TO THE FINANCIAL STATEMENTS | |
In thousands of Brazilian Real - R$, unless otherwise stated. |
1. General Information
Banco Santander (Brasil) S.A. (Banco Santander or Bank), directly and indirectly controlled by Banco Santander, S.A., headquartered in Spain (Banco Santander Spain), is the lead institution of the Financial and Prudential Conglomerates (Conglomerate Santander) towards the Central Bank of Brazil (Bacen), established as a joint-stock corporation, with head office at Avenida Presidente Juscelino Kubitschek, 2041 and 2235 - A Block - Vila Olímpia, in the City of São Paulo, State of São Paulo. Banco Santander operates as a multiple service bank, conducting its operations by means of its commercial, investment, loans and advances, mortgage loans, leasing and foreign exchange portfolios. Through its subsidiaries, also operates on the segments of payment industry, shares club management, securities and insurance brokerage operations, capitalization, consumer finance, payroll credit, digital platforms, management and recovery of non-performing loans and private pension. 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.
2. Presentation of Financial Statements
The 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. The consolidated financial statements include the Bank and its subsidiaries indicated in Note 14 and investment funds, 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.
All the relevant information related to Banco Santander's financial statements, and only them, are being evidenced, and correspond to those used by Banco Santander´s management.
Investment Funds Consolidated
· Santander Fundo de Investimento Amazonas Multimercado Crédito Privado de Investimento no Exterior (Santander FI Amazonas);
· Santander Fundo de Investimento Diamantina Multimercado Crédito Privado de Investimento no Exterior (Santander FI Diamantina);
· Santander Fundo de Investimento Guarujá Multimercado Crédito Privado de Investimento no Exterior (Santander FI Guarujá);
· Santander Fundo de Investimento Unix Multimercado Crédito Privado (Santander FI Unix);
· Santander Fundo de Investimento SBAC Referenciado DI Crédito Privado (Santander FI SBAC);
· Santander Paraty QIF PLC (Santander Paraty)(4);
· Venda de Veículos Fundo de Investimento em Direitos Creditórios (Venda de Veículos FIDC);(1)
· Fundo de Investimento em Direitos Creditórios RN Brasil - Financiamento de Veículos (FI RN Brasil - Financiamento de Veículos)(2);
· Prime 16 – Fundo de Investimento Imobiliário (current name of BRL V - Fundo de Investimento Imobiliário - FII (Fundo de Investimento Imobi)(3);
· Santander FI Hedge Strategies Fund (Santander FI Hedge Strategies)(4);
· Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema VI - Não Padronizado (Fundo Investimento Ipanema NPL VI)(5);
· Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema V - Não Padronizado (Fundo Investimento Ipanema NPL V)(6);
· Santander Hermes Multimercado Crédito Privado Infraestrutura Fundo de Investimentos(7); and
· Fundo de Investimento em Direitos Creditórios Atacado – Não Padrozinado(8).
(1) The carmaker Renault (not belonging to the Conglomerate Santander) sells its trade receivables to the Fund. This Fund buys only trade receivables from Renault carmaker. In turn, the Banco RCI Brasil S.A. (Note 14) owns 100% of its subordinated shares.
(2) Banco RCI Brasil S.A. sold receivables (CDC portfolio) to FI RN Brasil – Financiamento de Veículos.The senior shares will have only one investor. Banco RCI Brasil S.A. holds 100% of subordinated shares.
(3) Banco Santander figured as lender of certain delayed debts (loans) for which had real assets as guarantees. The process of credit recovery consists in converted into capital contributions by the Real Estate Fund in conjunction transfer of the same shares to Banco Santander through the process of payment in kind of the above credit operations payments.The Extraordinary General Meeting held on October 30, 2018 approved the change of the name of BRL V - Fundo de Investimento Imobiliário – FII to Prime 16 – Fundo de Investimento Imobiliário.
(4) Banco Santander, through its subsidiaries, holds the risks and benefits of Santander Paraty and the Santander FI Hedge Strategies Subfund, resident in Ireland, and both are fully consolidated in its Consolidated Financial Statements. In the Irish market, an investment fund can not act directly and, for that reason, it was necessary to create another structure (a sub-fund), Santander FI Hedge Strategies. Santander Paraty does not have a financial position, and all position is derived from the financial position of Santander FI Hedge Strategies.
Individual and Consolidated Financial Statements - June 30, 2019 28
(5) This investment fund was formed and started to be consolidated in September of 2017. It refers to a structure where the Bank has sold certain loans agreements which were already written-off (agreements matured over 360 days) and transferred to this fund. The Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. (Atual Securitizadora) (Note 14), company controlled by the Bank, holds 100% of the fund´s shares.
(6) This fund started to be consolidated in October 2017 and is indirectly controlled by Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. (Note 14).
(7) This fund started to be consolidated in November 2018 and is controlled by Banco Bandepe S.A. (Note 14).
(8) This fund started to be consolidated in June 2019 and is controlled by Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. (Note 14).
During the preparation of the consolidated financial statements the information regarding equity in subsidiaries, significant receivable and payable balances, revenues and expenses arising from transactions between domestic branches, foreign branches and subsidiaries, unrealized profits between these entities and non-controlling stockholders participation are stated separately in stockholders’ equity and in the income statements.
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, contingent liabilities, pension plan and the fair value of financial assets.
The Board of Directors authorized the issuance of the Financial Statements of the period ended June 30, 2019 at the meeting held on July 22, 2019.
The consolidatedcondensed interim financial statements based on international accounting standards issued by the International Accounting Standards Board (IASB) for the period ended on June 30, 2019 were disclosed simultaneously, at the website www.santander.com.br/ri.
3. 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.
Individual and Consolidated Financial Statements - June 30, 2019 29
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
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
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.
Individual and Consolidated Financial Statements - June 30, 2019 30
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.
h) Minimum Requirements in the Process of Financial Instruments Valuation (Securities and Derivatives Financial Instruments)
The CMN Resolution nº 4,277 of October 31, 2013 (required since June 30, 2015) provides the minimum requirements to be observed in the process of financial instruments valuation measured at market value and on the adoption of prudential adjustments by financial institutions. The financial instruments mentioned in the Resolution includes:
a) Securities classified as trading and available-for-sale, according to the Central Bank´s Circular 3,068 of November 8, 2001;
b) Derivatives Financial Instruments, according to the Central Bank Letter 3,082; of January 30, 2002; and
c) Other financial instruments at fair value, regardless of their classification in the trading portfolio, established in CMN nº 3,464 of June 26, 2007.
According to this resolution, the Bank has established procedures to assess the need for adjustments in the value of financial instruments mentioned above, observing the prudential, relevance and reliability criteria. This review includes, among other factors, the credit risk spread in the registration of the market value of these instruments.
i) Loan Portfolio and Allowance for Losses
The loan portfolio includes lending, leasing, advances on exchange contracts and other loans with credit characteristics. It is stated at present value, considering the indexes, interest rates and charges agreed, calculated on a daily pro rata basis through the end of the reporting period. The revenue recognition only occurs when it is actually received for lending operations past due over 60 days.
Normally, the Bank writes off loans losses when they are past due over 360 days. In the case of long-term credit operations (over 3 years) their losses are written off when they complete 540 days late. Credit operations written of as loss are recorded in a compensation account for a minimum of five years and while not exhausted all procedures for collection.
The financial assets involved in credit operations sold without risk retention are written off from the balance sheet, which are now kept in the compensation account. The results of these sales are fully recognized when they are realized.
Since January 2012, as required by CMN Resolution nº 3,533/2008 and Resolution nº 3,895/2010, all credit operations sold with substancial risk retention will have their results (profit or loss) recognized by the remaining terms of operations, and financial assets involved in these sales shall remain registered as loans and the amount received as obligations for sale operations or transfer of financial assets.
Allowances for loan losses are recognized based on the analysis of outstanding loans and advances (past-due and current), past experience, future expectations, specific portfolio risks, and Management´s risk assessment policy for recognizing allowances, as established by CMN Resolution nº 2,682/1999.
j) 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.
Individual and Consolidated Financial Statements - June 30, 2019 31
k) 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.
k.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.
l) Permanent Assets
They are stated at acquisition cost, are tested for impairment annually or more frequently if the conditions or circumstances indicate that assets may be impaired, and evaluated considering the following aspects:
l.1) 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.2) Fixed Assets
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.
l.3) 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.
m) 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:
Individual and Consolidated Financial Statements - June 30, 2019 32
· 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 yield rate of savings account - 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.
n) 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, 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 will cost more than expected.
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.
Individual and Consolidated Financial Statements - June 30, 2019 33
o) 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.
p) 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.
q) 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.
Individual and Consolidated Financial Statements - June 30, 2019 34
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.
r) 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.
s) 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.
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.
t) 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.
u) Impairment
The financial and non-financial assets are measured at the end of each exercise 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.
v) 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.
w) Non-Controlling Interest - Consolidated Stockholders' Equity
The non-controlling interests (minority interests) are reported and highlighted in a separate stockholders' equity of the parent.
x) 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.
y) 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.
Individual and Consolidated Financial Statements - June 30, 2019 35
Bank | ||||||
06/30/2019 | 12/31/2018 | 06/30/2018 | 12/31/2017 | |||
Cash | 13,239,305 | 11,358,459 | 11,517,424 | 11,148,561 | ||
Interbank Investments | 7,122,522 | 14,496,489 | 11,440,205 | 11,515,820 | ||
Money Market Investments | 2,254,019 | 4,925,769 | 976,909 | 603,408 | ||
Interbank Deposits | 1,199,018 | 1,702,653 | 881,930 | 1,498,280 | ||
Foreign Currency Investments | 3,669,485 | 7,868,067 | 9,581,366 | 9,414,132 | ||
Total | 20,361,827 | 25,854,948 | 22,957,629 | 22,664,381 | ||
Consolidated | ||||||
06/30/2019 | 12/31/2018 | 06/30/2018 | 12/31/2017 | |||
Cash | 13,335,575 | 11,629,112 | 11,884,321 | 11,234,369 | ||
Interbank Investments | 6,357,568 | 13,656,870 | 11,440,849 | 11,278,948 | ||
Money Market Investments | 2,254,019 | 4,925,769 | 976,909 | 673,426 | ||
Interbank Deposits | 433,514 | 862,449 | 881,930 | 1,190,802 | ||
Foreign Currency Investments | 3,670,035 | 7,868,652 | 9,582,010 | 9,414,720 | ||
Total | 19,693,143 | 25,285,982 | 23,325,170 | 22,513,317 |
Individual and Consolidated Financial Statements - June 30, 2019 36
5. Interbank Investments
Bank | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Up to | From 3 to | Over | ||||||||||
3 Months | 12 Months | 12 Months | Total | Total | ||||||||
Money Market Investments | 19,351,028 | 12,055,508 | - | 31,406,536 | 40,289,675 | |||||||
Own Portfolio | 3,757,372 | 1,409,272 | - | 5,166,644 | 2,979,416 | |||||||
Financial Treasury Bills - LFT | 1,800,286 | - | - | 1,800,286 | 142,390 | |||||||
National Treasury Bills - LTN | 1,956,879 | 258,825 | - | 2,215,704 | 670 | |||||||
National Treasury Notes - NTN | 207 | 1,150,447 | - | 1,150,654 | 2,836,356 | |||||||
Third-party Portfolio | 2,217,093 | 4,728,399 | - | 6,945,492 | 17,965,790 | |||||||
National Treasury Bills - LTN | 7,278 | 95,510 | - | 102,788 | 5,633,398 | |||||||
National Treasury Notes - NTN | 2,209,815 | 4,632,889 | - | 6,842,704 | 12,332,392 | |||||||
Sold Position | 13,376,563 | 5,917,837 | - | 19,294,400 | 19,344,469 | |||||||
National Treasury Bills - LTN | 3,655,564 | 269,648 | - | 3,925,212 | 3,581,192 | |||||||
National Treasury Notes - NTN | 9,720,999 | 5,648,189 | - | 15,369,188 | 15,763,277 | |||||||
Interbank Deposits | 11,441,361 | 23,290,026 | 28,506,389 | 63,237,776 | 55,750,837 | |||||||
Foreign Currency Investments | 3,669,485 | - | - | 3,669,485 | 9,581,366 | |||||||
Total | 34,461,874 | 35,345,534 | 28,506,389 | 98,313,797 | 105,621,878 |
Consolidated | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Up to | From 3 to | Over | ||||||||||
3 Months | 12 Months | 12 Months | Total | Total | ||||||||
Money Market Investments | 19,351,028 | 12,055,508 | - | 31,406,536 | 40,289,675 | |||||||
Own Portfolio | 3,757,372 | 1,409,272 | - | 5,166,644 | 7,979,359 | |||||||
Financial Treasury Bills - LFT | 1,800,286 | - | - | 1,800,286 | 142,390 | |||||||
National Treasury Bills - LTN | 1,956,879 | 258,825 | - | 2,215,704 | 2,935,983 | |||||||
National Treasury Notes - NTN | 207 | 1,150,447 | - | 1,150,654 | 4,900,986 | |||||||
Third-party Portfolio | 2,217,093 | 4,728,399 | - | 6,945,492 | 12,965,847 | |||||||
National Treasury Bills - LTN | 7,278 | 95,510 | - | 102,788 | 2,698,084 | |||||||
National Treasury Notes - NTN | 2,209,815 | 4,632,889 | - | 6,842,704 | 10,267,763 | |||||||
Sold Position | 13,376,563 | 5,917,837 | - | 19,294,400 | 19,344,469 | |||||||
National Treasury Bills - LTN | 3,655,564 | 269,647 | - | 3,925,211 | 3,581,192 | |||||||
National Treasury Notes - NTN | 9,720,999 | 5,648,190 | - | 15,369,189 | 15,763,277 | |||||||
Interbank Deposits | 1,931,878 | 1,440,866 | 449,376 | 3,822,120 | 3,422,918 | |||||||
Foreign Currency Investments | 3,670,035 | - | - | 3,670,035 | 9,582,010 | |||||||
Total | 24,952,941 | 13,496,374 | 449,376 | 38,898,691 | 53,294,603 |
6. Securities and Derivatives Financial Instruments
a) Securities
I) By Category
Bank | ||||||
06/30/2019 | 06/30/2018 | |||||
Amortized | Effect of Adjustment to | Carrying | Carrying | |||
Cost | Income | Equity | Amount | Amount | ||
Trading Securities | 36,099,563 | 769,020 | - | 36,868,583 | 33,295,117 | |
Government Securities | 34,729,427 | 710,569 | - | 35,439,996 | 32,523,860 | |
Private Securities | 1,370,136 | 58,451 | - | 1,428,587 | 771,257 | |
Available-for-Sale Securities | 116,862,993 | 2,613,933 | 3,625,557 | 123,102,483 | 127,213,630 | |
Government Securities | 93,076,731 | 2,549,638 | 3,912,558 | 99,538,927 | 94,877,696 | |
Private Securities | 23,786,262 | 64,295 | (287,001) | 23,563,556 | 32,335,934 | |
Held-to-Maturity Securities | 10,721,117 | - | - | 10,721,117 | 11,226,746 | |
Government Securities | 10,721,117 | - | - | 10,721,117 | 11,226,746 | |
Total Securities | 163,683,673 | 3,382,953 | 3,625,557 | 170,692,183 | 171,735,493 |
Individual and Consolidated Financial Statements - June 30, 2019 37
Consolidated | ||||||
06/30/2019 | 06/30/2018 | |||||
Amortized | Effect of Adjustment to | Carrying | Carrying | |||
Cost | Income | Equity | Amount | Amount | ||
Trading Securities | 40,842,986 | 816,255 | - | 41,659,241 | 38,670,750 | |
Government Securities | 38,928,790 | 757,936 | - | 39,686,726 | 37,248,781 | |
Private Securities | 1,914,196 | 58,319 | - | 1,972,515 | 1,421,969 | |
Available-for-Sale Securities | 123,459,195 | 2,613,933 | 3,685,719 | 129,758,847 | 118,706,152 | |
Government Securities | 99,626,721 | 2,549,638 | 3,972,622 | 106,148,981 | 98,914,751 | |
Private Securities | 23,832,474 | 64,295 | (286,903) | 23,609,866 | 19,791,401 | |
Held-to-Maturity Securities | 10,721,117 | - | - | 10,721,117 | 11,226,746 | |
Government Securities | 10,721,117 | - | - | 10,721,117 | 11,226,746 | |
Total Securities | 175,023,298 | 3,430,188 | 3,685,719 | 182,139,205 | 168,603,648 |
II) Trading Securities
Bank | Consolidated | ||||||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||||||||||
Adjustment | Adjustment | ||||||||||||||||
Amortized | to Fair Value - | Carrying | Carrying | Amortized | to Fair Value - | Carrying | Carrying | ||||||||||
Trading Securities | Cost | Income | Amount | Amount | Cost | Income | Amount | Amount | |||||||||
Government Securities | 34,729,427 | 710,569 | 35,439,996 | 32,523,860 | 38,928,790 | 757,936 | 39,686,726 | 37,248,781 | |||||||||
Financial Treasury Bills - LFT (2) | 887,057 | 181 | 887,238 | 2,213,779 | 3,194,932 | 2,049 | 3,196,981 | 5,361,292 | |||||||||
National Treasury Bills - LTN | 15,629,001 | 102,435 | 15,731,436 | 5,294,189 | 15,629,001 | 102,435 | 15,731,436 | 5,294,189 | |||||||||
National Treasury Notes - NTN (3) | 17,875,432 | 597,728 | 18,473,160 | 24,830,479 | 19,766,920 | 643,227 | 20,410,147 | 26,407,887 | |||||||||
Agricultural Debt Securities - TDA | 108,297 | 4,409 | 112,706 | 147,191 | 108,297 | 4,409 | 112,706 | 147,191 | |||||||||
Brazilian Foreign Debt Notes | 229,640 | 5,816 | 235,456 | 38,222 | 229,640 | 5,816 | 235,456 | 38,222 | |||||||||
Private Securities | 1,370,136 | 58,451 | 1,428,587 | 771,257 | 1,914,196 | 58,319 | 1,972,515 | 1,421,969 | |||||||||
Shares | 1 | (1) | - | 168 | 142,404 | (1) | 142,403 | 473,869 | |||||||||
Investment Fund Shares | 692,562 | 45,633 | 738,195 | - | 1,054,289 | 45,501 | 1,099,790 | 176,405 | |||||||||
Investment Fund Real Estate | - | - | - | - | 28,167 | - | 28,167 | 606 | |||||||||
Debentures (1) | 596,071 | 12,067 | 608,138 | 385,606 | 596,071 | 12,067 | 608,138 | 385,606 | |||||||||
Eurobonds | - | - | - | 152,819 | - | - | - | 152,819 | |||||||||
Certificates of Real Estate Receivables - CRI | 15,982 | 17 | 15,999 | 26,284 | 15,982 | 17 | 15,999 | 26,284 | |||||||||
Certificates of Agribusiness Receivables - CRA | 56,336 | 736 | 57,072 | 123,288 | 56,336 | 736 | 57,072 | 123,288 | |||||||||
Financial Bills | 9,184 | (1) | 9,183 | 28,408 | 10,813 | (1) | 10,812 | 28,408 | |||||||||
Bills of Exchange | - | - | - | - | 10,134 | - | 10,134 | - | |||||||||
Promissory Notes | - | - | - | 54,684 | - | - | - | 54,684 | |||||||||
Total | 36,099,563 | 769,020 | 36,868,583 | 33,295,117 | 40,842,986 | 816,255 | 41,659,241 | 38,670,750 | |||||||||
Bank | |||||||||||||||||
06/30/2019 | |||||||||||||||||
Trading Securities | Without | Up to | From 3 to | From 1 to | Over | ||||||||||||
by Maturity | Maturity | 3 Months | 12 Months | 3 Years | 3 Years | Total | |||||||||||
Government Securities | - | 3,204,616 | 3,424,671 | 9,154,413 | 19,656,296 | 35,439,996 | |||||||||||
Financial Treasury Bills - LFT | - | - | 89,345 | 223,674 | 574,219 | 887,238 | |||||||||||
National Treasury Bills - LTN | - | 2,930,385 | 3,234,469 | 5,136,563 | 4,430,019 | 15,731,436 | |||||||||||
National Treasury Notes - NTN (3) | - | 257,378 | 54,416 | 3,530,221 | 14,631,145 | 18,473,160 | |||||||||||
Agricultural Debt Securities - TDA | - | 16,853 | 46,441 | 28,930 | 20,482 | 112,706 | |||||||||||
Brazilian Foreign Debt Securities | - | - | - | 235,025 | 431 | 235,456 | |||||||||||
Private Securities | 738,195 | 2,096 | 5,779 | 14,956 | 667,561 | 1,428,587 | |||||||||||
Investment Fund Shares | 738,195 | - | - | - | - | 738,195 | |||||||||||
Certificates of Real Estate Receivables - CRI | - | 243 | - | 200 | 15,556 | 15,999 | |||||||||||
Financial Bills | - | - | - | 2,041 | 7,142 | 9,183 | |||||||||||
Debentures (1) | - | 1,853 | 5,617 | 7,399 | 593,269 | 608,138 | |||||||||||
Certificates of Agribusiness Receivables - CRA | - | - | 162 | 5,316 | 51,594 | 57,072 | |||||||||||
Total | 738,195 | 3,206,712 | 3,430,450 | 9,169,369 | 20,323,857 | 36,868,583 |
Individual and Consolidated Financial Statements - June 30, 2019 38
Consolidated | |||||||||||||||||
06/30/2019 | |||||||||||||||||
Trading Securities | Without | Up to | From 3 to | From 1 to | Over | ||||||||||||
by Maturity | Maturity | 3 Months | 12 Months | 3 Years | 3 Years | Total | |||||||||||
Government Securities | - | 3,204,616 | 3,842,282 | 10,384,596 | 22,255,232 | 39,686,726 | |||||||||||
Financial Treasury Bills - LFT (2) | - | - | 506,956 | 1,251,008 | 1,439,017 | 3,196,981 | |||||||||||
National Treasury Bills - LTN | - | 2,930,385 | 3,234,469 | 5,136,563 | 4,430,019 | 15,731,436 | |||||||||||
National Treasury Notes - NTN (3) | - | 257,378 | 54,416 | 3,733,070 | 16,365,283 | 20,410,147 | |||||||||||
Agricultural Debt Securities - TDA | - | 16,853 | 46,441 | 28,930 | 20,482 | 112,706 | |||||||||||
Brazilian Foreign Debt Notes | - | - | - | 235,025 | 431 | 235,456 | |||||||||||
Private Securities | 1,270,360 | 2,096 | 15,913 | 16,585 | 667,561 | 1,972,515 | |||||||||||
Shares | 142,403 | - | - | - | - | 142,403 | |||||||||||
Investment Fund Real Estate | 28,167 | - | - | - | - | 28,167 | |||||||||||
Investment Fund Shares | 1,099,790 | - | - | - | - | 1,099,790 | |||||||||||
Debentures (1) | - | 1,853 | 5,617 | 7,399 | 593,269 | 608,138 | |||||||||||
Certificates of Agribusiness Receivables - CRA | - | - | 162 | 5,316 | 51,594 | 57,072 | |||||||||||
Certificates of Real Estate Receivables - CRI | - | 243 | - | 200 | 15,556 | 15,999 | |||||||||||
Financial Bills | - | - | - | 3,670 | 7,142 | 10,812 | |||||||||||
Bills of Exchange | - | - | 10,134 | - | - | 10,134 | |||||||||||
Total | 1,270,360 | 3,206,712 | 3,858,195 | 10,401,181 | 22,922,793 | 41,659,241 |
III) Available-for-Sale Securities
Bank | |||||||||||||||||
06/30/2019 | 06/30/2018 | ||||||||||||||||
Amortized | Fair Value on: | Carrying | Carrying | ||||||||||||||
Available-for-Sale Securities | Cost | Income | Equity | Amount | Amount | ||||||||||||
Government Securities | 93,076,731 | 2,549,638 | 3,912,558 | 99,538,927 | 94,877,696 | ||||||||||||
Treasury Certificates - CFT | 891 | - | 204 | 1,095 | 933 | ||||||||||||
Securitized Credit | 1,048 | - | 91 | 1,139 | 1,738 | ||||||||||||
Financial Treasury Bills - LFT | 10,840,620 | - | 5,660 | 10,846,280 | 9,098,873 | ||||||||||||
National Treasury Bills - LTN | 29,147,345 | 710,107 | 179,041 | 30,036,493 | 41,894,892 | ||||||||||||
National Treasury Notes - NTN (3) | 38,908,028 | 1,839,531 | 3,702,852 | 44,450,411 | 31,316,008 | ||||||||||||
Mexican Foreign Debt Bonds | 1,938,471 | - | 57,433 | 1,995,904 | 1,898,423 | ||||||||||||
Brasilian Foreign Debt Bonds (Global Bonds) | 459,710 | - | (11) | 459,699 | 817,829 | ||||||||||||
Spanish Foreign Debt Bonds | 11,780,618 | - | (32,712) | 11,747,906 | 9,849,000 | ||||||||||||
Private Securities | 23,786,262 | 64,295 | (287,001) | 23,563,556 | 32,335,934 | ||||||||||||
Shares | 320 | - | (266) | 54 | 42,508 | ||||||||||||
Investment Fund Shares in Participation - FIP | 23,056 | - | - | 23,056 | 29,307 | ||||||||||||
Investment Fund Shares | 984,287 | - | - | 984,287 | 857,189 | ||||||||||||
Investment Fund Real Estate | 343,124 | - | - | 343,124 | 417,180 | ||||||||||||
Debentures (1) | 10,082,753 | 64,295 | (485,424) | 9,661,624 | 21,068,658 | ||||||||||||
Eurobonds | 2,334,590 | - | 49,255 | 2,383,845 | - | ||||||||||||
Promissory Notes - NP | 4,249,589 | - | 35,703 | 4,285,292 | 7,197,953 | ||||||||||||
Financial Bills - LF | 242,345 | - | 1,368 | 243,713 | 103,348 | ||||||||||||
Certificates of Real Estate Receivables - CRI | 127,200 | - | (13,579) | 113,621 | 181,707 | ||||||||||||
Rural Product Note - CPR | 5,398,998 | - | 125,942 | 5,524,940 | 2,438,084 | ||||||||||||
Total | 116,862,993 | 2,613,933 | 3,625,557 | 123,102,483 | 127,213,630 | ||||||||||||
Consolidated | |||||||||||||||||
06/30/2019 | 06/30/2018 | ||||||||||||||||
Amortized | Fair Value on: | Carrying | Carrying | ||||||||||||||
Available-for-Sale Securities | Cost | Income | Equity | Amount | Amount | ||||||||||||
Government Securities | 99,626,721 | 2,549,638 | 3,972,622 | 106,148,981 | 98,914,751 | ||||||||||||
Treasury Certificates - CFT | 891 | - | 204 | 1,095 | 933 | ||||||||||||
Securitized Credit | 1,048 | - | 91 | 1,139 | 1,738 | ||||||||||||
Financial Treasury Bills - LFT (2) | 15,313,121 | - | 4,675 | 15,317,796 | 9,718,112 | ||||||||||||
National Treasury Bills - LTN | 29,147,345 | 710,107 | 179,041 | 30,036,493 | 43,282,085 | ||||||||||||
National Treasury Notes - NTN (3) | 40,985,517 | 1,839,531 | 3,763,901 | 46,588,949 | 33,346,631 | ||||||||||||
Mexican Foreign Debt Bonds | 1,938,471 | - | 57,433 | 1,995,904 | 1,898,423 | ||||||||||||
Brasilian Foreign Debt Bonds (Global Bonds) | 459,710 | - | (11) | 459,699 | 817,829 | ||||||||||||
Spanish Foreign Debt Bonds | 11,780,618 | - | (32,712) | 11,747,906 | 9,849,000 | ||||||||||||
Private Securities | 23,832,474 | 64,295 | (286,903) | 23,609,866 | 19,791,401 | ||||||||||||
Shares | 76,529 | - | (266) | 76,263 | 47,856 | ||||||||||||
Investment Fund Shares in Participation - FIP | 23,056 | - | - | 23,056 | 29,307 | ||||||||||||
Investment Fund Shares | 258,259 | - | - | 258,259 | 86,839 | ||||||||||||
Investment Fund Real Estate | 65,685 | - | 98 | 65,783 | 59,523 | ||||||||||||
Debentures (1) | 11,056,223 | 64,295 | (485,424) | 10,635,094 | 9,646,738 | ||||||||||||
Eurobonds | 2,334,590 | - | 49,255 | 2,383,845 | - | ||||||||||||
Promissory Notes - NP | 4,249,589 | - | 35,703 | 4,285,292 | 7,197,953 | ||||||||||||
Foreign Exchange Bills - LC | - | - | - | - | - | ||||||||||||
Financial Bills - LF | 242,345 | - | 1,368 | 243,713 | 103,348 | ||||||||||||
Certificates of Real Estate Receivables - CRI | 127,200 | - | (13,579) | 113,621 | 181,707 | ||||||||||||
Certificates of Time Deposits - CDB | - | - | - | - | 46 | ||||||||||||
Rural Product Note - CPR | 5,398,998 | - | 125,942 | 5,524,940 | 2,438,084 | ||||||||||||
Total | 123,459,195 | 2,613,933 | 3,685,719 | 129,758,847 | 118,706,152 |
Individual and Consolidated Financial Statements - June 30, 2019 39
Bank | |||||||||||||||||
06/30/2019 | |||||||||||||||||
Available-for-Sale Securities | Without | Up to | From 3 to | From 1 to | Over | ||||||||||||
by Maturity | Maturity | 3 Months | 12 Months | 3 Years | 3 Years | Total | |||||||||||
Government Securities | - | 1,734,448 | 18,265,626 | 27,531,609 | 52,007,244 | 99,538,927 | |||||||||||
Treasury Certificates - CFT | - | - | - | 1,095 | - | 1,095 | |||||||||||
Securitized Credit | - | 188 | 354 | 597 | - | 1,139 | |||||||||||
Financial Treasury Bills - LFT | - | - | - | 3,038,951 | 7,807,329 | 10,846,280 | |||||||||||
National Treasury Bills - LTN | - | - | 4,511,703 | 21,751,520 | 3,773,270 | 30,036,493 | |||||||||||
National Treasury Notes - NTN (3) | - | 1,274,561 | 9,759 | 2,739,446 | 40,426,645 | 44,450,411 | |||||||||||
Mexican Foreign Debt Bonds | - | - | 1,995,904 | - | - | 1,995,904 | |||||||||||
Brasilian Foreign Debt Bonds (Global Bonds) | - | 459,699 | - | - | - | 459,699 | |||||||||||
Spanish Foreign Debt Bonds | - | - | 11,747,906 | - | - | 11,747,906 | |||||||||||
Private Securities | 1,350,521 | 1,476,843 | 5,880,147 | 4,628,128 | 10,227,916 | 23,563,556 | |||||||||||
Shares | 54 | - | - | - | - | 54 | |||||||||||
Investment Fund Shares in Participation - FIP | 23,056 | - | - | - | - | 23,056 | |||||||||||
Investment Fund Shares | 984,287 | - | - | - | - | 984,287 | |||||||||||
Investment Fund Real Estate | 343,124 | - | - | - | - | 343,124 | |||||||||||
Debentures (1) | - | 301,427 | 2,018,496 | 1,230,321 | 6,111,379 | 9,661,624 | |||||||||||
Eurobonds | - | - | - | - | 2,383,845 | 2,383,845 | |||||||||||
Promissory Notes - NP | - | 490,163 | 1,476,337 | 1,896,102 | 422,690 | 4,285,292 | |||||||||||
Financial Bills - LF | - | - | 56,057 | 187,656 | - | 243,713 | |||||||||||
Certificates of Real Estate Receivables - CRI | - | 343 | 21,761 | 84,568 | 6,949 | 113,621 | |||||||||||
Rural Product Note - CPR | - | 684,910 | 2,307,496 | 1,229,481 | 1,303,053 | 5,524,940 | |||||||||||
Total | 1,350,521 | 3,211,291 | 24,145,773 | 32,159,737 | 62,235,160 | 123,102,483 | |||||||||||
Consolidated | |||||||||||||||||
06/30/2019 | |||||||||||||||||
Available-for-Sale Securities | Without | Up to | From 3 to | From 1 to | Over | ||||||||||||
by Maturity | Maturity | 3 Months | 12 Months | 3 Years | 3 Years | Total | |||||||||||
Government Securities | - | 2,107,876 | 21,423,719 | 28,655,719 | 53,961,667 | 106,148,981 | |||||||||||
Treasury Certificates - CFT | - | - | - | 1,095 | - | 1,095 | |||||||||||
Securitized Credit | - | 188 | 354 | 597 | - | 1,139 | |||||||||||
Financial Treasury Bills - LFT (2) | - | 373,428 | 3,158,094 | 3,918,614 | 7,867,660 | 15,317,796 | |||||||||||
National Treasury Bills - LTN | - | - | 4,511,703 | 21,751,520 | 3,773,270 | 30,036,493 | |||||||||||
National Treasury Notes - NTN (3) | - | 1,274,561 | 9,758 | 2,983,893 | 42,320,737 | 46,588,949 | |||||||||||
Mexican Foreign Debt Bonds | - | - | 1,995,904 | - | - | 1,995,904 | |||||||||||
Brasilian Foreign Debt Bonds (Global Bonds) | - | 459,699 | - | - | - | 459,699 | |||||||||||
Spanish Foreign Debt Bonds | - | - | 11,747,906 | - | - | 11,747,906 | |||||||||||
Private Securities | 423,361 | 1,460,123 | 5,832,734 | 5,961,530 | 9,932,118 | 23,609,866 | |||||||||||
Shares | 76,263 | - | - | - | - | 76,263 | |||||||||||
Investment Fund Shares in Participation - FIP | 23,056 | - | - | - | - | 23,056 | |||||||||||
Investment Fund Shares | 258,259 | - | - | - | - | 258,259 | |||||||||||
Investment Fund Shares | 65,783 | - | - | - | - | 65,783 | |||||||||||
Debentures (1) | - | 284,707 | 1,971,084 | 2,563,723 | 5,815,580 | 10,635,094 | |||||||||||
Eurobonds | - | - | - | - | 2,383,845 | 2,383,845 | |||||||||||
Promissory Notes - NP | - | 490,163 | 1,476,337 | 1,896,102 | 422,690 | 4,285,292 | |||||||||||
Financial Bills - LF | - | - | 56,057 | 187,656 | - | 243,713 | |||||||||||
Certificates of Real Estate Receivables - CRI | - | 343 | 21,761 | 84,568 | 6,949 | 113,621 | |||||||||||
Rural Product Note - CPR | - | 684,910 | 2,307,495 | 1,229,481 | 1,303,054 | 5,524,940 | |||||||||||
Total | 423,361 | 3,567,999 | 27,256,453 | 34,617,249 | 63,893,785 | 129,758,847 |
Individual and Consolidated Financial Statements - June 30, 2019 40
(1) In the Bank and Consolidated, includes securities issued by mixed-capital companies in the amount of R$7,391 (06/30/2018 - R$37,340) in securities for trading and R$307,239 (06/30/2018 - R$1,203,268) in available-for-sale securities.
(2) On December 31, 2018, management decided to change the classification of Financial Treasury Bills – LFT, of the securities portfolio of Getnet Adquirência e Serviços para Meios de Pagamento S.A. (Getnet SA), Banco Bandepe SA and Santander Corretora de Cambio e Valores Mobiliários S.A. (Santander CCVM). The securities were transferred from the Trading to Available for Sale category, in the amounts of R$739,430, R$14,099 and R$375,488, respectively. Such transfers did not impact the amounts of Consolidated and also did not generate effect on the result. The change in the category occurred due to the revaluation of the recent trading history of these assets.
(3) On June 30, 2019, the quantity of 1,140,000 in the amount of R$1,344,002 (06/30/2018 - 1,140,000 in the amount of R$1,132,281) Notes National Treasury - NTN are bound by the obligation assumed by Banco Santander to hedge the unamortized reserves Plan V of the Social Security Fund (Banesprev).
IV) Held-to-Maturity Securities
Bank/Consolidated | |||||||||||||||||
06/30/2019 | |||||||||||||||||
By Maturity | |||||||||||||||||
Amortized Cost | From 1 to | Over | |||||||||||||||
Held-to-Maturity Securities (1) | 06/30/2019 | 06/30/2018 | Up to 3 Months | From 3 to 12 Months | 3 Years | 3 Years | Total | ||||||||||
Government Securities | 10,721,117 | 11,226,746 | - | 11,559 | 1,351,165 | 9,358,393 | 10,721,117 | ||||||||||
National Treasury Notes - NTN | 3,288,096 | 3,382,413 | - | 11,559 | - | 3,276,537 | 3,288,096 | ||||||||||
Brazilian Foreign Debt Bonds | 7,433,021 | 7,844,333 | - | - | 1,351,165 | 6,081,856 | 7,433,021 | ||||||||||
Total | 10,721,117 | 11,226,746 | - | 11,559 | 1,351,165 | 9,358,393 | 10,721,117 |
(1) The fair value of held to maturity securities is R$11,002,133 (06/30/2018 - R$11,632,961).
For the first semester of 2019, there were no changes in the federal public securities and other securities classified as 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.
V) Financial Income - Securities Transactions
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Income From Fixed-Income Securities (1) | 8,967,151 | 9,228,182 | 9,640,374 | 9,164,018 |
Income From Interbank Investments | 3,984,717 | 6,418,518 | 1,725,392 | 3,865,134 |
Income From Variable-Income Securities | 62,482 | (66,850) | 5,297 | (165,948) |
Financial Income of Pension and Capitalization | - | - | 66,601 | 72,663 |
Provision for Impairment Losses (2) | 26,614 | (77,544) | 26,614 | (77,544) |
Others (3) | 84,421 | (485,749) | 68,462 | (434,630) |
Total | 13,125,385 | 15,016,557 | 11,532,740 | 12,423,693 |
(1) Includes exchange variation expense in the amount of R$797,313in the Bank and Consolidated (2018 – revenue of R$2,602,482 in the Bank and Consolidated).
(2) Corresponds to the permanent loss record, referring to securities classified as available for sale.
(3) As of June 30, 2019, includes the net valuation of investment fund quotas and participations and on June 30, 2018, includes exchange variation expense in the amount of R$ 478,544 in the Bank and 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.
Individual and Consolidated Financial Statements - June 30, 2019 41
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 composition of the Derivative Financial Instruments portfolio (Assets and Liabilities) by type of instrument, at market value:
Bank | Consolidated | ||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||
Assets | |||||||
Swap Differentials Receivable | 8,575,101 | 6,698,722 | 17,355,645 | 13,549,906 | |||
Option Premiums to Exercise | 629,641 | 1,078,839 | 772,046 | 1,222,195 | |||
Forward Contracts and Others | 2,629,384 | 4,035,648 | 2,723,979 | 4,040,864 | |||
Total | 11,834,126 | 11,813,209 | 20,851,670 | 18,812,965 | |||
Liabilities | |||||||
Swap Differentials Payable | 9,843,441 | 6,861,387 | 19,072,715 | 13,844,234 | |||
Option Premiums Launched | 688,412 | 548,459 | 771,637 | 623,923 | |||
Forward Contracts and Others | 2,910,651 | 3,324,992 | 2,940,789 | 3,324,992 | |||
Total | 13,442,504 | 10,734,838 | 22,785,141 | 17,793,149 |
II) Derivatives Recorded in Memorandum Accounts and Balance Sheets
Bank | |||||||
06/30/2019 | 06/30/2018 | ||||||
Trading | Trading | ||||||
Notional (1) | Cost | Fair Value | Notional (1) | Cost | Fair Value | ||
Swap | - | (608,713) | (1,267,815) | - | 307,111 | (162,665) | |
Assets | 358,190,830 | 234,894,582 | 234,831,632 | 210,469,223 | 103,093,947 | 102,654,471 | |
CDI (Interbank Deposit Rates) | 49,111,512 | 12,031,909 | 11,869,043 | 48,981,779 | 19,256,421 | 19,304,530 | |
Fixed Interest Rate - Real | 49,777,207 | - | - | 41,403,129 | - | - | |
Indexed to Price and Interest Rates | 2,276,551 | - | - | 4,381,011 | - | - | |
Foreign Currency | 256,972,160 | 222,862,674 | 222,962,589 | 115,642,248 | 83,837,526 | 83,349,941 | |
Others | 53,400 | - | - | 61,056 | - | - | |
Liabilities | 358,799,543 | (235,503,296) | (236,099,447) | 210,162,112 | (102,786,836) | (102,817,136) | |
CDI (Interbank Deposit Rates) | 37,079,603 | - | - | 29,725,358 | - | - | |
Fixed Interest Rate - Real | 71,994,331 | (22,217,123) | (22,926,352) | 66,206,170 | (24,803,041) | (24,857,948) | |
Indexed to Price and Interest Rates | 214,329,593 | (212,053,042) | (212,035,529) | 81,738,081 | (77,357,070) | (77,362,129) | |
Foreign Currency | 34,109,486 | - | - | 31,804,722 | - | - | |
Others | 1,286,530 | (1,233,130) | (1,137,566) | 687,781 | (626,725) | (597,059) |
Individual and Consolidated Financial Statements - June 30, 2019 42
Bank | |||||||
06/30/2019 | 06/30/2018 | ||||||
Trading | Trading | ||||||
Notional (1) | Cost | Fair Value | Notional (1) | Cost | Fair Value | ||
Options | 648,359,817 | (59,738) | (58,772) | 125,434,454 | 247,457 | 530,380 | |
Purchased Position | 306,097,770 | 441,815 | 629,641 | 60,848,681 | 671,737 | 1,078,839 | |
Call Option - Foreign Currency | 9,026,895 | 179,722 | 109,355 | 14,570,453 | 271,648 | 525,536 | |
Put Option - Foreign Currency | 4,028,767 | 15,612 | 36,056 | 7,608,333 | 144,318 | 236,220 | |
Call Option - Other | 4,189,199 | 20,217 | 11,021 | 1,065,124 | 25,830 | 24,458 | |
Interbank Market | 4,074,923 | 20,217 | 2,690 | 357,133 | 4,233 | 2,051 | |
Others (2) | 114,276 | - | 8,331 | 707,991 | 21,597 | 22,407 | |
Put Option - Other | 288,852,909 | 226,265 | 473,209 | 37,604,771 | 229,941 | 292,625 | |
Interbank Market | 288,780,864 | 226,265 | 472,870 | 37,123,696 | 210,168 | 277,042 | |
Others (2) | 72,045 | - | 339 | 481,075 | 19,773 | 15,583 | |
Sold Position | 342,262,046 | (501,554) | (688,412) | 64,585,773 | (424,280) | (548,459) | |
Call Option - Foreign Currency | 3,758,281 | (37,889) | (28,823) | 7,847,169 | (129,249) | (289,465) | |
Put Option - Foreign Currency | 8,940,257 | (212,204) | (179,968) | 10,057,893 | (198,016) | (123,327) | |
Call Option - Other | 58,352,403 | (36,535) | (33,248) | 8,911,189 | (28,264) | (27,760) | |
Interbank Market | 58,273,758 | (30,379) | (23,694) | 8,240,327 | (4,876) | (4,725) | |
Others (2) | 78,645 | (6,156) | (9,553) | 670,862 | (23,388) | (23,035) | |
Put Option - Other | 271,211,105 | (214,926) | (446,373) | 37,769,522 | (68,751) | (107,907) | |
Interbank Market | 271,143,014 | (207,731) | (438,819) | 37,271,948 | (39,724) | (82,806) | |
Others (2) | 68,091 | (7,195) | (7,555) | 497,574 | (29,027) | (25,101) | |
Futures Contracts | 462,532,893 | - | - | 372,263,377 | - | - | |
Purchased Position | 143,021,839 | - | - | 130,881,343 | - | - | |
Exchange Coupon (DDI) | 53,557,624 | - | - | 33,642,166 | - | - | |
Interest Rates (DI1 and DIA) | 67,208,478 | - | - | 94,443,168 | - | - | |
Foreign Currency | 21,926,057 | - | - | 1,979,469 | - | - | |
Indexes (3) | 318,996 | - | - | 795,269 | - | - | |
Treasury Bonds/Notes | 10,684 | - | - | 21,271 | - | - | |
Sold Position | 319,511,055 | - | - | 241,382,034 | - | - | |
Exchange Coupon (DDI) | 191,585,000 | - | - | 99,189,902 | - | - | |
Interest Rates (DI1 and DIA) | 93,906,745 | - | - | 99,020,656 | - | - | |
Foreign Currency | 32,834,665 | - | - | 41,928,775 | - | - | |
Indexes (3) | 811,346 | - | - | 36,204 | - | - | |
Forward Contracts and Others | 115,893,737 | 35,765 | (281,267) | 73,033,827 | 765,475 | 710,656 | |
Purchased Commitment | 48,608,280 | (239,240) | 514,475 | 33,441,749 | 1,173,345 | 1,198,969 | |
Currencies | 46,166,247 | (241,686) | 486,283 | 32,639,876 | 1,173,345 | 1,194,411 | |
Others | 2,442,033 | 2,446 | 28,193 | 801,873 | - | 4,558 | |
Sell Commitment | 67,285,457 | 275,005 | (795,742) | 39,592,078 | (407,870) | (488,313) | |
Currencies | 55,569,503 | 245,096 | (738,824) | 38,946,701 | (399,910) | (477,426) | |
Others | 11,715,954 | 29,909 | (56,918) | 645,377 | (7,960) | (10,887) |
Individual and Consolidated Financial Statements - June 30, 2019 43
Consolidated | |||||||
06/30/2019 | 06/30/2018 | ||||||
Trading | Trading | ||||||
Notional (1) | Cost | Fair Value | Notional (1) | Cost | Fair Value | ||
Swap | - | (397,353) | (1,716,545) | - | (157,794) | (294,328) | |
Assets | 404,888,758 | 253,423,527 | 233,877,763 | 262,999,149 | 125,834,062 | 106,214,927 | |
CDI (Interbank Deposit Rates) | 49,027,390 | 21,253,299 | 21,768,516 | 48,108,798 | 26,163,315 | 26,229,784 | |
Fixed Interest Rate - Real | 67,585,921 | - | - | 59,078,985 | - | - | |
Indexed to Price and Interest Rates | 2,276,551 | - | - | 4,381,011 | - | - | |
Foreign Currency | 285,998,895 | 232,170,228 | 212,109,248 | 151,369,299 | 99,670,747 | 79,985,143 | |
Others | - | - | - | 61,056 | - | - | |
Liabilities | 405,286,111 | (253,820,880) | (235,594,308) | 263,156,943 | (125,991,856) | (106,509,255) | |
CDI (Interbank Deposit Rates) | 27,774,091 | - | - | 21,945,483 | - | - | |
Fixed Interest Rate - Real | 108,067,228 | (40,481,307) | (22,367,813) | 107,087,046 | (48,008,061) | (28,550,067) | |
Indexed to Price and Interest Rates | 214,329,593 | (212,053,042) | (212,035,529) | 81,738,081 | (77,357,070) | (77,362,129) | |
Foreign Currency | 53,828,667 | - | - | 51,698,552 | - | - | |
Others | 1,286,530 | (1,286,530) | (1,190,966) | 687,781 | (626,725) | (597,059) | |
Options | 654,397,908 | (59,738) | 409 | 129,034,822 | 259,600 | 598,272 | |
Purchased Position | 308,958,648 | 441,815 | 772,046 | 62,792,353 | 683,614 | 1,222,195 | |
Call Option - Foreign Currency | 9,026,895 | 179,722 | 109,355 | 14,536,976 | 283,525 | 505,839 | |
Put Option - Foreign Currency | 4,028,767 | 15,612 | 36,056 | 7,608,333 | 144,318 | 236,220 | |
Call Option - Other | 6,404,200 | 20,217 | 133,698 | 2,266,739 | 25,830 | 125,391 | |
Interbank Market | 4,074,923 | 20,217 | 2,690 | 357,133 | 4,233 | 2,051 | |
Others (2) | 2,329,277 | - | 131,007 | 1,909,606 | 21,597 | 123,340 | |
Put Option - Other | 289,498,786 | 226,265 | 492,937 | 38,380,305 | 229,941 | 354,745 | |
Interbank Market | 288,780,864 | 226,265 | 472,870 | 37,123,696 | 210,168 | 277,042 | |
Others (2) | 717,923 | - | 20,068 | 1,256,609 | 19,773 | 77,703 | |
Sold Position | 345,439,259 | (501,554) | (771,637) | 66,242,469 | (424,014) | (623,923) | |
Call Option - Foreign Currency | 3,758,281 | (37,889) | (28,823) | 7,804,169 | (128,983) | (277,551) | |
Put Option - Foreign Currency | 8,940,257 | (212,204) | (179,968) | 10,057,893 | (198,016) | (123,327) | |
Call Option - Other | 60,745,338 | (36,535) | (103,154) | 9,821,024 | (28,264) | (56,715) | |
Interbank Market | 58,273,758 | (30,379) | (23,694) | 8,240,327 | (4,876) | (4,725) | |
Others (2) | 2,471,580 | (6,156) | (79,460) | 1,580,697 | (23,388) | (51,990) | |
Put Option - Other | 271,995,383 | (214,926) | (459,691) | 38,559,383 | (68,751) | (166,330) | |
Interbank Market | 271,143,014 | (207,731) | (438,819) | 37,271,948 | (39,724) | (82,806) | |
Others (2) | 852,369 | (7,195) | (20,873) | 1,287,435 | (29,027) | (83,524) | |
Futures Contracts | 463,019,907 | - | - | 372,840,333 | - | - | |
Purchased Position | 143,362,887 | - | - | 131,281,749 | - | - | |
Exchange Coupon (DDI) | 53,557,624 | - | - | 33,998,700 | - | - | |
Interest Rates (DI1 and DIA) | 67,373,882 | - | - | 94,443,168 | - | - | |
Foreign Currency | 21,926,057 | - | - | 2,023,341 | - | - | |
Indexes (3) | 494,640 | - | - | 795,269 | - | - | |
Treasury Bonds/Notes | 10,684 | - | - | 21,271 | - | - |
Individual and Consolidated Financial Statements - June 30, 2019 44
Consolidated | |||||||
06/30/2019 | 06/30/2018 | ||||||
Trading | Trading | ||||||
Sold Position | 319,657,020 | - | - | 241,558,584 | - | - | |
Exchange Coupon (DDI) | 191,585,000 | - | - | 99,219,909 | - | - | |
Interest Rates (DI1 and DIA) | 93,955,377 | - | - | 99,020,656 | - | - | |
Foreign Currency | 32,834,665 | - | - | 42,075,318 | - | - | |
Indexes (3) | 908,679 | - | - | 36,204 | - | - | |
Forward Contracts and Others | 115,897,646 | 39,675 | (216,810) | 73,038,917 | 765,475 | 715,872 | |
Purchased Commitment | 48,612,189 | (235,330) | 578,783 | 33,446,839 | 1,173,345 | 1,204,185 | |
Currencies | 46,166,247 | (241,686) | 486,283 | 32,639,876 | 1,173,345 | 1,194,411 | |
Others | 2,445,942 | 6,356 | 92,500 | 806,963 | - | 9,774 | |
Sell Commitment | 67,285,457 | 275,005 | (795,593) | 39,592,078 | (407,870) | (488,313) | |
Currencies | 55,569,503 | 245,096 | (738,824) | 38,946,701 | (399,910) | (477,426) | |
Others | 11,715,954 | 29,909 | (56,769) | 645,377 | (7,960) | (10,887) |
(1) Nominal value of the updated contracts.
(2) Includes options of indexes, mainly being options involving US treasury, shares and stock indexes.
(3) Includes Bovespa and S&P indexes.
III) Derivatives Financial Instruments by Counterparty
Bank | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Related | Financial | ||||||
Customers | Parties | Institutions (1) | Total | Total | |||
Swap | 32,971,219 | 60,086,035 | 265,133,576 | 358,190,830 | 210,469,223 | ||
Options | 12,363,532 | 617,373 | 635,378,911 | 648,359,817 | 125,434,454 | ||
Futures Contracts | - | - | 462,532,893 | 462,532,893 | 372,263,377 | ||
Forward Contracts and Others | 39,322,997 | 69,210,921 | 7,359,818 | 115,893,737 | 73,033,827 | ||
Consolidated | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Related | Financial | ||||||
Customers | Parties | Institutions (1) | Total | Total | |||
Swap | 32,971,219 | 59,701,948 | 312,215,591 | 404,888,758 | 262,999,149 | ||
Options | 12,363,532 | 617,373 | 641,417,002 | 654,397,908 | 129,034,822 | ||
Futures Contracts | - | - | 463,019,907 | 463,019,907 | 372,840,333 | ||
Forward Contracts and Others | 39,322,997 | 69,210,921 | 7,363,728 | 115,897,646 | 73,038,917 |
(1) Includes operations that have counterpart B3 S.A. - Brazil, Stock Exchange, Counter (B3) and other stock and commodity exchanges.
Individual and Consolidated Financial Statements - June 30, 2019 45
IV) Derivatives Financial Instruments by Maturity
Bank | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Up to | From 3 to | Over | |||||
3 Months | 12 Months | 12 Months | Total | Total | |||
Asset | |||||||
Swap | 23,448,356 | 236,935,060 | 97,807,414 | 358,190,830 | 210,469,223 | ||
Options | 167,864,309 | 471,628,161 | 8,867,346 | 648,359,817 | 125,434,454 | ||
Futures Contracts | 119,602,057 | 191,500,916 | 151,429,921 | 462,532,893 | 372,263,377 | ||
Forward Contracts and Others | 59,761,173 | 31,991,871 | 24,140,693 | 115,893,737 | 73,033,827 | ||
Consolidated | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Up to | From 3 to | Over | |||||
3 Months | 12 Months | 12 Months | Total | Total | |||
Liabilities | |||||||
Swap | 51,432,150 | 253,007,879 | 100,448,729 | 404,888,758 | 262,999,149 | ||
Options | 171,189,606 | 473,957,316 | 9,250,985 | 654,397,908 | 129,034,822 | ||
Futures Contracts | 119,784,419 | 191,694,019 | 151,541,469 | 463,019,907 | 372,840,333 | ||
Forward Contracts and Others | 59,765,083 | 31,991,871 | 24,140,693 | 115,897,646 | 73,038,917 |
V) Derivatives Financial Instruments by Trade Market
Bank | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Exchange (1) | Over the | Total | Total | ||||
Swap | 239,672,788 | 118,518,042 | 358,190,830 | 210,469,223 | |||
Options | 634,384,385 | 13,975,432 | 648,359,817 | 125,434,454 | |||
Futures Contracts | 462,532,893 | - | 462,532,893 | 372,263,377 | |||
Forward Contracts and Others | 4,767,039 | 111,126,697 | 115,893,737 | 73,033,827 | |||
Consolidated | |||||||
Notional | |||||||
06/30/2019 | 06/30/2018 | ||||||
Exchange (1) | Over the | Total | Total | ||||
Swap | 239,672,788 | 165,215,970 | 404,888,758 | 262,999,149 | |||
Options | 634,384,385 | 20,013,523 | 654,397,908 | 129,034,822 | |||
Futures Contracts | 463,019,907 | - | 463,019,907 | 372,840,333 | |||
Forward Contracts and Others | 4,767,039 | 111,130,607 | 115,897,646 | 73,038,917 | |||
(1) Includes amount traded with the B3.
(2) Composed by operations that are included in Clearing Houses, according to the regulation of the Bacen.
VI) Information on Credit Derivatives
Banco Santander uses credit derivatives with the objectives of performing counterparty risk management and meeting its customers' demands, performing protection purchase and sale transactions through credit default swaps and total return swaps, primarily related to Brazilian sovereign risk securities.
TotalReturn Swaps – TRS
Credit derivativesrefer tothe exchange of the return of the reference obligationbya cash flow andin which, in the event of a credit event, the protection buyer is usually entitled to receive from the protection seller the equivalent of the difference between the restated amount and the fair value (market value) of the reference obligation on the settlement date of theagreement.
Individual and Consolidated Financial Statements - June 30, 2019 46
Credit Default Swaps – CDS
These are credit derivatives where, in the event of a credit event, the protection buyer is entitled to receive from the protection seller the equivalent of the difference between the face value of the CDS agreement and the fair value (market value) of the reference obligation on the settlement date of the contract. In return, the seller receives compensation for the sale of the protection.
Below, the composition of the Credit Derivatives portfolio shown by its reference value and effect in the calculation of Required Stockholders' Equity.
06/30/2019 | 06/30/2018 | ||||||
Nominal Value | Nominal Value | ||||||
Retained Risk | Nominal Value | Retained Risk | Nominal Value | ||||
Total Rate of Return Swap | Transferred Risk - | Total Rate of Return Swap | Transferred Risk - | ||||
Credit Swap | Credit Swap | ||||||
Credit Swaps | 2,315,920 | 574,830 | - | - | |||
Total | 2,315,920 | 574,830 | - | - |
Value referring to the premium paid on CDS for use as collateral (transfer of risks) in the amount of R$525.
The PLE effect on received risk was R$92,637.
During the period there was no occurrence of credit event related to the events generated by the contracts.
06/30/2019 | |||||||
Over | |||||||
Maximum Potential for Future Payments - Gross | 12 Months | Total | |||||
Per Instrument | |||||||
CDS | 2,315,920 | 2,315,920 | |||||
Total | 2,315,920 | 2,315,920 | |||||
Per Risk Classification | |||||||
Below Investment Grade | 2,315,920 | 2,315,920 | |||||
Total | 2,315,920 | 2,315,920 | |||||
Per Reference Entity | |||||||
Brazilian Government | 2,315,920 | 2,315,920 | |||||
Total | 2,315,920 | 2,315,920 |
VII) Hedge Accounting
The effectiveness determined for the hedge portfolio is in accordance with Bacen Circular 3,082 / 2002 and the following hedge accounting structures were established:
VII.I) Market Risk Hedge
The Bank's market risk hedging strategies consist of a hedge of exposure to variation in market risk, in receipts and interest payments related to assets and liabilities recognized.
The Bank's market risk hedging methodology segregates transactions by risk factor (eg, real / dollar exchange rate risk, fixed interest rate risk in Reais, dollar exchange rate risk, inflation, interest rate risk, etc.). Transactions generate exposures that are consolidated by risk factor and compared to pre-established internal limits.
To protect the market risk variation in the receipt and payment of interest, the Bank uses swap contracts and interest rate futures contracts relating to fixed assets and liabilities.
The Bank applies the market risk hedge as follows:
Individual and Consolidated Financial Statements - June 30, 2019 47
• Designates Foreign Currency + Coupon Versus% CDI and Pre - Real Interest Rate as a derivative instrument in Hedge Accounting structures, with foreign currency loan operations being the object of such transactions.
• The Bank has a portfolio of credit assets denominated in US dollars at the fixed rate in the balance sheet of Santander EFC, whose operations are recorded in Euro. As a way of managing this mismatch, the Bank designates each Euro Floating Foreign Currency swap versus Fixed Dollar as the market risk hedge of the corresponding loan.
• The Bank has a portfolio of assets indexed to the Euro and traded at the Cayman branch. In the transaction, the value of the asset in Euro will be converted to the Dollar by the rate of the exchange contract of the transaction. As from the conversion, the principal amount of the funding, already expressed in US dollars, will be adjusted by the CDI or Pre-Fixed rate. The assets will be covered with Swap Cross Currency in order to cross the risk in Euro for LIBOR + Coupon.
• The Bank has a pre-fixed interest rate risk generated by government securities (NTN-F and LTN) in the Financial assets portfoliomeasured through Other Comprehensive Income. Tomanage this mismatch, the entity contracts DI futures on the Stock Exchange and designates them as a derivative instrument in ahedge accounting framework.
• The Bank has a risk to the IPCA index generated by debenture in the portfolio of securities available for sale. To manage this mismatch, it contracts IPCA (DAP) futures on the Stock Exchange and designates them as a derivative instrument in a Hedge Accounting structure.
• Santander Leasing has a pre-fixed interest rate risk generated by government securities (NTN-F) in the portfolio of available-for-sale securities. To manage this mismatch, the Entity contracts interest swaps and designates them as a derivative instrument in an Accounting Hedge structure.
In market risk hedging, the results, both on hedging instruments and on the objects (attributable to the type of risk being hedged) are recognized directly in the income statement.
Bank | ||||||||||||
06/30/2019 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
|
| |||||||||||
Strategies | Liability | to Fair Value | Fair Value | Liability | to Fair Value | Fair Value | ||||||
Swap Contracts | 2,008,083 | 1,892 | 2,009,975 | 2,006,747 | (4,095) | 2,002,652 | ||||||
| 1,467,810 | (8,362) | 1,459,448 | 1,368,643 | 9,234 | 1,377,877 | ||||||
Securities Hedge | 540,273 | 10,254 | 550,527 | 638,104 | (13,330) | 624,775 | ||||||
| 48,556,780 | - | 48,556,780 | 51,086,198 | 2,613,934 | 53,700,132 | ||||||
Securities Hedge | 48,556,780 | - | 48,556,780 | 51,086,198 | 2,613,934 | 53,700,132 | ||||||
Bank | ||||||||||||
06/30/2018 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
|
| |||||||||||
Strategies | Liability | to Fair Value | Fair Value | Liability | to Fair Value | Fair Value | ||||||
Swap Contracts | 1,829,947 | 109,111 | 1,939,058 | 1,828,876 | 87,285 | 1,916,161 | ||||||
| 683,112 | 72,567 | 755,679 | 686,410 | 57,175 | 743,585 | ||||||
Securities Hedge | 1,146,835 | 36,544 | 1,183,379 | 1,142,466 | 30,110 | 1,172,576 | ||||||
| 41,286,091 | - | 41,286,091 | 44,130,671 | (205,941) | 43,924,730 | ||||||
Securities Hedge | 41,286,091 | - | 41,286,091 | 44,130,671 | (205,941) | 43,924,730 |
Individual and Consolidated Financial Statements - June 30, 2019 48
Consolidated | ||||||||||||
06/30/2019 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
|
| |||||||||||
Strategies | Liability | to Fair Value | Fair Value | Liability | to Fair Value | Fair Value | ||||||
Swap Contracts | 3,830,429 | 79,471 | 3,909,900 | 3,844,944 | 57,913 | 3,902,857 | ||||||
| 1,697,429 | 5,235 | 1,702,664 | 1,610,649 | 11,144 | 1,621,793 | ||||||
Securities Hedge | 2,133,000 | 74,236 | 2,207,236 | 2,234,295 | 46,769 | 2,281,064 | ||||||
| 48,556,780 | - | 48,556,780 | 51,086,198 | 2,613,934 | 53,700,132 | ||||||
Securities Hedge | 48,556,780 | - | 48,556,780 | 51,086,198 | 2,613,934 | 53,700,132 | ||||||
Consolidated | ||||||||||||
06/30/2018 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
|
| |||||||||||
Strategies | Liability | to Fair Value | Fair Value | Liability | to Fair Value | Fair Value | ||||||
Swap Contracts | 3,908,082 | 140,447 | 4,048,529 | 3,921,249 | 65,014 | 3,986,263 | ||||||
| 1,152,249 | 115,180 | 1,267,429 | 1,166,387 | 50,668 | 1,217,055 | ||||||
Securities Hedge | 2,755,833 | 25,267 | 2,781,100 | 2,754,862 | 14,346 | 2,769,208 | ||||||
| 41,286,091 | - | 41,286,091 | 44,130,671 | (205,941) | 43,924,730 | ||||||
Securities Hedge | 41,286,091 | - | 41,286,091 | 44,130,671 | (205,941) | 43,924,730 |
(*) The Bank operates some Hedge Accounting strategies, hedging assets from its portfolio (object), regards that, the table is presented showing the liability amounts from the respective instruments. For structures whose objects are futures, the table is presented showing the balance of the daily adjustment, registered in the suspense accounts.
VII.II) Cash Flow Hedge
The Bank's cash flow hedging strategies consist of a hedge of exposure to changes in cash flows, interest payments and exchange rate exposure, which are attributable to changes in interest rates on recognized assets and liabilities and changes of unrecognized assets and liabilities.
The Bank applies the cash flow hedge as follows:
• It contracts fixed and floating dollar indexed swaps in Reais / Euro floating and designates them as a derivative instrument in a Cash Flow Hedge structure, with the purpose of protecting floating rate indexed loans and negotiated with third parties through agency in Cayman and securities held to maturity of Brazilian foreign debt securities.
• Contracts DDI + DI Futures (DIY Futures) and designates them as a derivative instrument in a Cash Flow Hedge structure, the object of which in this relation is part of the Bank's credit portfolio in Dollars and Promissory Notes in the portfolio of securities available for sale.
• The Bank has post-fixed interest rate risk generated by public securities (LFT) in the portfolio of available-for-sale securities, which present expected cash flows subject to Selic variations over their duration. To manage these oscillations, it contracts DI futures on the Stock Exchange and designates them as a derivative instrument in a Hedge Accounting structure.
• Banco RCI Brasil S.A., has hedge operations whose purpose is funding with financial letters (LF), bills of exchange (LC) and Interbank Deposit Certificates (CDI).
In cash flow hedge, the effective portion of the variation in the hedging instrument is temporarily recognized in shareholders' equity under the heading of equity valuation adjustments until the forecasted transactions occur, when that portion is recognized in the statement of income. The non effective portion of the variation in the value of exchange rate hedge derivatives is recognized directly in the statements of income. In the first semester of 2019 no result was recorded relating to ineffective portion, in 2018 was recorded on results expense of R$1,415.
Individual and Consolidated Financial Statements - June 30, 2019 49
Bank | ||||||||||||
06/30/2019 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
| ||||||||||||
Strategies | Liability | to Fair Value | Fair Value | Asset | ||||||||
Swap Contracts | 2,307,383 | (784,955) | 1,522,428 | 1,459,154 | ||||||||
Credit Operations Hedge | 1,254,294 | (664,166) | 590,128 | 615,159 | ||||||||
Securities Hedge | 1,053,089 | (120,789) | 932,300 | 843,995 | ||||||||
| 49,164,979 | - | 44,961,780 | 20,310,138 | ||||||||
Credit Operations Hedge (2) | 44,961,780 | - | 44,961,780 | 16,310,320 | ||||||||
Securities Hedge | 4,203,199 | - | - | 3,999,819 | ||||||||
Bank | ||||||||||||
06/30/2018 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
| ||||||||||||
Strategies | Liability | to Fair Value | Fair Value | Asset | ||||||||
Swap Contracts | 1,314,347 | (80,346) | 1,234,001 | 1,151,009 | ||||||||
Credit Operations Hedge | 254,773 | (5,907) | 248,866 | 245,369 | ||||||||
Securities Hedge | 1,059,574 | (74,439) | 985,135 | 905,640 | ||||||||
| 57,157,366 | - | 57,157,366 | 27,554,378 | ||||||||
Credit Operations Hedge (1) | 51,662,413 | - | 51,662,413 | 20,682,847 | ||||||||
Securities Hedge | 5,494,953 | - | 5,494,953 | 6,871,531 | ||||||||
Consolidated | ||||||||||||
06/30/2019 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
| ||||||||||||
Strategies | Liability | to Fair Value | Fair Value | Asset | ||||||||
Swap Contracts | 8,063,898 | (591,517) | 7,472,381 | 7,639,038 | ||||||||
Credit Operations Hedge | 1,632,850 | (627,696) | 1,005,154 | 990,189 | ||||||||
Securities Hedge | 1,053,089 | (120,789) | 932,300 | 843,995 | ||||||||
Funding Hedge | 5,377,960 | 156,967 | 5,534,927 | 5,804,854 | ||||||||
Future Contracts | 49,164,979 | - | 49,164,979 | 20,310,138 | ||||||||
Credit Operations Hedge (1) | 44,961,780 | - | 44,961,780 | 16,310,320 | ||||||||
Securities Hedge | 4,203,199 | - | 4,203,199 | 3,999,819 | ||||||||
Consolidated | ||||||||||||
06/30/2018 | ||||||||||||
Hedge Instruments | Hedge Objects | |||||||||||
| ||||||||||||
Strategies | Liability | to Fair Value | Fair Value | Asset | ||||||||
Swap Contracts | 5,647,747 | 59,080 | 5,706,827 | 6,399,923 | ||||||||
Credit Operations Hedge | 945,755 | 115,124 | 1,060,879 | 1,411,660 | ||||||||
Securities Hedge | 1,059,574 | (74,439) | 985,135 | 905,640 | ||||||||
Funding Hedge | 3,642,418 | 18,395 | 3,660,813 | 4,082,623 | ||||||||
Contratos de Futuro | 57,157,366 | - | 57,157,366 | 27,554,378 | ||||||||
Credit Operations Hedge (1) | 51,662,413 | - | 51,662,413 | 20,682,847 | ||||||||
Securities Hedge | 5,494,953 | - | 5,494,953 | 6,871,531 |
Individual and Consolidated Financial Statements - June 30, 2019 50
(*) The Bank operates some Cash Flow Hedge strategies, hedging assets from its portfolio (object), regards that, the table is presented showing the liability amounts from the respective instruments. For structures whose objects are futures, the table is presented showing the balance of the daily adjustment, registered in the suspense accounts.
(1) The updated amount of the instruments as of june 30, 2019 is R$16,708,740 (06/30/2018 - R$21,014,536).
In the Bank and Consolidated, the mark-to-market effect of swap contracts and future assets corresponds to a credit in the amount of R$338,479 (06/30/2018 - R$19,523) and is recorded in shareholders' equity , net of tax effects, of which R$55,348 as credit and will be incurred against profit in the next twelve months.
VIII) Derivative Financial Instruments - Margin Given in Guarantee
The margin given as collateral for transactions traded on B3 with its own and third party derivative financial instruments is composed of federal government securities.
Bank | Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||
Financial Literature of the Treasury - LFT | 6,463,115 | 2,041,129 | 7,347,563 | 2,527,710 | ||||||||
National Treasury Bills - LTN | 432,453 | 3,952,581 | 432,453 | 3,950,706 | ||||||||
| 7,872,179 | 3,651,495 | 7,883,620 | 3,843,271 | ||||||||
Total | 14,767,747 | 9,645,205 | 15,663,636 | 10,321,687 |
c) Financial Instruments - Sensitivity Analysis
The risk management is focused on portfolios and risk factors pursuant to Bacen’s regulations and good international practices.
Financial instruments are segregated into trading and banking portfolios, as in the management of market risk exposure, according to the best market practices and the transaction classification and capital management criteria of Bacen´s Basileia Standard Method. The trading portfolio consists of all transactions with financial instruments and products, including derivatives, held for trading. The banking portfolio consists of core business transactions arising from the different Banco Santander business lines and their possible hedges. Therefore, based on the nature of Banco Santander’s activities, the sensitivity analysis was divided by both trading and banking portfolios.
Banco Santander performs the sensitivity analysis of the financial instruments in accordance with requirements of CVM nº Instruction 475/2008, considering the market information and scenarios that would adversely affect the positions of the Bank.
The table below summarizes the stress test amounts generated by Banco Santander’s corporate systems, related to the trading and banking portfolio, for each one of the portfolio scenarios as of June 30, 2019.
Trading Portfolio | Consolidated | |||||||||||||
Risk Factor | Description | Scenario 1 | Scenario 2 | Scenario 3 | ||||||||||
Interest Rate - Real | Exposures subject to Changes in Interest Fixed Rate | (4,381) | (62,076) | (124,152) | ||||||||||
Coupon Interest Rate | Exposures subject to Changes in Coupon Rate of Interest Rate | (2,644) | (13,676) | (27,352) | ||||||||||
Coupon - US Dollar | Exposures subject to Changes in Coupon US Dollar Rate | (6,754) | (135) | (269) | ||||||||||
Coupon - Other Currencies | Exposures subject to Changes in Coupon Foreign Currency Rate | (5,724) | (2,358) | (4,717) | ||||||||||
Foreign Currency | Exposures subject to Foreign Exchange | (9,284) | (232,099) | (464,198) | ||||||||||
Eurobond/Treasury/Global | Exposures subject to Changes in Interest Rate Negotiated Roles in International Market | (1,064) | (4,601) | (9,201) | ||||||||||
Inflation | Exposures subject to Change in Coupon Rates of Price Indexes | (4,600) | (47,395) | (94,790) | ||||||||||
Shares and Indexes | Exposures subject to Change in Shares Price | (2,214) | (55,344) | (110,687) | ||||||||||
Commodities | Exposures subject to Change in Commodity Price | (2) | (58) | (116) | ||||||||||
Total (1) | (36,667) | (417,742) | (835,482) |
(1) Amounts net of taxes.
Scenario 1: a shock of +10 and -10 base points on the interest curves and 1% to price changes (currency and share), are considered the greatest losses per risk factor.
Scenario 2: a shock of +25% and -25% in all risk factors, are considered the greatest losses per risk factor.
Scenario 3: a shock of +50% and -50% in all risk factors, are considered the greatest losses per risk factor.
Individual and Consolidated Financial Statements - June 30, 2019 51
Banking Portfolio | Consolidated | |||||||||||||
Risk Factor | Description | Scenario 1 | Scenario 2 | Scenario 3 | ||||||||||
Interest Rate - Real | Exposures subject to Changes in Interest Fixed Rate | (41,053) | (628,168) | (1,266,290) | ||||||||||
TR and Long-Term Interest Rate - (TJLP) | Exposures subject to Change in Exchange TR and TJLP | (31,226) | (475,414) | (767,524) | ||||||||||
Inflation | Exposures subject to Change in Coupon Rates of Price Indexes | (64,912) | (417,220) | (825,183) | ||||||||||
Coupon - US Dollar | Exposures subject to Changes in Coupon US Dollar Rate | (12,351) | (43,011) | (76,047) | ||||||||||
Coupon - Other Currencies | Exposures subject to Changes in Coupon Foreign Currency Rate | (10,383) | (152,491) | (271,313) | ||||||||||
Interest Rate Markets International | Exposures subject to Changes in Interest Rate Negotiated Roles in International Market | (1,976) | (41,372) | (66,303) | ||||||||||
Foreign Currency | Exposures subject to Foreign Exchange | (2,442) | (61,044) | (122,087) | ||||||||||
Total (1) | (164,343) | (1,818,719) | (3,394,747) |
(1) Amounts net of taxes.
Scenario 1: a shock of +10 and -10 base points on the interest curves and 1% to price changes (currency and share), are considered the greatest losses per risk factor.
Scenario 2: a shock of +25% and -25% in all risk factors, are considered the greatest losses per risk factor.
Scenario 3: a shock of +50% and -50% in all risk factors, are considered the greatest losses per risk factor.
7. Interbank Accounts
The amount of interbank accounts is composed of restricted deposits with the Bacen to meet compulsory obligations for demand deposits, savings deposits and time deposits, and payments and receipts pending settlement, represented by checks and other documents sent to clearinghouses payment transactions (assets and liabilities position).
8. Loan Portfolio and Allowance for Loan Losses
a) Loan Portfolio
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Lending Operations | 193,874,726 | 183,049,635 | 257,577,835 | 238,659,152 | ||||||||||
Loans and Discounted Titles | 106,016,050 | 96,220,136 | 120,230,480 | 109,445,467 | ||||||||||
Financing | 39,517,851 | 40,073,733 | 89,006,530 | 82,395,270 | ||||||||||
Rural and Agroindustrial - Financing | 10,859,591 | 11,305,201 | 10,859,591 | 11,305,201 | ||||||||||
Real Estate Financing | 37,481,234 | 35,450,160 | 37,481,234 | 35,450,160 | ||||||||||
Securities Financing | - | 405 | - | 405 | ||||||||||
Lending Operations Related to Assignment | - | - | - | 62,649 | ||||||||||
Leasing Operations | - | - | 2,691,897 | 2,605,207 | ||||||||||
Advances on Foreign Exchange Contracts (Note 9) (1) | 6,347,857 | 6,419,824 | 6,347,857 | 6,419,824 | ||||||||||
Other Receivables (2) | 47,703,495 | 39,371,454 | 51,018,361 | 42,845,076 | ||||||||||
Total | 247,926,078 | 228,840,913 | 317,635,950 | 290,529,259 |
(1) Advance on foreign exchange contracts are classified as a reduction of other obligations.
(2) Comprise receivables for guarantees honored other receivables - others (granted to borrowers to purchase securities, assets, notes and receivable - Note 12) and income receivable on foreign exchange contracts (Note 9).
Sale or Transfer Operations of Financial Assets
According to CMN Resolution nº 3,533/2008 updated with later norms, the lending operations with substantial retention of risks and benefits, started from January 1, 2012 to remain registered in the loan portfolio. For lending operations made until December 31, 2011, regardless of the retention or transfer of substantial risks and benefits, financial assets were written off from the record of the original operation and the result recorded in the transfer to the appropriate result.
(i) With Substantial Transfer of Risks and Benefits
In the Bank and Consolidated, during the first semester of 2019, operations were carried out credit assignment without co-obligation in the amount of R$267,716 (06/30/2018 - R$808,224) and were recorded substantially in loans and discounted securities, classified as F risk level.
During the first half of 2019, credit assignments were fully provisioned without co-obligation in the amount of R$5,428,775in the Bank and in the Consolidated related to credit losses operations, of which R$2,892,397 in intra-group transactions.
Individual and Consolidated Financial Statements - June 30, 2019 52
(ii) With Substantial Retention of Risks and Benefits
Since August 2016, in the Consolidated, the amount referring to the loan portfolio assigned with co-obligation started to include the operations coming from Banco PSA Finance Brasil S.A. (Banco PSA). On June 30, 2019, the present value of the operations assigned to Banco PSA was settled (06/30/2018 - R$62,649).
In September 2015, the Bank carried out assignment of credits with co-obligation related to the operations of Funded Participation (Export) in the amount of R$201,706, due in April 2019. In 2018, the loan assignment was settled.
On December 2011, the Bank made the assignment of receivables with recourse relating to real estate financing in the amount of R$688,821, which fall due until October 2041. On June 30, 2019, the present value of the divested operations is R$85,516 (06/30/2018 - R$110,501).
These assignment operations were carried out with a co-obligation clause, and compulsory repurchase is envisaged in the following situations:
- Contracts in default for a period exceeding 90 consecutive days;
- Contracts subject to renegotiation;
- Contracts subject to portability in accordance with CMN Resolution nº 3,401/2006; and
- Contracts subject to intervention.
The compulsory repurchase price will be calculated by unpaid balance of the loan due date at the time of its repurchase.
From the date of transfer, cash flows from operations will be paid directly to the assignee entity.
b) Loan Portfolio by Maturity
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Overdue | 8,073,365 | 7,074,372 | 9,050,812 | 8,472,519 | ||||||||||
Due to: | ||||||||||||||
Up to 3 Months | 51,896,086 | 69,173,971 | 63,042,091 | 79,374,448 | ||||||||||
From 3 to 12 Months | 54,680,042 | 54,898,942 | 74,749,192 | 74,114,236 | ||||||||||
Over 12 Months | 133,276,585 | 97,693,628 | 170,793,855 | 128,568,056 | ||||||||||
Total | 247,926,078 | 228,840,913 | 317,635,950 | 290,529,259 |
c) Lease Portfolio Operations
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Gross Investment in Leasing Operations | - | - | 3,231,261 | 3,104,839 | ||||||||||
Lease Receivables | - | - | 1,989,864 | 2,079,810 | ||||||||||
Unrealized Residual Values (1) | - | - | 1,241,397 | 1,025,029 | ||||||||||
Unearned Income on Lease | - | - | (1,966,860) | (2,061,781) | ||||||||||
Offsetting Residual Values | - | - | (1,241,397) | (1,025,029) | ||||||||||
Leased Assets | 58,257 | 58,915 | 6,661,911 | 6,630,731 | ||||||||||
Accumulated Depreciation | (58,257) | (58,915) | (3,329,835) | (3,408,322) | ||||||||||
Excess Depreciation | 22,039 | 22,348 | 1,250,463 | 1,289,355 | ||||||||||
Losses on Unamortized Lease | - | - | 192,150 | 200,929 | ||||||||||
Advances for Guaranteed Residual Value | (22,039) | (22,348) | (2,108,072) | (2,127,776) | ||||||||||
Other Assets | - | - | 2,276 | 2,261 | ||||||||||
Total of Lease Portfolio at Present Value | - | - | 2,691,897 | 2,605,207 |
(1) Guaranteed residual value of lease agreements, net of advances.
Leasing unrealized financial income (lease income to appropriate related to minimum payments to receive) in the Consolidated is R$539,364 (06/30/2018 - R$499,632).
On June 30, 2019 and 2018, there were no individually material agreements or commitments for lease contracts considered relevant.
Report per Lease Portfolio Maturity of Gross Investment
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Overdue | - | - | 5,533 | 11,986 | ||||||||||
Due to: | ||||||||||||||
Up to 1 Year | - | - | 2,546,556 | 1,400,540 | ||||||||||
From 1 to 5 Years | - | - | 676,627 | 1,685,614 | ||||||||||
Over 5 Years | - | - | 2,545 | 6,699 | ||||||||||
Total | - | - | 3,231,261 | 3,104,839 |
Individual and Consolidated Financial Statements - June 30, 2019 53
Report per Lease Portfolio Maturity at Present Value
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Overdue | - | - | 11,9278 | 11,264 | ||||||||||
Due to: | ||||||||||||||
Up to 1 Year | - | - | 1,217,903 | 1,295,869 | ||||||||||
From 1 to 5 Years | - | - | 1,460,194 | 1,293,769 | ||||||||||
Over 5 Years | - | - | 1,872 | 4,305 | ||||||||||
Total | - | - | 2,691,897 | 2,605,207 |
d) Loan Portfolio by Business Sector
Bank | Consolidated | |||||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||||
Private Sector | 247,088,974 | 228,545,911 | 316,798,578 | 290,234,257 | ||||||||||||
Industry | 50,691,014 | 55,737,526 | 51,621,680 | 57,624,234 | ||||||||||||
Commercial | 30,826,867 | 27,093,737 | 35,400,807 | 30,970,431 | ||||||||||||
Financial Institutions | 1,526,690 | 1,587,792 | 1,533,539 | 1,594,408 | ||||||||||||
Services and Other (1) | 30,843,931 | 33,956,563 | 34,177,747 | 37,044,889 | ||||||||||||
Individuals | 129,969,087 | 107,104,679 | 190,813,779 | 159,880,991 | ||||||||||||
Credit Cards | 31,462,075 | 25,726,706 | 31,462,075 | 25,726,706 | ||||||||||||
Mortgage Loans | 33,961,984 | 30,330,534 | 33,961,984 | 30,330,534 | ||||||||||||
Payroll Loans | 24,219,125 | 18,368,161 | 37,949,073 | 30,802,966 | ||||||||||||
Financing and Vehicles Lease | 2,346,083 | 1,968,549 | 47,167,964 | 39,755,459 | ||||||||||||
Others (2) | 37,979,820 | 30,710,729 | 40,272,683 | 33,265,326 | ||||||||||||
Agricultural | 3,231,385 | 3,065,614 | 3,251,026 | 3,119,304 | ||||||||||||
Public Sector | 837,103 | 295,002 | 837,372 | 295,002 | ||||||||||||
State (3) | 256,160 | 267,090 | 256,160 | 267,090 | ||||||||||||
Municipal | 580,943 | 27,910 | 581,212 | 27,910 | ||||||||||||
Federal | - | 2 | - | 2 | ||||||||||||
Total | 247,926,077 | 228,840,913 | 317,635,950 | 290,529,259 |
(1) Includes the activities of mortgage companies - business plan, transportation services, health, personal and others.
(2) Includes personal loans, overdraft among others.
(3) Mainly includes working capital operations.
e) Classification of Loan Portfolio and Respective Allowance for Loan Losses by Risk Level
Bank | ||||||||||||||
06/30/2019 | ||||||||||||||
Loan Portfolio | Allowance | |||||||||||||
Risk Level | Minimum Allowance Required (%) | Current | Past Due (1) | Total (3) | Required | Additional (2) | Total | |||||||
AA | - | 103,344,965 | - | 103,344,965 | - | - | - | |||||||
A | 0.5% | 70,941,788 | - | 70,941,788 | 354,709 | 183,176 | 537,885 | |||||||
B | 1% | 20,163,103 | 2,211,883 | 22,374,986 | 223,750 | 31,606 | 255,356 | |||||||
C | 3% | 21,271,737 | 2,224,329 | 23,496,066 | 704,882 | 622,091 | 1,326,973 | |||||||
D | 10% | 8,606,673 | 2,193,737 | 10,800,410 | 1,080,041 | 639,249 | 1,719,290 | |||||||
E | 30% | 1,980,295 | 1,529,920 | 3,510,215 | 1,053,065 | 69,760 | 1,122,825 | |||||||
F | 50% | 1,694,207 | 1,665,370 | 3,359,577 | 1,679,789 | 22,366 | 1,702,155 | |||||||
G | 70% | 763,832 | 1,086,149 | 1,849,981 | 1,294,987 | 3,094 | 1,298,081 | |||||||
H | 100% | 2,827,073 | 5,411,783 | 8,238,856 | 8,238,856 | - | 8,238,856 | |||||||
Total | 231,593,673 | 16,323,171 | 247,916,844 | 14,630,077 | 1,571,342 | 16,201,419 |
Individual and Consolidated Financial Statements - June 30, 2019 54
Bank | ||||||||||||||
06/30/2018 | ||||||||||||||
Loan Portfolio | Allowance | |||||||||||||
Risk Level | Minimum Allowance Required (%) | Current | Past Due (1) | Total (3) | Required | Additional (2) | Total | |||||||
AA | - | 86,418,887 | - | 86,418,887 | - | - | - | |||||||
A | 0.5% | 85,725,762 | - | 85,725,762 | 428,629 | 314,187 | 742,816 | |||||||
B | 1% | 15,862,096 | 1,722,924 | 17,585,020 | 175,850 | 281,438 | 457,288 | |||||||
C | 3% | 9,814,455 | 1,858,781 | 11,673,236 | 350,197 | 787,055 | 1,137,252 | |||||||
D | 10% | 7,651,688 | 2,185,184 | 9,836,872 | 983,687 | 348,936 | 1,332,623 | |||||||
E | 30% | 2,923,066 | 1,653,167 | 4,576,233 | 1,372,870 | - | 1,372,870 | |||||||
F | 50% | 1,298,703 | 1,225,956 | 2,524,659 | 1,262,329 | - | 1,262,329 | |||||||
G | 70% | 841,486 | 954,592 | 1,796,078 | 1,257,254 | - | 1,257,254 | |||||||
H | 100% | 3,673,054 | 4,973,937 | 8,646,991 | 8,646,991 | - | 8,646,991 | |||||||
Total | 214,209,197 | 14,574,541 | 228,783,738 | 14,477,807 | 1,731,616 | 16,209,423 | ||||||||
Consolidated | ||||||||||||||
06/30/2019 | ||||||||||||||
Loan Portfolio | Allowance | |||||||||||||
Risk Level | Minimum Allowance Required (%) | Current | Past Due (1) | Total (3) | Required | Additional (2) | Total | |||||||
AA | - | 121,617,624 | - | 121,617,624 | - | - | - | |||||||
A | 0.5% | 109,957,045 | - | 109,957,045 | 549,785 | 203,546 | 753,331 | |||||||
B | 1% | 24,481,920 | 3,869,120 | 28,351,040 | 283,510 | 31,606 | 315,116 | |||||||
C | 3% | 22,622,059 | 3,661,940 | 26,283,999 | 788,520 | 621,477 | 1,409,997 | |||||||
D | 10% | 9,103,742 | 2,891,298 | 11,995,040 | 1,199,504 | 639,249 | 1,838,753 | |||||||
E | 30% | 2,126,177 | 1,914,429 | 4,040,606 | 1,212,182 | 69,760 | 1,281,942 | |||||||
F | 50% | 1,795,200 | 1,976,856 | 3,772,056 | 1,886,028 | 23,385 | 1,909,413 | |||||||
G | 70% | 784,211 | 1,308,911 | 2,093,122 | 1,465,185 | 3,094 | 1,468,279 | |||||||
H | 100% | 2,955,121 | 6,559,151 | 9,514,272 | 9,514,272 | - | 9,514,272 | |||||||
Total | 295,443,099 | 22,181,705 | 317,624,804 | 16,898,986 | 1,592,117 | 18,491,103 | ||||||||
Consolidated | ||||||||||||||
06/30/2018 | ||||||||||||||
Loan Portfolio | Allowance | |||||||||||||
Risk Level | Minimum Allowance Required (%) | Current | Past Due (1) | Total (3) | Required | Additional (2) | Total | |||||||
AA | - | 102,299,630 | - | 102,299,630 | - | - | - | |||||||
A | 0.5% | 120,552,090 | - | 120,552,090 | 602,760 | 335,781 | 938,541 | |||||||
B | 1% | 20,086,604 | 3,241,510 | 23,328,114 | 233,281 | 281,438 | 514,719 | |||||||
C | 3% | 10,932,312 | 3,189,419 | 14,121,731 | 423,652 | 787,055 | 1,210,707 | |||||||
D | 10% | 7,863,066 | 2,740,953 | 10,604,019 | 1,060,402 | 349,383 | 1,409,785 | |||||||
E | 30% | 3,008,634 | 1,952,151 | 4,960,785 | 1,488,236 | - | 1,488,236 | |||||||
F | 50% | 1,444,382 | 1,514,663 | 2,959,045 | 1,479,523 | - | 1,479,523 | |||||||
G | 70% | 851,230 | 1,144,200 | 1,995,430 | 1,396,801 | - | 1,396,801 | |||||||
H | 100% | 3,754,703 | 5,903,044 | 9,657,747 | 9,657,747 | - | 9,657,747 | |||||||
Total | 270,792,651 | 19,685,940 | 290,478,591 | 16,342,402 | 1,753,657 | 18,096,059 |
Individual and Consolidated Financial Statements - June 30, 2019 55
(1) Includes current and past-due operations.
(2) The additional allowance is recognized based mainly on the expected realization of the loan portfolio, in addition to the current minimum regulatory requirements.
(3) The total loan portfolio includes the value of a credit of R$9,234 (06/30/2018 - R$57,175) Bank and R$11,144 (06/30/2018 - R$50,667) Consolidated, related to the adjustment to fair value of loans that are being hedged, recorded in accordance with Article 5 of Circular Letter 3,624 of the Bacen of December 26, 2013 and are not included in the note of the risk levels (Note 6.b.VI.a).
f) Changes in Allowance for Loan Losses
Bank | Consolidated | |||||||||||||
01/01 to | 01/01 to 06/30/2018 | 01/01 to | 01/01 to 06/30/2018 | |||||||||||
Opening Balance | 16,734,154 | 15,867,217 | 18,789,123 | 17,461,974 | ||||||||||
Allowances Recognized | 5,202,029 | 5,473,887 | 6,358,594 | 6,490,460 | ||||||||||
Write-offs | (5,734,764) | (5,131,681) | (6,656,614) | (5,856,375) | ||||||||||
Closing Balance | 16,201,419 | 16,209,423 | 18,491,103 | 18,096,059 | ||||||||||
Recoveries Credits (1) | 974,926 | 988,719 | 1,035,810 | 1,129,176 |
(1) It is recorded as financial income in the items: lending operations and leasing operations. Includes results of assignment without recourse, related to the prior operations written off, as losses amounting the value to R$115,368 (2018 - R$34,564) Bank and R$115,368 (2018 - R$34,564) Consolidated.
g) Renegotiated Credits
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Renegotiated Credits | 13,888,321 | 13,097,972 | 15,602,623 | 13,822,499 | ||||||||||
Allowance for Loan Losses | (7,897,738) | (7,618,519) | (8,317,214) | (7,835,389) | ||||||||||
Percentage of Coverage on Renegotiated Credits | 56.9% | 58.2% | 53.3% | 56.7% |
h) Loan Portfolio Concentration
Consolidated | ||||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||||
Loan Portfolio and Credit Guarantees (1), Securities (2) and Derivatives Financial Instruments (3) | Risk | % | Risk | % | ||||||||||
Largest Debtor | 4,081,365 | 1.0% | 5,410,538 | 1.4% | ||||||||||
10 Largest | 28,951,483 | 7.0% | 29,255,268 | 7.8% | ||||||||||
20 Largest | 46,443,006 | 11.3% | 45,682,132 | 12.1% | ||||||||||
50 Largest | 74,448,050 | 18.1% | 73,092,263 | 19.4% | ||||||||||
100 Largest | 96,409,966 | 23.5% | 96,580,776 | 25.7% |
(1) Includes installments of credit to builders/developers.
(2) Refers to debentures, promissory notes and certificates of real estate receivables - CRI.
(3) Refers to credit of derivatives risk.
9. Foreign Exchange Portfolio
Bank/Consolidated | |||||||
06/30/2019 | 06/30/2018 | ||||||
Assets | |||||||
Rights to Foreign Exchange Sold | 75,857,440 | 28,487,772 | |||||
Exchange Purchased Pending Settlement | 52,320,981 | 37,620,816 | |||||
Advances in Local Currency | (4,256,505) | (294,762) | |||||
Income Receivable from Advances and Importing Financing (Note 8.a) | 111,591 | 115,876 | |||||
Currency and Documents Term Foreign Currency | 60,996 | 6,089 | |||||
Total | 124,094,503 | 65,935,791 | |||||
Liabilities | |||||||
Exchange Sold Pending Settlement | 80,816,694 | 35,670,665 | |||||
Foreign Exchange Purchased | 47,033,370 | 29,601,915 | |||||
Advances on Foreign Exchange Contracts (Note 8.a) | (6,347,857) | (6,419,824) | |||||
Others | 96 | 104 | |||||
Total | 121,502,303 | 58,852,860 | |||||
Memorandum Accounts | |||||||
Outstanding Import Credits – Foreign Currency | - | 1,376,467 | |||||
Confirmed Export Credits – Foreign Currency | - | 833,400 |
Individual and Consolidated Financial Statements - June 30, 2019 56
10. Securities Trading and Brokerage
Bank | Consolidated | ||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||
Assets | |||||||
Financial Assets and Pending Settlement Transactions | 173,758 | 109,284 | 413,093 | 109,897 | |||
Clearinghouse Transactions | 4,769 | - | 4,772 | 77,499 | |||
Debtors Pending Settlement | 1,993 | - | 3,238,068 | 441,152 | |||
Stock Exchanges - Guarantee Deposits | 188,773 | 54,692 | 188,773 | 54,692 | |||
Others (1) | 850,946 | 318,500 | 850,945 | 318,501 | |||
Total | 1,220,239 | 482,476 | 4,695,651 | 1,001,741 | |||
Liabilities | |||||||
Financial Assets and Pending Settlement Transactions | 346,650 | 682,784 | 3,644,181 | 703,594 | |||
Creditors Pending Settlement | 13,868 | 4,392 | 366,275 | 983,938 | |||
Creditors for Loan of Shares | - | 441 | - | 441 | |||
Clearinghouse Transactions | - | - | 55,168 | 2,729 | |||
Records and Settlement | 1,613 | 1,403 | 2,746 | 3,405 | |||
Others | 14,012 | 24,561 | 14,019 | 24,564 | |||
Total | 376,143 | 713,581 | 4,082,389 | 1,718,671 |
(1) Refers to deposits used as guarantee for derivatives transactions made with customers in the counter market.
11. Deferred Taxes
a) Nature and Origin of Recorded Deferred Tax Assets
Bank | |||||||||||||
12/31/2018 | Recognition | Realization | 06/30/2019 | 06/30/2018 | |||||||||
Allowance for Loan Losses | 11,717,258 | 1,998,149 | (1,788,162) | 11,927,245 | 11,024,653 | ||||||||
Reserve for Legal and Administrative Proceedings - Civil | 1,359,671 | 237,169 | (241,719) | 1,355,121 | 1,092,200 | ||||||||
Reserve for Tax Risks and Legal Obligations | 1,191,066 | 166,380 | (19,869) | 1,337,577 | 1,391,323 | ||||||||
Reserve for Legal and Administrative Proceedings - Labor | 1,867,983 | 347,105 | (350,553) | 1,864,535 | 1,789,907 | ||||||||
Adjustment to Fair Value of Trading Securities and Derivatives (1) | 2,459,145 | 2,536,369 | (2,391,539) | 2,603,975 | 1,591,788 | ||||||||
Adjustment to Fair Value of Available-for-sale Securities and Cash Flow Hedge (1) | 383,413 | 93,225 | - | 476,638 | 525,603 | ||||||||
Accrual for Pension Plan (2) | 1,109,912 | 565,551 | (14,511) | 1,660,952 | 856,615 | ||||||||
Profit Sharing, Bonuses and Personnel Gratuities | 410,087 | 338,012 | (410,873) | 337,226 | 326,441 | ||||||||
Other Temporary Provisions (3) | 3,053,048 | - | (334,468) | 2,718,580 | 3,169,116 | ||||||||
Total Tax Credits on Temporary Differences | 23,551,583 | 6,281,960 | (5,551,694) | 24,281,849 | 21,767,646 | ||||||||
Tax Losses and Negative Social Contribution Bases | 478,528 | - | (478,528) | - | 3,007,988 | ||||||||
Social Contribution Tax - Executive Act 2,158/2001 | 417,464 | - | (55,331) | 362,133 | 423,730 | ||||||||
Balance of Recorded Deferred Tax Assets | 24,447,575 | 6,281,960 | (6,085,553) | 24,643,982 | 25,199,364 |
Individual and Consolidated Financial Statements - June 30, 2019 57
Consolidated | |||||||||||||
12/31/2018 | Recognition | Realization | 06/30/2019 | 06/30/2018 | |||||||||
Allowance for Loan Losses | 13,146,128 | 2,502,437 | (2,082,136) | 13,566,429 | 12,383,256 | ||||||||
Reserve for Legal and Administrative Proceedings - Civil | 1,470,536 | 288,165 | (286,940) | 1,471,761 | 1,218,833 | ||||||||
Reserve for Tax Risks and Legal Obligations | 1,994,094 | 187,252 | (45,592) | 2,135,754 | 2,349,037 | ||||||||
Reserve for Legal and Administrative Proceedings - Labor | 1,994,195 | 370,046 | (359,217) | 2,005,024 | 1,919,783 | ||||||||
Adjustment to Fair Value of Trading Securities and Derivatives (1) | 2,461,985 | 2,536,533 | (2,376,733) | 2,621,785 | 1,600,386 | ||||||||
Adjustment to Fair Value of Available-for-sale Securities and Cash Flow Hedge (1) | 427,108 | 113,987 | (4,012) | 537,083 | 561,513 | ||||||||
Accrual for Pension Plan (2) | 1,119,330 | 570,705 | (14,511) | 1,675,524 | 861,634 | ||||||||
Profit Sharing, Bonuses and Personnel Gratuities | 452,046 | 369,478 | (452,135) | 369,389 | 350,612 | ||||||||
Other Temporary Provisions (3) | 3,252,458 | 84,118 | (384,623) | 2,951,953 | 3,543,050 | ||||||||
Total Tax Credits on Temporary Differences | 26,317,880 | 7,022,721 | (6,005,899) | 27,334,702 | 24,788,104 | ||||||||
Tax Loss Carryforwards | 928,752 | 125,514 | (527,003) | 527,263 | 3,349,795 | ||||||||
Social Contribution Tax - Executive Act 2,158/2001 | 417,463 | - | (55,3310) | 362,133 | 423,729 | ||||||||
Balance ofRecorded Tax Credits | 27,664,095 | 7,148,235 | (6,588,232) | 28,224,098 | 28,561,628 |
(1) Includes tax credits IRPJ, CSLL, PIS and Cofins.
(2) Includes tax credits IRPJ and CSLL, adjustments on plan benefits to employees as mentioned Note 3.n.
(3) Composed mainly by administrative provisions nature.
On June 30, 2019, there are deferred tax assets not registered in assets in the amount of R$256,115 (06/30/2018 - R$14,077) in the Bank and R$279,856 (06/30/2018 - R$14,077) in the Consolidated, whose expectation of achievement exceeds 10 years.
The accounting record of the deferred tax assets in the Santander Brasil financial statements was made at the rates applicable to the expected period of its realization and is based on the projection of future results and a technical study prepared pursuant to CMN Resolution nº 3,059/2002, with the amendments to the Resolution CMN nº 4,441/2015.
b) Expected Realization of Recorded Tax Credits
Bank | |||||||
06/30/2019 | |||||||
Temporary Differences | Tax Loss | Total | |||||
Year | IRPJ | CSLL | PIS/Cofins | Carryforwards | CSLL 18% | Recorded | |
2019 | 1,973,105 | 1,190,315 | 44,385 | - | 226,199 | 3,434,004 | |
2020 | 4,199,287 | 2,532,508 | 88,770 | - | 135,932 | 6,956,499 | |
2021 | 4,490,694 | 2,651,995 | 88,770 | - | - | 7,231,459 | |
2022 | 2,214,408 | 1,330,388 | 49,294 | - | - | 3,594,090 | |
2023 | 514,774 | 312,869 | 9,816 | - | - | 837,459 | |
2024 to 2026 | 1,076,142 | 651,615 | 29,448 | - | - | 1,757,205 | |
2027 to 2029 | 491,887 | 316,840 | 24,539 | - | - | 833,266 | |
Total | 14,960,297 | 8,986,530 | 335,022 | - | 362,133 | 24,643,982 | |
Consolidated | |||||||
06/30/2019 | |||||||
Temporary Differences | Tax Loss | Total | |||||
Year | IRPJ | CSLL | PIS/Cofins | Carryforwards | CSLL 18% | Recorded | |
2019 | 2,262,909 | 1,356,251 | 45,168 | 142,282 | 226,199 | 4,032,809 | |
2020 | 4,684,751 | 2,807,790 | 90,335 | 105,484 | 135,934 | 7,824,294 | |
2021 | 4,884,937 | 2,885,884 | 90,313 | 76,360 | - | 7,937,494 | |
2022 | 2,441,943 | 1,465,505 | 50,814 | 62,691 | - | 4,020,953 | |
2023 | 1,012,857 | 586,484 | 11,338 | 11,692 | - | 1,622,371 | |
2024 to 2026 | 1,096,893 | 662,451 | 30,741 | 113,412 | - | 1,903,497 | |
2027 to 2029 | 515,341 | 326,923 | 25,074 | 15,342 | - | 882,680 | |
Total | 16,899,631 | 10,091,288 | 343,783 | 527,263 | 362,133 | 28,224,098 |
Due to differences between accounting, tax and corporate, expected realization of tax credits should not be taken as indicative of future net income.
c) Present Value of Tax Credits
The present value of the tax credits recorded is R$22,155,321 (06/30/2018 - R$21,450,480) in the Bank and R$25,355,104 (06/30/2018 - R$24,222,721) in the Consolidated, calculated according to with the expectation of realizing the temporary differences, tax loss carryforwards, negative social contribution tax, Social Contribution 18% - MP 2,158/2001 and the average funding rate, projected for the corresponding periods.
Individual and Consolidated Financial Statements - June 30, 2019 58
12. Other Receivables - Other
Bank | Consolidated | ||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||
Notes and Credits Receivable (Note 8.a) | |||||||
Credit Cards | 25,212,497 | 20,971,033 | 25,336,720 | 21,134,949 | |||
Receivables (1) | 21,581,152 | 17,440,054 | 24,771,794 | 20,749,760 | |||
Escrow Deposits for: | |||||||
Tax Claims | 4,984,206 | 5,114,935 | 6,880,338 | 7,464,336 | |||
Labor Claims | 2,429,035 | 1,781,500 | 2,574,218 | 1,880,588 | |||
Others - Civil | 1,209,814 | 1,132,364 | 1,470,349 | 1,300,717 | |||
Contract Guarantees - Former Controlling Stockholders (Note 22.i) | 102,758 | 631,435 | 102,758 | 713,519 | |||
Recoverable Taxes | 3,579,852 | 4,007,318 | 4,599,757 | 5,046,892 | |||
Receivables - Buyer Services | - | 53,453 | - | 17,397 | |||
Reimbursable Payments | 182,417 | 179,502 | 207,941 | 211,377 | |||
Salary Advances/Others | 215,852 | 200,625 | 480,046 | 272,038 | |||
Employee Benefit Plan (Note 34) | 311,969 | 161,840 | 378,510 | 206,965 | |||
Debtors for Purchase of Assets (Note 8.a) | 500,777 | 353,922 | 500,777 | 353,922 | |||
Receivable from Affiliates | 32,309 | 22,338 | 14,644 | 2,613 | |||
Others | 1,484,977 | 937,290 | 2,648,816 | 1,917,242 | |||
Total | 61,827,615 | 52,987,609 | 69,966,668 | 61,272,315 |
(1) It consists of operations with credit assignment characteristics substantially composed of "Confirming" operations with companies subject to credit risk and analysis of loan losses by segment in accordance with the Bank risk policies.
13. Dependences Information and Foreign Subsidiary
Branches:
Cayman
The Grand Cayman Agency is licensed under the Banks and Fiduciary Companies Act and is duly registered as a Foreign Company with the Registrar of Companies in Grand Cayman, Cayman Islands. The agency is therefore duly authorized to carry out banking business in the Cayman Islands and is currently engaged in fund raising business in the international banking and capital market to provide credit lines to Banco Santander, which are then extended to Banco Santander clients' for financing working capital and foreign trade. It also receives deposits in foreign currency from corporate clients and individuals and provides credit to Brazilian and foreign clients, primarily to support commercial operations with Brazil.
Luxembourg
On June 9, 2017, Banco Santander obtained authorization from the Brazilian Central Bank to set up an agency in Luxembourg with a capital of US$1 billion, with the objective of complementing the foreign trade strategy for corporate clients (large Brazilian companies and their operations abroad) and offer financial products and services through an offshore entity that is not established in a jurisdiction with favored taxation and that allows for the increase of funding capacity. The opening of the agency was authorized by the Minister of Finance of Luxembourg on March 5, 2018. On April 3, 2018, after the reduction of the capital of the Cayman Agency in the equivalent amount, the value of US$1 billion was allocated to capital of the Luxembourg branch.
Subsidiary:
Banco Santander has a subsidiary in Spain, Santander Brasil, Establecimiento Financiero de Credito, S.A. (Santander Brasil EFC), to complement the foreign trade strategy for corporate clients - large brazilian companies and their operations abroad - and offer products and financial services through an offshore entity that is not established in a jurisdiction with favored taxation.
The summarized financial position of dependency and foreign subsidiary, converted at the exchange rate prevailing at balance sheet date in the financial statements include (without eliminating transactions with related parties):
Individual and Consolidated Financial Statements - June 30, 2019 59
Grand Cayman Branch (3) | Luxembourg Branch (3) | Santander Brasil EFC (3) | |||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||||
Assets | 108,808,413 | 89,995,075 | 14,328,203 | 7,092,248 | 3,561,525 | 3,592,221 | |||||
Current and Long-term Assets | 108,808,413 | 89,995,075 | 14,327,897 | 7,092,248 | 3,561,525 | 3,592,221 | |||||
Cash | 7,263,557 | 4,247,638 | 122,469 | 13,984 | 65,137 | 352,281 | |||||
Interbank Investments | 17,160,861 | 8,350,117 | 1,260,548 | 5,043,651 | 2,397,285 | 1,260,896 | |||||
Securities and Derivatives Financial Instruments | 62,256,439 | 45,143,556 | 752,605 | 37,553 | 34,070 | 61,531 | |||||
Lending Operations (1) | 12,659,492 | 21,810,997 | 11,992,668 | 1,693,654 | 738,827 | 1,857,046 | |||||
Foreign Exchange Portfolio | 7,008,608 | 8,990,345 | 156,752 | - | - | - | |||||
Others | 2,459,456 | 1,452,422 | 42,855 | 303,406 | 326,206 | 60,467 | |||||
Permanent Assets | - | - | 306 | - | - | - | |||||
Liabilities | 108,808,413 | 89,995,075 | 14,328,203 | 7,092,248 | 3,561,525 | 3,592,221 | |||||
Current and Long-term Liabilities | 57,314,225 | 47,068,029 | 10,233,873 | 3,224,879 | 129,362 | 102,905 | |||||
Deposits and Money Market Funding | 11,356,130 | 7,545,418 | 1,286,884 | 2,130,574 | 28,637 | 40,562 | |||||
Funds from Acceptance and Issuance of Securities | 6,274,639 | 4,908,970 | 881,694 | - | - | - | |||||
Debt Instruments Eligible to Compose Capital | 9,673,047 | 22,803,647 | 7,712,219 | 1,092,760 | - | - | |||||
Borrowings (2) | 17,450,755 | 8,907,618 | 156,332 | - | - | - | |||||
Foreign Exchange Portfolio | 7,010,673 | - | - | - | - | - | |||||
Others | 5,548,981 | 2,902,376 | 196,744 | 1,545 | 100,725 | 62,343 | |||||
Deferred Income | 117 | 123 | - | - | 8,959 | 14,317 | |||||
Stockholders' Equity | 51,494,071 | 42,926,923 | 4,094,330 | 3,867,369 | 3,423,204 | 3,474,999 | |||||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | ||||||
Net Income | 1,248,289 | 1,201,125 | 125,115 | 11,886 | 3,059 | 40,282 |
(1) Refers mainly to lending and export financing operations.
(2) Borrowings abroad regarding financing lines to exports and imports and other lines of credit.
(3) The functional currency is Real (Note 3.b).
Individual and Consolidated Financial Statements - June 30, 2019 60
14. Investments in Affiliates and Subsidiaries
a) Amount of Shares or Quotas Owned, Direct and Indirect Participation
06/30/2019 | |||||||||
Quantity of Shares or Quotas Owned (in Thousands) | Direct | Consolidated | |||||||
Investments | Activity | Common Shares and Quotas | Preferred Shares | Participation | Participation | ||||
Controlled by Banco Santander | |||||||||
Santander Leasing S.A. Arrendamento Mercantil (Santander Leasing) | Leasing | 11,043,798 | - | 78.57% | 99.99% | ||||
Santander Brasil Administradora de Consórcio Ltda. (Santander Brasil Consórcio) (1) | Buying Club | 174,886 | - | 100.00% | 100.00% | ||||
Banco Bandepe S.A. (2) | Bank | 3,589 | - | 100.00% | 100.00% | ||||
Banco RCI Brasil S.A. | Bank | 81 | 81 | 39.89% | 39.89% | ||||
Aymoré Crédito, Financiamento e Investimento S.A. (Aymoré CFI) (3) | Financial | 287,706,670 | - | 100.00% | 100.00% | ||||
Santander CCVM (4) | Broker | 14,067,673 | 14,067,673 | 99.99% | 100.00% | ||||
Santander Corretora de Seguros, Investimentos e Serviços S.A. (Santander Corretora de Seguros) | Other Activities | 7,184 | - | 100.00% | 100.00% | ||||
Getnet S.A. (5) | Payment Institution | 69,565 | - | 100.00% | 100.00% | ||||
Sancap Investimentos e Participações S.A. (Sancap) (6) | Holding | 17,114,176 | - | 100.00% | 100.00% | ||||
Santander Brasil EFC | Financial | 75 | - | 100.00% | 100.00% | ||||
Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. (current name of Atual Companhia Securitizadora de Créditos Financeiros)(7) | Recovery of Defaulted Credits | 692,834 | - | 100.00% | 100.00% | ||||
Santander Holding Imobiliária S.A. (8) | Holding | 283,781 | - | 100.00% | 100.00% | ||||
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.) (9) | Tecnology | 45,371 | - | 100.00% | 100.00% | ||||
Rojo Entretenimento S.A. (10) | Other Activities | 7,417 | - | 94.60% | 94.60% | ||||
BEN Benefícios e Serviços S.A. (BEN Benefícios) (11) | Other Activities | 45,001 | - | 100.00% | 100.00% | ||||
Esfera Fidelidade S.A. (12) | Other Activities | 10,001 | - | 100.00% | 100.00% | ||||
Controlled by Aymoré CFI | |||||||||
Super Pagamentos e Administração de Meios Eletrônicos S.A. (Super Pagamentos) | Payment Institution | 90,724 | - | - | 100.00% | ||||
Banco Olé Bonsucesso Consignado S.A. (Olé Consignado) (13) | Bank | 261,359 | - | - | 60.00% | ||||
Banco PSA | Bank | 105 | - | - | 50.00% | ||||
Banco Hyundai Capital Brasil S.A. (current name of BHJV Assessoria e Consultoria Empresarial Ltda.) (14) | Bank | 150,000 | - | - | 50.00% | ||||
Controlled by Santander Leasing | |||||||||
PI Distribuidora de Títulos e Valores Mobiliários S.A. (current name of Santander Finance Arrendamento Mercantil S.A.) (PI DTVM) (15) | Leasing | 182 | - | - | 100.00% | ||||
Controlled by Sancap | |||||||||
Santander Capitalização S.A. (Santander Capitalização) | Capitalization | 64,615 | - | - | 100.00% | ||||
Evidence Previdência S.A. (16) | Private Pension | 25,578,184 | - | - | 100.00% |
Individual and Consolidated Financial Statements - June 30, 2019 61
06/30/2019 | ||||||||
Quantity of Shares or Quotas Owned (in Thousands) | Direct | Consolidated | ||||||
Investments | Activity | Common Shares and Quotas | Preferred Shares | Participation | Participation | |||
Controlled by Atual Serviços de Recuperação de Créditos | ||||||||
Return Capital Serviços de Recuperação de Créditos S.A. (current name of Ipanema Empreendimentos e Participações S.A.) (17) | Collection and Recover of Credit Management | 140 | - | - | 70.00% | |||
Controlled by Return Capital Serviços de Recuperação de Créditos S.A. (current name of Ipanema Empreendimentos e Participações S.A.) (19) | ||||||||
Return Gestão de Recursos S.A. (current name of Gestora de Investimentos Ipanema S.A.) (17) | Resources Management | 11 | - | - | 100.00% | |||
Jointly Controlled Companies by Banco Santander | ||||||||
Cibrasec Companhia Brasileira de Securitização (Cibrasec) (18) | Securitization | 4 | - | 9.72% | 9.72% | |||
Norchem Participações e Consultoria S.A. (Norchem Participações) | Other Activities | 950 | - | 50.00% | 50.00% | |||
Estruturadora Brasileira de Projetos S.A. - EBP (EBP) (19) | Other Activities | 3,859 | 2,953 | 11.11% | 11.11% | |||
Gestora de Inteligência de Crédito S.A. (Gestora de Crédito) (20) | Credit Bureau | 3,560 | 3,560 | 20.00% | 20.00% | |||
Campo Grande Empreendimentos Ltda. (21) | Other Activities | 255 | - | 25.32% | 25.32% | |||
Jointly Controlled Companies by Santander Corretora de Seguros | ||||||||
Webmotors S.A. (22) | Other Activities | 366,182,676 | - | - | 70.00% | |||
TecBan - Tecnologia Bancária S.A. (TecBan) | Other Activities | 743,944 | - | - | 19.81% | |||
PSA Corretora de Seguros e Serviços Ltda. (PSA Corretora de Seguros) (23) | Insurance Broker | 450 | - | - | 50.00% | |||
Jointly Controlled by Sancap | ||||||||
Santander Auto S.A. (24) | Other Activities | 7,500 | - | - | 50.00% | |||
Controlled by Getnet S.A | ||||||||
Auttar HUT Processamento de Dados Ltda. (Auttar HUT) | Other Activities | 3,865 | - | - | 100.00% | |||
Integry Tecnologia e Serviços A.H.U Ltda. (Integry Tecnologia) | Other Activities | 76,276 | - | - | 99.99% | |||
Toque Fale Serviços de Telemarketing Ltda. (Toque Fale) | Other Activities | 6,050 | - | - | 100.00% | |||
Controlled by Webmotors S.A. | ||||||||
Loop Gestão de Pátios S.A. (Loop) (25) | Other Activities | 23,243 | - | - | 51.00% | |||
Controlled by TecBan | ||||||||
Tbnet Comércio, Locação e Administração Ltda. (Tbnet) | Other Activities | 530,301 | - | - | 19.81% | |||
Controlled by Tebnet | ||||||||
Tbforte Segurança e Transporte de Valores Ltda. (Tbforte) | Other Activities | 517,505 | - | - | 19.81% | |||
Controlled by Olé Consignado | ||||||||
BPV Promotora de Vendas e Cobrança Ltda. | Other Activities | 6,950 | - | - | 60.00% | |||
Olé Tecnologia Ltda. | Other Activities | 450 | - | - | 60.00% | |||
Affiliate of Banco Santander | ||||||||
Norchem Holdings e Negócios S.A. (Norchem Holdings) | Other Activities | 1,679 | - | 21.75% | 21.75% |
Individual and Consolidated Financial Statements - June 30, 2019 62
b) Value of Investments
Adjusted Stockholders' Equity | Net Income Adjusted | Investments Value | Equity Accounting Results | ||||||||||||||
06/30/2019 | 01/01 to | 06/30/2019 | 06/30/2018 | 01/01 to | 01/01 to 06/30/2018 | ||||||||||||
Controlled by Banco Santander | |||||||||||||||||
Santander Leasing | 5,739,409 | 3,066 | 4,509,684 | 4,475,950 | 2,409 | 202,030 | |||||||||||
Banco Bandepe S.A. | 4,185,552 | 146,169 | 4,185,552 | 3,133,162 | 146,169 | 136,031 | |||||||||||
Santander Brasil EFC | 3,423,205 | 3,059 | 3,423,205 | 3,474,999 | 3,059 | 40,282 | |||||||||||
Santander Corretora de Seguros | 2,765,632 | 203,540 | 2,765,632 | 2,398,242 | 203,540 | 206,391 | |||||||||||
Aymoré CFI | 2,098,743 | 617,715 | 2,098,743 | 1,716,460 | 617,715 | 270,992 | |||||||||||
Getnet S.A. | 2,466,215 | 301,099 | 2,466,215 | 1,790,414 | 297,138 | 204,306 | |||||||||||
Goodwill on the Acquisition of Residual Participation of Getnet S.A. (5) | - | - | 1,139,372 | - | - | - | |||||||||||
Banco RCI Brasil S.A. | 1,223,373 | 93,455 | 488,015 | 466,715 | 37,280 | 39,443 | |||||||||||
Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. | 762,529 | 17,641 | 762,295 | 254,534 | 17,659 | 5,915 | |||||||||||
Santander CCVM | 638,406 | 41,796 | 638,406 | 593,081 | 41,795 | 63,168 | |||||||||||
Sancap | 636,753 | 113,341 | 636,753 | 432,553 | 113,260 | 57,712 | |||||||||||
Santander Brasil Consórcio | 368,725 | 96,622 | 368,725 | 239,757 | 96,622 | 65,443 | |||||||||||
Others | 1,139,700 | 20,497 | 738,455 | 391,355 | 32,401 | (3,584) | |||||||||||
Total | 24,221,052 | 19,367,222 | 1,609,047 | 1,288,129 |
Adjusted Stockholders' Equity | Net Income (Loss) Adjusted | Investments Value | Equity Accounting Results | ||||||||||||||
06/30/2019 | 01/01 to | 06/30/2019 | 06/30/2018 | 01/01 to | 01/01 to | ||||||||||||
Jointly Controlled Companies Directly and Indirectly by Banco Santander | |||||||||||||||||
TecBan | 432,684 | 20,480 | 85,715 | 86,833 | 4,057 | (1,752) | |||||||||||
Gestora de Crédito | 277,208 | (18,280) | 55,442 | 25,823 | (3,656) | (3,690) | |||||||||||
Webmotors S.A. | 176,911 | 28,419 | 123,838 | 101,762 | 19,892 | 13,894 | |||||||||||
Norchem Holdings | 96,362 | 1,302 | 20,959 | 20,668 | 283 | 320 | |||||||||||
Cibrasec | 74,628 | 767 | 7,254 | 7,212 | 75 | 107 | |||||||||||
Norchem Participações | 41,391 | 1,180 | 20,696 | 25,614 | 590 | 628 | |||||||||||
EBP | 33,723 | 506 | 3,747 | 3,639 | 56 | (1,069) | |||||||||||
Santander Auto | 15,243 | 177 | 7,620 | - | 89 | - | |||||||||||
PSA Corretora | 1,530 | 458 | 765 | 1,022 | 229 | 281 | |||||||||||
Others | - | - | 5,265 | 5,264 | 105 | 280 | |||||||||||
Total | 331,301 | 277,837 | 21,720 | 8,999 |
Individual and Consolidated Financial Statements - June 30, 2019 63
(1) At an Extraordinary General Meeting (EGM) held on April 30, 2019, a capital increase of R$79,537 was approved, the share capital of R$95,349 increased to R$174,886 composed by 174,885,602 shares with R$1,00 (one real) nominative value each.
(2) At an EGM held on December 7, 2018, a capital increase of R$2,000,000 was approved , the share capital of R$2,787,689 increased to R$4,787,689 through the issuance of 1,405,667 (one million four hundred five thousand six hundred sixty-seven) new common shares, nominatives and without par value. The shareholder Banco Santander subscribed the fully of new common shares issued and pain-in the shares corresponding 50% of the capital share increase, being set that subscribed shares and outstanding of paind-in will be realize in term of one year counting since approving date of capital increased by Bacen.
(3) At an EGM held on April 26, 2019, a capital increase of R$137,880 was approved, the share capital of R$726,561 increased to R$864,441 without issuance of new shares.
(4) At an EGM held on April 26, 2019, a capital increase of R$1,689 was approved, the share capital of R$296,000 increased to R$297,689 without issuance of new shares.
(5) In February 25, 2019, Banco Santander acquired the Minority Shares totality of GetNet S.A., corresponding 11.5% of share capital of GetNet S.A., conform “Purchase and Sale Contract’s of shares and others deals of GetNet S.A.” with approving by Bacen in February 18, 2019. (Note 36.c)
(6) At an EGM held on April 2, 2019, a capital increase of R$200,000,000 was approved, the share capital of R$347,135 increased to R$547,135 composed by 17,114,176,389 (seventeen billion one hundred fourteen million one hundred seventy-six thousand three hundred eighty-nine) new common shares, nominative and without par value.
(7) At an EGM held on March 23, 2018, a capital increase of R$150,000 was approved, through the issuance of 145,419,292 (one hundred forty-five million, four hundred nineteen thousand and two hundred ninety-two) new common shares, nominative and without par value, the share capital of R$120,000 increased to R$270,000. The shares issued in the capital increase were fully subscribed by the stockholder of Banco Santander. In addition, the Extraordinary General Meeting issued the denomination change of the company to Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. At the AGM held on March 31, 2019, a capital increase of R$100,000 was approved, through the issuance of 92,174,394 ( ninety-two million, one hundred seventy-four thousand and three hundred ninety-four) new common shares, nominatives and without per value, the share capital of R$270,000 increased to R$370,000. The shares issuance in reason of capital growth was fully subscribed by shareholder Santander. At an EGM held on July 25, 2019, a capital increase of R$375,000 was approved, the share capital of R$370,000 increased to R$745,000 through the issuance of 335,240,479 (three hundred third-five million two hundred fourty thousand four hundred seventy-nine) new common shares, nominative and without par value.
(8) On May 14, 2019, the Bank Santander and your fully affiliate Santander Holding Imobiliária S.A. perform bound document with partners of Summer Empreendimentos Ltda establishing trade of purchase and sale terms of representative shares in the totality of share capital of Summer Empreendimentos. The operation conclusion is subject of new precedence conditions usual to this type of trade, including the previously authorization by BACEN (Note 36.a). At an EGM held on April 18, 2019, a capital increase of R$86,000 was approved, the share capital of R$24,500 increased to R$110,500 through the issuance of 108,271,434 (one hundred eight million two hundred seventy-one thousand four hundred thirdy-four) new common shares, nominatives and without per value. At EGM held on May 30, 2019, a capital increase of R$119,162 was approved, the share capital of R$110,500 increase to R$229,662 through the issuance of 151,009,682 (one hundred fifty-one million nine thousand six hundred eighty-two) new common shares, nominatives and without per value, at issuance's value share of R$0,7891 each.
(9) Company acquired on February 28, 2018, on the same date, Produban Serviços de Informática S.A. was changed to Santander Brasil Tecnologia S.A. (Note 36.g). At the Extraordinary Shareholders' Meeting held on March 19, 2018, the capital increase of Santander Brasil Tecnologia SA (currently known as Produban Serviços de Informática SA) was approved in the amount of R$4,000, through the capitalization of the reserve for equalization of dividends, without changing the number of shares, the capital stock being increased from R$91,048 to R$95,048, represented by 45,371,225 (forty-five million, three hundred and seventy-one thousand, two hundred and twenty-five) common shares, nominative and without par value.
(10) Investment transferred from non-current assets held for sale in June, 2018.
(11) Company incorporated in June 11, 2018 (Note 36.f). At the EGM held on March 27, 2019, a capital increase of R$49,999 was approved, the share capital of R$45,001 increased to R$90,000, through the issuance of 44,999,000 (forty-four million nine hundred ninety-nine thousand) new common shares, nominative and without par value. The shareholder Banco Santander subscribed a totality of new shares issued and paid in the shares corresponding 100% of share capital increase.
(12) Company incorporated on August 14, 2018 with the beginning of its activities in November 2018 (Note 36.d).
(13) Stockholders representing the entire share capital of Olé Consignado, at the Extraordinary Shareholders' Meeting held on February 9, 2018, approved the increase in the capital of Olé Consignado in the amount of R$120,000, from the current R$400,000 to R$520,000, through the issuance of 57,089,392 (fifty-seven million, eighty-nine thousand, three hundred and ninety-two) common, nominative and non-par value shares fully subscribed and paid-in by the stockholders on the date of the AGE in proportion to their respective stockholdings. The capital increase was approved by the Central Bank in an order dated March 15, 2018.
(14) The pre-operating company BHJV Assessoria e Consultoria em Gestão Empresarial Ltda., was incorporated on April 11, 2018 and transformed into Banco Hyundai Capital Brasil S.A. on December 13, 2018. Aymoré CFI, a wholly-owned subsidiary of Banco Santander , has the effective operational control of the company (Note 36.j). At the EGM held on February 19, 2019, a capital increase of R$200,000 was approved, through the issuance of 200,000,000 (two hundred million) new common shares, nominative and without par value, the share capital of R$100,000 increased to R$300,000. The shares issued as a result of the capital increase were fully subscribed by the shareholders Aymoré Financiamentos FI in the amount of R$100,000 and Hyundai Capital Services Inc. in the amount of R$100,000.
(15) At the EGM held in May 3, 2018, the shareholders of Company approved its change into a securities distributing company, and the change of its corporate name to SI Distribuidora de Títulos e Valores Mobiliários S.A. The change process was approved by Bacen in November 21, 2018. At an Extraordinary General Meeting held on December 17, 2018, SI Distribuidora de Valores Mobiliários SA approved the change of its corporate name to PI Distribuidora de Títulos e Valores Mobiliários SA. The amendment process was approved by Bacen in January 22, 2019 (Note 36.k).
Individual and Consolidated Financial Statements - June 30, 2019 64
(16) At an EGM held on April 2, 2019, a capital increase of R$200,000 was approved, the share capital of R$ 250,000 increased to R$450,000 through the issuance of 12,987,012,987 (twelve billion nine hundred eighty-seven million twelve thousand nine hundred eighty-seven) new common shares, nominative and without par value.
(17) At the EGM held in July 12, 2018, was approved the change of its corporate name of Ipanema Empreendimentos e Participações S.A. to Return Capital Serviços de Recuperação de Créditos S.A. At an AGM held on July 12, 2018, was approved the change of its corporate name Gestora de Investimentos Ipanema S.A. to Return Gestão de Recursos S.A.
(18) The Bank has a participation of less than 20%, and there is no control block in Cibrasec, and business decisions are taken jointly by the stockholders.
(19) According to its Bylaws, EBP was formed in order to carry out projects to contribute for the brazilian economic and social development for the period of 10 years. After the conclusion of the timetable set EPB closes its activities this year of 2018. The dissolution of its rights and liquidation were aproved in the EGM held on january 29, 2018. The Company is in the process of liquidation.
(20) Company incorporated in April 14, 2017 and it is in the pre-operational phase. Pursuant to the stockholders' agreement, the control is shared among stockholders who hold 20% of its share capital each (Note 36.i).
(21) Participation resulting from the credit recovery from the Banco Comercial and Investimentos Sudameris S.A. incorporated in 2009 by Banco ABN AMRO Real S.A., which in the same year was incorporated into the Banco Santander (Brasil) S.A. currently partner of Campo Grande Empreendimentos Ltda. The partners are conducting the procedures for extinction of the company, whose depends on the sale of a property. Once it has been sold, the liquidation of the company and each partner will receive its share of the equity.
(22) Although participation exceeds 50%, in accordance with the stockholder' agreement, the control is shared by Santander Corretora de Seguros and Carsales.com. Investments PTY LTD (Carsales).
(23) In accordance with the stockholders' agreement, the control is shared by Santander Corretora de Seguros and PSA Services LTD.
(24) Insurance company incorporated on October 9, 2018, through transformation of the corporate vehicle L.G.J.S.P.E. Empreendimentos e Participações S.A., submitted to Susep to obtain authorization to operate. In accordance with the shareholders' agreement, the control is shared by Sancap and HDI Seguros S.A. (Note 36.h).
(25) Investment acquired in September 25, 2018 (Note 36.e).
(26) mainly composed by Webmotors' qoodwill.
Individual and Consolidated Financial Statements - June 30, 2019 65
15. Fixed Assets
Bank | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Cost | Depreciation | Net | Net | ||||||||
Real Estate | 2,466,848 | (763,313) | 1,703,535 | 1,784,125 | |||||||
Land | 653,065 | - | 653,065 | 655,869 | |||||||
Buildings | 1,813,783 | (763,313) | 1,050,470 | 1,128,256 | |||||||
Others Fixed Assets | 13,122,924 | (8,831,547) | 4,291,377 | 3,877,252 | |||||||
Installations, Furniture and Equipment | 4,153,595 | (2,226,846) | 1,926,749 | 1,507,528 | |||||||
Data Processing Equipment | 3,627,411 | (3,166,319) | 461,092 | 355,823 | |||||||
Leasehold Improvements | 4,013,373 | (2,593,183) | 1,420,190 | 1,489,098 | |||||||
Security and Communication Equipment | 822,135 | (585,806) | 236,329 | 260,073 | |||||||
Others | 506,410 | (259,393) | 247,017 | 264,730 | |||||||
Total | 15,589,772 | (9,594,860) | 5,994,912 | 5,661,377 | |||||||
Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Cost | Depreciation | Net | Net | ||||||||
Real Estate | 2,752,408 | (794,156) | 1,958,252 | 1,958,922 | |||||||
Land | 720,469 | - | 720,469 | 689,254 | |||||||
Buildings | 2,031,939 | (794,156) | 1,237,783 | 1,269,668 | |||||||
Others Fixed Assets | 14,532,842 | (9,684,345) | 4,848,497 | 4,386,599 | |||||||
Installations, Furniture and Equipment | 4,275,058 | (2,250,495) | 2,024,563 | 1,606,971 | |||||||
Data Processing Equipment | 3,868,829 | (3,279,135) | 589,694 | 484,838 | |||||||
Leasehold Improvements | 4,087,529 | (2,645,029) | 1,442,500 | 1,509,027 | |||||||
Security and Communication Equipment | 1,789,653 | (1,248,029) | 541,624 | 520,937 | |||||||
Others | 511,773 | (261,657) | 250,116 | 264,826 | |||||||
Total | 17,285,250 | (10,478,501) | 6,806,749 | 6,345,521 |
16. Intangibles
Bank | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Cost | Amortization | Net | Net | ||||||||
Goodwill on Acquired Companies | 26,419,016 | (26,161,286) | 257,730 | 309,217 | |||||||
Other Intangible Assets | 9,786,888 | (6,485,174) | 3,301,714 | 2,980,950 | |||||||
Acquisition and Development of Software | 6,374,090 | (4,938,564) | 1,435,526 | 1,203,692 | |||||||
Exclusivity Contracts for Provision of Banking Services | 3,091,378 | (1,266,680) | 1,824,698 | 1,724,651 | |||||||
Others | 321,420 | (279,930) | 41,490 | 52,607 | |||||||
Total | 36,205,904 | (32,646,460) | 3,559,444 | 3,290,167 | |||||||
Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Cost | Amortization | Net | Net | ||||||||
Goodwill on Acquired Companies | 29,106,874 | (27,317,985) | 1,788,889 | 937,218 | |||||||
Other Intangible Assets | 10,507,444 | (6,915,584) | 3,591,860 | 3,189,341 | |||||||
Acquisition and Development of Software | 6,952,253 | (5,282,427) | 1,669,826 | 1,390,350 | |||||||
Exclusivity Contracts for Provision of Banking Services | 3,091,378 | (1,266,680) | 1,824,698 | 1,724,651 | |||||||
Others | 463,813 | (366,477) | 97,336 | 74,340 | |||||||
Total | 39,614,318 | (34,233,569) | 5,380,749 | 4,126,559 |
Individual and Consolidated Financial Statements - June 30, 2019 66
17. Funding and Borrowings and Onlendings
a) Deposits
Bank | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Without | Up to 3 | From 3 to | Over 12 | ||||||||
Maturity | Months | 12 Months | Months | Total | Total | ||||||
Demand Deposits | 20,702,993 | - | - | - | 20,702,993 | 17,280,179 | |||||
Savings Deposits | 46,574,515 | - | - | - | 46,574,515 | 42,570,994 | |||||
Interbank Deposits | - | 2,473,163 | 2,780,343 | 302,100 | 5,555,606 | 7,321,155 | |||||
Time Deposits (1) | 83,253 | 52,201,663 | 81,859,730 | 65,032,755 | 199,177,401 | 179,778,220 | |||||
Total | 67,360,761 | 54,674,826 | 84,640,073 | 65,334,855 | 272,010,515 | 246,950,548 | |||||
Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Without | Up to 3 | From 3 to | Over 12 | ||||||||
Maturity | Months | 12 Months | Months | Total | Total | ||||||
Demand Deposits | 20,521,469 | - | - | - | 20,521,469 | 17,369,253 | |||||
Savings Deposits | 46,574,515 | - | - | - | 46,574,515 | 42,570,994 | |||||
Interbank Deposits | - | 1,735,015 | 1,234,654 | 882,801 | 3,852,470 | 4,198,886 | |||||
Time Deposits (1) | 83,253 | 52,227,793 | 81,587,871 | 63,401,919 | 197,300,837 | 177,610,670 | |||||
Other Deposits | 6,228 | - | - | - | 6,228 | 4,283 | |||||
Total | 67,185,465 | 53,962,808 | 82,822,525 | 64,284,720 | 268,255,518 | 241,754,086 |
(1) Considering the maturities established in the respective applications, there is the possibility of immediate withdrawal, in advance of maturity.
b) Money Market Funding
Bank | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Up to 3 | From 3 to | Over 12 | |||||||||
Months | 12 Months | Months | Total | Total | |||||||
Own Portfolio | 74,509,051 | 175,892 | 111,530 | 74,796,473 | 111,419,674 | ||||||
Government Securities | 67,815,894 | 38,846 | 87,395 | 67,942,135 | 94,791,845 | ||||||
Debt Securities in Issue | 11,833 | 130,223 | 15,891 | 157,947 | 10,415,923 | ||||||
Others | 6,681,324 | 6,823 | 8,244 | 6,696,391 | 6,211,906 | ||||||
Third Parties | 7,001,131 | - | - | 7,001,131 | 17,274,900 | ||||||
Linked to Trading Portfolio Operations | 4,511,857 | 2,682,860 | 18,384,717 | 25,579,434 | 19,881,585 | ||||||
Total | 86,022,039 | 2,858,752 | 18,496,247 | 107,377,038 | 148,576,159 |
Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Up to 3 | From 3 to | Over 12 | |||||||||
Months | 12 Months | Months | Total | Total | |||||||
Own Portfolio | 69,735,146 | 175,891 | 24,247 | 69,935,284 | 100,998,296 | ||||||
Government Securities | 63,041,989 | 38,846 | 111 | 63,080,946 | 84,370,468 | ||||||
Debt Securities in Issue | 11,833 | 130,223 | 15,891 | 157,947 | 10,415,923 | ||||||
Others | 6,681,324 | 6,822 | 8,245 | 6,696,391 | 6,211,905 | ||||||
Third Parties | 7,001,131 | - | - | 7,001,131 | 12,274,957 | ||||||
Linked to Trading Portfolio Operations | 4,511,857 | 2,682,860 | 18,384,717 | 25,579,434 | 19,881,585 | ||||||
Total | 81,248,134 | 2,858,751 | 18,408,964 | 102,515,849 | 133,154,838 |
c) Funds from Acceptance and Issuance of Securities
Bank | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Up to 3 | From 3 to | Over 12 | |||||||||
Months | 12 Months | Months | Total | Total | |||||||
Real Estate Credit Notes, Mortgage Notes, | 6,726,894 | 33,925,001 | 32,905,217 | 73,557,112 | 65,050,033 | ||||||
Real Estate Credit Notes - LCI (1) | 4,215,444 | 8,394,811 | 15,659,460 | 28,269,715 | 26,019,014 | ||||||
Agribusiness Credit Notes - LCA | 2,428,518 | 9,469,046 | 2,370,945 | 14,268,509 | 11,332,754 | ||||||
Treasury Bills - LF (2) | 82,932 | 16,061,144 | 13,790,158 | 29,934,234 | 27,698,265 | ||||||
Guaranteed Real Estate Credit Notes - LIG (3) | - | - | 1,084,654 | 1,084,654 | - | ||||||
Securities Issued Abroad | 516,872 | 2,836,593 | 3,803,891 | 7,157,356 | 5,079,029 | ||||||
Eurobonds | 516,872 | 2,836,593 | 3,803,891 | 7,157,356 | 5,079,029 | ||||||
Funding by Structured Operations Certificates | 322,914 | 816,792 | 1,890,214 | 3,029,920 | 2,252,545 | ||||||
Total | 7,566,680 | 37,578,386 | 38,599,322 | 83,744,388 | 72,381,607 | ||||||
Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Up to 3 | From 3 to | Over 12 | |||||||||
Months | 12 Months | Months | Total | Total | |||||||
Exchange Acceptances | 190,922 | 480,756 | 834,422 | 1,506,100 | 1,266,039 | ||||||
Real Estate Credit Notes, Mortgage Notes, | |||||||||||
Credit and Similar Notes | 7,050,703 | 35,163,127 | 35,014,834 | 77,228,664 | 68,447,499 | ||||||
Real Estate Credit Notes - LCI (1) | 4,215,444 | 8,394,811 | 15,659,460 | 28,269,715 | 26,019,014 | ||||||
Agribusiness Credit Notes - LCA | 2,428,518 | 9,469,046 | 2,370,944 | 14,268,508 | 11,332,754 | ||||||
Treasury Bills - LF (2) | 406,741 | 17,299,270 | 15,899,775 | 33,605,786 | 31,095,731 | ||||||
Guaranteed Real Estate Credit Notes - LIG (3) | - | - | 1,084,655 | 1,084,655 | - | ||||||
Securities Issued Abroad | 516,872 | 2,802,963 | 3,062,664 | 6,382,499 | 5,079,029 | ||||||
Eurobonds | 516,872 | 2,802,963 | 3,062,664 | 6,382,499 | 5,079,029 | ||||||
Funding by Structured Operations Certificates | 322,914 | 816,792 | 1,890,214 | 3,029,920 | 2,252,545 | ||||||
Total | 8,081,411 | 39,263,638 | 40,802,134 | 88,147,183 | 77,045,112 |
Individual and Consolidated Financial Statements - June 30, 2019 67
(1) LCI are fixed income securities linked with mortgages and guaranteed by mortgage-backed securities or liens on property. On June 30, 2019, they have maturities between 2019 and 2026.
(2) The main features of the Treasury Bills are the minimum period of two years, minimum notional of R$300 and permission for early redemption of only 5% of the issued amount. On June 30, 2019, its maturities dates are between 2019 and 2025 (06/30/2018 - with maturity between 2018 and 2025).
(3) LIG are fixed income securities linked with mortgages and guaranteed by the issuer and by a pool of real estate credits separated from the other assets of the issuer. On June 30, 2019, they have maturities between 2021 and 2022.
Bank/Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Eurobonds | Issuance | Maturity | Currency | Interest Rate (p.a) | Total | Total | |||||
Eurobonds | 2017 | 2018 | USD | Zero Coupon a 2,3% | - | 775,123 | |||||
Eurobonds | 2017 | 2019 | USD | LIBOR 3M + 1,0% | 192,054 | 193,216 | |||||
Eurobonds | 2017 | 2024 | USD | 6,9% a 10,0% | 632,157 | 636,050 | |||||
Eurobonds | 2018 | 2018 | USD | Zero Coupon a 6,3% | - | 347,974 | |||||
Eurobonds | 2018 | 2019 | USD | Zero Coupon - 9,0% | 305,499 | 412,647 | |||||
Eurobonds | 2018 | 2019 | USD | LIBOR 3M + 0,95% | - | 19,285 | |||||
Eurobonds | 2018 | 2024 | USD | 0.059 | - | 1,351,651 | |||||
Eurobonds | 2018 | 2024 | USD | 0.069 | - | 1,205,414 | |||||
Eurobonds | 2018 | 2024 | USD | 6,6% a 6,7% | 1,197,878 | - | |||||
Eurobonds | 2018 | 2025 | USD | 0.09 | 1,197,418 | - | |||||
Eurobonds | 2019 | 2019 | USD | 1,1% a 4,0% | 364,882 | - | |||||
Eurobonds | 2019 | 2020 | USD | 1,1% a 4,0% | 2,139,610 | - | |||||
Eurobonds | 2019 | 2020 | USD | CDI + 6,4% | 1,386 | - | |||||
Eurobonds | 2019 | 2022 | USD | CDI + 6,4% | 5,897 | - | |||||
Eurobonds | 2019 | 2023 | USD | CDI + 6,4% | 9,313 | - | |||||
Eurobonds | 2019 | 2024 | USD and BRL | 2,8% a 3,8% | 44,419 | - | |||||
Eurobonds | 2019 | 2024 | USD | CDI + 6,4% | 17,534 | - | |||||
Eurobonds | 2019 | 2025 | USD | CDI + 6,4% | 6,748 | - | |||||
Eurobonds | 2019 | 2026 | USD | CDI + 6,4% | 21,538 | - | |||||
Others | 48,383 | 137,669 | |||||||||
Total | 6,382,499 | 5,079,029 |
d) Money Market Funding Expenses
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Time Deposits (1) (2) | 4,208,020 | 6,871,122 | 4,230,789 | 6,871,010 |
Savings Deposits | 1,056,399 | 982,354 | 1,056,399 | 982,354 |
Interbank Deposits | 258,159 | 391,087 | 105,572 | 111,684 |
Money Market Funding | 5,557,542 | 7,081,185 | 5,401,585 | 6,472,906 |
Upgrade and Provisions Interest and Pension Plans and Capitalization | - | - | 62,696 | 53,036 |
Acceptance and Issuance of Securities | 2,395,139 | 574,483 | 2,514,675 | 721,936 |
Others (3) | 298,892 | 284,175 | 341,295 | 285,303 |
Total | 13,774,151 | 16,184,406 | 13,713,011 | 15,498,229 |
Individual and Consolidated Financial Statements - June 30, 2019 68
(1) In the Bank and Consolidated, includes the record of interest in the amount of R$318,568 (2018 - R$252,376), related to the issuance of the Debt Instrument Eligible to Tier I and II Capital (Note 20).
(2) Includes exchange variation income in the amount of R$543.210 in the Bank and Consolidated (2018 – expenses with exchange variation in the amount of R$2,514,803 in the Bank and consolidated).
(3) Includes exchange variation income in the amount of R$151.561 in the Bank and Consolidated (2018 – expenses with exchange variation in the amount of R$33,221 in the Bank and Consolidated).
e) Borrowings and Onlendings
Bank | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Up to 3 | From 3 to | Over 12 | ||||||||||
Months | 12 Months | Months | Total | Total | ||||||||
Foreign Borrowings | 13,977,520 | 34,859,761 | 1,993,319 | 50,830,600 | 47,698,404 | |||||||
Import and Export Financing Lines | 8,407,430 | 18,180,321 | 91,908 | 26,679,659 | 30,823,559 | |||||||
Other Credit Lines | 5,570,090 | 16,679,440 | 1,901,411 | 24,150,941 | 16,874,845 | |||||||
Domestic Onlendings | 1,025,078 | 2,784,931 | 8,679,902 | 12,489,911 | 14,328,628 | |||||||
Total | 15,002,598 | 37,644,692 | 10,673,221 | 63,320,511 | 62,027,032 | |||||||
Consolidated | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Up to 3 | From 3 to | Over 12 | ||||||||||
Months | 12 Months | Months | Total | Total | ||||||||
Domestic Borrowings | 11,761 | 32,553 | 26,206 | 70,520 | 120,874 | |||||||
Foreign Borrowings | 11,580,785 | 34,859,761 | 1,993,319 | 48,433,865 | 46,438,153 | |||||||
Import and Export Financing Lines | 8,407,430 | 18,180,321 | 91,908 | 26,679,659 | 30,823,559 | |||||||
Other Credit Lines | 3,173,355 | 16,679,440 | 1,901,411 | 21,754,206 | 15,614,594 | |||||||
Domestic Onlendings | 1,025,078 | 2,784,931 | 8,679,902 | 12,489,911 | 14,328,628 | |||||||
Total | 12,617,624 | 37,677,245 | 10,699,427 | 60,994,296 | 60,887,655 |
In the Bank and Consolidated, the export and import financing lines are funded by foreign banks, for foreign exchange transactions purposes, related to export bills discounting and export and import pre-financing, with maturity until 2021 (06/30/2018 - until 2021) and subject to financial charges corresponding to exchange rate changes plus interest ranging from 0.63% p.a. to 8.84% p.a. (06/30/2018 – from 0.37% p.a. to 9.5% p.a.).
Domestic onlendings - official institutions are subject to financial charges corresponding to the TJLP, exchange variation of the currency basket of the BNDES, or US dollar exchange variation, plus interest rate in accordance with the operating policies of the BNDES System.
18. Tax and Social Security
Bank | Consolidated | ||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||
Deferred Tax Liabilities | 4,185,244 | 1,950,555 | 4,791,695 | 2,427,174 | |||
Provision for Taxes and Contributions on Income | 2,015,231 | - | 2,703,941 | 281,016 | |||
Taxes Payable | 828,821 | 368,334 | 1,071,030 | 562,402 | |||
Total | 7,029,296 | 2,318,889 | 8,566,666 | 3,270,592 |
a) Nature and Origin of Deferred Tax Liabilities
Bank | |||||||||||||
12/31/2018 | Recognition | Realization | 06/30/2019 | 06/30/2018 | |||||||||
Adjustment to Fair Value of Trading Securities and Derivatives (1) | 898,976 | - | - | 898,976 | 898,976 | ||||||||
Adjustment to Fair Value of Available-for-Sale Securities and Cash Flow Hedge (1) | 1,968,659 | 1,186,752 | - | 3,155,411 | 980,681 | ||||||||
Excess Depreciation of Leased Assets | 5,515 | - | (22) | 5,493 | 5,588 | ||||||||
Others | 89,896 | 35,468 | - | 125,364 | 65,310 | ||||||||
Total | 2,963,046 | 1,222,220 | (22) | 4,185,244 | 1,950,555 |
Individual and Consolidated Financial Statements - June 30, 2019 69
12/31/2018 | Consolidated | ||||||||||||
Recognition | Realization | 06/30/2019 | 06/30/2018 | ||||||||||
Adjustment to Fair Value of Trading Securities and Derivatives (1) | 963,016 | 69,263 | - | 1,032,279 | 934,791 | ||||||||
Adjustment to Fair Value of Available-for-Sale Securities and Cash Flow Hedge (1) | 2,034,554 | 1,206,315 | (12,474) | 3,228,395 | 1,050,114 | ||||||||
Excess Depreciation of Leased Assets | 310,163 | 12,383 | (4,456) | 318,090 | 322,345 | ||||||||
Others | 169,326 | 46,712 | (3,107) | 212,931 | 119,924 | ||||||||
Total | 3,477,059 | 1,334,673 | (20,037) | 4,791,695 | 2,427,174 | ||||||||
(1) Includes IRPJ, CSLL, PIS and Cofins. | |||||||||||||
b) Expected Realization of Deferred Tax Liabilities | |||||||||||||
Bank | |||||||||||||
06/30/2019 | |||||||||||||
Temporary Differences | |||||||||||||
Year | IRPJ | CSLL | PIS/Cofins | Total | |||||||||
2019 | 128,630 | 76,629 | 24,913 | 230,172 | |||||||||
2020 | 265,972 | 158,474 | 49,827 | 474,273 | |||||||||
2021 | 265,972 | 158,474 | 49,827 | 474,273 | |||||||||
2022 | 243,938 | 145,802 | 45,707 | 435,447 | |||||||||
2023 | 221,904 | 133,131 | 41,587 | 396,622 | |||||||||
2024 to 2026 | 665,712 | 399,393 | 124,762 | 1,189,867 | |||||||||
2027 to 2029 | 550,403 | 330,219 | 103,968 | 984,590 | |||||||||
Total | 2,342,531 | 1,402,122 | 440,591 | 4,185,244 | |||||||||
Consolidated | |||||||||||||
06/30/2019 | |||||||||||||
Temporary Differences | |||||||||||||
Year | IRPJ | CSLL | PIS/Cofins | Total | |||||||||
2019 | 207,566 | 83,227 | 25,308 | 316,101 | |||||||||
2020 | 361,260 | 173,083 | 50,617 | 584,960 | |||||||||
2021 | 328,678 | 171,209 | 50,617 | 550,504 | |||||||||
2022 | 302,724 | 156,186 | 46,497 | 505,407 | |||||||||
2023 | 276,774 | 141,167 | 42,378 | 460,319 | |||||||||
2024 to 2026 | 782,507 | 423,497 | 127,134 | 1,333,138 | |||||||||
2027 to 2029 | 585,015 | 350,306 | 105,945 | 1,041,266 | |||||||||
Total | 2,844,524 | 1,498,675 | 448,496 | 4,791,695 |
On December 18, 2019, the Bacen issued approval for the repurchase of the notes issued on January 29, 2014, this approval led to the reclassification of these instruments from the line Debt Instruments Eligible to Compose Capital to Subordinated Debts. This operation settled on January, 2019.
20. 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. (Note 25.e).
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 (Note 19).
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:
Bank/Consolidated | ||||||
06/30/2019 | 06/30/2018 | |||||
Debt Instruments Eligible to Compose Capital | Issuance | Maturity | Amount (Million) | Interest Rate (p.a.) (2) | Total | Total |
Tier I (1) | January - 14 | No Maturity (Perpetual) | R$3.000 | 7.375% | - | 4,881,660 |
Tier II (1) | January - 14 | January - 24 | R$3.000 | 6.000% | - | 4,953,371 |
Tier I (3) | November - 18 | No Maturity (Perpetual) | US$1.250 | 7.250% | 4,840,415 | - |
Tier II (3) | November - 18 | November - 28 | US$1.250 | 6.125% | 4,832,630 | - |
Total | 9,673,045 | 9,835,031 |
Individual and Consolidated Financial Statements - June 30, 2019 70
(1) Notes repurchased in 2019; As authorized by Bacen on December 17, 2018, as of the date of their issuance, Level I and II of PR must be excluded.
(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.
(3) Interest paid semiannually, as of May 8, 2019.
Notes 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 Banco 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.
On December 18, 2018, the Bank issued approval for the Notes to comprise Tier I and Tier II of Banco Santander's Reference Equity as of such date, as well as the repurchase of the notes issued on January 29, 2014, this approve grants in the instrument’s reclassification on the line Debt Instruments Eligible to Compose Capital (Note 19)
21. Other Payables – Other
Bank | Consolidated | ||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | ||||
Provision Technical for Capitalization Operations | - | - | 2,192,019 | 1,901,893 | |||
Provision Technical for Pension Operations | - | - | 2,018,244 | 1,582,025 | |||
Payables for Credit Cards | 24,592,894 | 20,061,634 | 32,002,328 | 30,688,719 | |||
Provision for Tax Risks and Legal Obligations (Note 22.b) (2) | 4,627,532 | 4,320,752 | 6,863,406 | 7,071,777 | |||
Provision for Legal and Administrative Proceedings - | 6,470,991 | 5,966,168 | 7,044,268 | 6,587,446 | |||
Provision for Financial Guarantees (Note 21.a) | 175,929 | 206,783 | 175,929 | 206,783 | |||
Employee Benefit Plans (Note 34) | 4,765,473 | 2,641,796 | 4,816,901 | 2,657,621 | |||
Payables for Acquisition of Assets and Rights | 21,667 | 21,120 | 21,667 | 21,120 | |||
Reserve for Tax Contingencies - Responsibility of | 101,967 | 622,238 | 101,967 | 704,322 | |||
Reserve for Legal and Administrative Proceedings - Responsibility of | 792 | 9,197 | 792 | 9,197 | |||
Accrued Liabilities | |||||||
Personnel Expenses | 1,815,940 | 1,714,889 | 2,019,671 | 1,875,663 | |||
Administrative Expenses | 170,011 | 321,089 | 419,326 | 451,364 | |||
Others Payments | 40,570 | 35,959 | 132,173 | 137,300 | |||
Creditors for Unreleased Funds | 1,026,610 | 1,200,940 | 1,026,610 | 1,200,940 | |||
Provision of Payment Services | 505,206 | 457,364 | 505,206 | 457,364 | |||
Suppliers | 759,651 | 492,164 | 1,583,226 | 1,393,942 | |||
Others (1) | 5,188,576 | 3,637,358 | 7,937,365 | 4,876,628 | |||
Total | 50,263,809 | 41,709,451 | 68,861,098 | 61,824,104 |
Individual and Consolidated Financial Statements - June 30, 2019 71
(1) As of June 30, 2019, includes impacts of the exchange rate variation referring to Notes and on June 30, 2018 includes the effects described in note 34.a, relating to the reduction of present value of actuarial obligations.
(2) In the first half of 2019, the Bank entered into an agreement with a former controlling shareholder, in which the Bank's liabilities became the responsibility of the Bank, with no impact on results (Notes 22.b and 22.i).
a) Provision for Financial Guarantees
The classification of the guarantees operations for the constitution of provision is based on the estimate of the involved risk. It happens due to the quality evaluation process applied to the clients and operations, using statistical model based on quantitative and qualitative information or on specialized credit analyst, which allow them to be classified according their default probabilities, based on internal and market´s objective variables (bureaus), previously identified as predictive of default probability. After this evaluation, the operations are classified according to the provisioning ratings, having as reference the CMN Resolution nº 2,682/1999. Based on the results of this analysis, amounts related to operations’ coverage are registered as provision considering the type of the guarantee, according to the requirements of CMN Resolution nº 4,512/2016.
Bank/Consolidated | |||||||
06/30/2019 | 06/30/2018 | ||||||
Type of Financial Guarantee | Balance Guarantees Provided | Provision | Balance Guarantees Provided | Provision | |||
Linked to International Merchandise Trade | 601.249 | 2.846 | 1.338.821 | 3.258 | |||
Linked to Bids, Auctions, Provision of Services or Execution of Works | 4.266.688 | 12.631 | 3.310.185 | 12.498 | |||
Linked to the Supply of Goods | 1.186.618 | 2.753 | 1.532.718 | 3.366 | |||
Linked to the Distribution of Securities by Public Offer | 2.100.000 | - | 295.000 | - | |||
Guarantee in Legal and Administrative Proceedings of Fiscal Nature | 13.633.689 | 105.420 | 11.414.261 | 118.971 | |||
Other Guarantees | 19.928 | 886 | 48.727 | 7.152 | |||
Other Bank Guarantees | 12.159.294 | 50.589 | 15.190.129 | 49.121 | |||
Other Financial Guarantees | 3.724.451 | 804 | 2.395.431 | 12.417 | |||
Total | 37.691.917 | 175.929 | 35.525.272 | 206.783 |
Changes in Allowances for Financial Guarantees
Bank/Consolidated | |||||||
01/01 to | 01/01 to 06/30/2018 | ||||||
Balance at Beginning | 201,410 | 312,373 | |||||
Constitution (Note 30) | 3,441 | 8,240 | |||||
Reversal (1) (Note 30) | (28,923) | (113,830) | |||||
Balance at End | 175,928 | 206,783 |
(1) Corresponds to the honored bond, change in rating and provision recorded in the allowance for doubtful accounts.
22. Provisions, Contingent Assets and Liabilities and Legal Obligations - Tax and Social Security
a) Contingent Assets
In the Bank and Consolidated, on June 30, 2019 and 2018, no contingent assets were registered (Note 3.q).
b) Balance Sheet of Provisions for Judicial and Administrative Proceedings and Legal Obligations by Nature
Bank | Consolidated | |||||||||||||
06/30/2019 | 06/30/2018 | 06/30/2019 | 06/30/2018 | |||||||||||
Reserve for Tax Contingencies and Legal Obligations (Note 21) | 4,627,532 | 4,320,752 | 6,863,406 | 7,071,777 | ||||||||||
Accrual for Legal and Administrative Proceedings - Labor and Civil (Note 21) | 6,470,991 | 5,966,168 | 7,044,268 | 6,587,446 | ||||||||||
Labor | 3,379,663 | 3,561,267 | 3,690,966 | 3,882,424 | ||||||||||
Civil | 3,091,329 | 2,404,901 | 3,353,301 | 2,705,022 | ||||||||||
Total | 11,098,524 | 10,286,920 | 13,907,673 | 13,659,223 |
Individual and Consolidated Financial Statements - June 30, 2019 72
c) Change in Accrual for Judicial and Administrative Proceedings and Legal Obligations
Bank | ||||||||||||||
01/01 to | 01/01 to 06/30/2018 | |||||||||||||
Tax (3) | Labor | Civil | Tax | Labor | Civil | |||||||||
Balance at Beginning | 4,079,141 | 3,543,801 | 3,144,599 | 4,279,109 | 3,240,115 | 2,241,047 | ||||||||
Recognition Net of Reversal (1) (4) | 528,905 | 264,252 | 92,356 | (17,173) | 513,504 | 276,710 | ||||||||
Inflation Adjustment | 70,648 | 40,783 | 138,051 | 73,024 | 310,172 | 123,406 | ||||||||
Write-offs Due to Payment | (51,161) | (469,174) | (283,679) | (14,208) | (502,523) | (236,262) | ||||||||
Balance at End | 4,627,532 | 3,379,663 | 3,091,329 | 4,320,752 | 3,561,268 | 2,404,901 | ||||||||
Escrow Deposits - | 1,381,339 | 1,153,139 | 618,251 | 1,167,756 | 620,580 | 492,801 | ||||||||
Escrow Deposits - Securities | 15,052 | 19,511 | 27,061 | 19,457 | 15,958 | 9,690 | ||||||||
Total Escrow Deposits (2) | 1,396,391 | 1,172,650 | 645,312 | 1,187,213 | 636,538 | 502,491 | ||||||||
Consolidated | ||||||||||||||
01/01 to | 01/01 to 06/30/2018 | |||||||||||||
Tax (3) | Labor | Civil | Tax | Labor | Civil | |||||||||
Balance at Beginning | 6,294,007 | 3,829,975 | 3,401,483 | 6,999,881 | 3,457,092 | 2,537,127 | ||||||||
Recognition Net of Reversal (1) (4) | 521,349 | 307,277 | 160,783 | (38,394) | 537,196 | 326,345 | ||||||||
Inflation Adjustment | 112,106 | 51,374 | 199,464 | 123,934 | 329,395 | 141,068 | ||||||||
Write-offs Due to Payment | (64,056) | (497,660) | (408,428) | (31,691) | (533,703) | (298,416) | ||||||||
Change in the Scope of | - | - | - | 18,048 | 92,480 | - | ||||||||
Others | - | - | - | - | (36) | (1,101) | ||||||||
Balance at End | 6,863,406 | 3,690,966 | 3,353,301 | 7,071,778 | 3,882,424 | 2,705,023 | ||||||||
Escrow Deposits - | 2,441,775 | 1,231,662 | 625,503 | 2,737,745 | 657,929 | 507,550 | ||||||||
Escrow Deposits - Securities | 16,071 | 19,511 | 27,061 | 20,749 | 15,958 | 9,690 | ||||||||
Total Escrow Deposits (2) | 2,457,846 | 1,251,173 | 652,563 | 2,758,494 | 673,887 | 517,240 |
(1) Tax risks include the constitutions of tax provisions related to lawsuits and administrative proceedings and legal obligations, recorded in the headings tax expenses, other operating income and other operating expenses IR and CSLL.
(2) Refers to the amounts of collateral deposits, limited to the amount of the provision and do not include escrow deposits related to possible and / or remote contingencies and recourse deposits.
(3) On June 30, 2018, it includes the effects of the access on the Sponsored Payments and Installments Programs from the cities of São Paulo and Rio de Janeiro and lawsuits related to IRPJ, CSLL and Social Securities Contributions related to the period from 1999 to 2005.
(4) In the first half of 2019, the Bank entered into an agreement with a former controlling shareholder, in which the Bank's liabilities became the responsibility of the Bank, with no impact on results (Notes 21 and 22.i).
d) Provisions for Contingent Civil, Labor, Tax and Social Security
Banco Santander and its subsidiaries are involved in lawsuits and administrative proceedings related to tax, labor, social security and civil arising in the normal course of its activities.
The provisions were constituted based on the nature, complexity, lawsuits historic and company´s assessment of lawsuit losses based on the opinions of internal and external legal advisors. The Santander has the policy to constitute provision of full amount in risk of lawsuits who’s the result of loss assessment is probable. The legal obligation of tax and social security were fully recognized in the financial statements.
Management understands that the provisions recorded are sufficient to meet legal obligations and losses from lawsuits and administrative proceedings as follows:
e) Lawsuits and Administrative Proceedings related to Tax and Social Security
Main lawsuits and administrative proceedings related to legal obligations, tax and social security
PIS and Cofins - R$1,873,352 in the Bank and R$3,709,842 in the Consolidated (06/30/2018 - R$1,808,491 in the Bank and R$3,580,690 in the Consolidated): Banco Santander and its subsidiaries filed lawsuits seeking to eliminate the application of Law 9,718/1998, which modified the calculation basis for PIS and Cofins to cover all revenues of legal entities and not only those arising from the provision of services and sale of goods. Regarding the Banco Santander Process, on April 23, 2015, a STF decision was issued admitting the Extraordinary Appeal filed by the Federal Government regarding PIS and denying the follow-up to the Extraordinary Appeal of the Federal Public Prosecutor regarding Cofins. Both appealed this decision, without any success, so that the suit relating to Cofins is defined, ruling the judgment of the FederalRegional Court of the 4th Region of August 2007, favorable to Banco Santander. Pursuant to the STF, Banco Santander's PIS and the PIS and Cofins of other subsidiaries are pending final judgment.
Individual and Consolidated Financial Statements - June 30, 2019 73
Increase in CSLL Tax Rate - R$110,583 in the Consolidated (06/30/2018 - R$372,504 in the Bank and R$1,028,133 in the Consolidated): the Bank Santander and its subsidiaries are discussing the increase in the CSLL tax rate, from 9% to 15%, established by Executive Act 413/2008, subsequently converted into Law 11,727/2008, as from April 2008. In 2018, given the classification of success and unfavorable scenario in the Courts, we opted to pay the amounts discussed, except for Companhia de Crédito, Financiamento e Investimento Renault do Brasil (RCI), because the judicial proceedings are pending of judgment.
Main lawsuits and administrative proceedings with probable loss risk
Banco Santander and its subsidiaries are parties in lawsuits and administrative proceedings related to tax and social security matters, which their risk of loss are classified as probable, based on the opinion of legal counsel.
Provisional Contribution on Financial Transactions (CPMF) on Customer Operations - R$737,345 (06/30/2018 - R$722,364) in the Bank and Consolidated: in May 2003, the Federal Revenue Service issued a tax assessment against Santander Distribuidora de Títulos e Valores Mobiliários Ltda. (Santander DTVM) and another tax assessment against Banco Santander Brasil S.A. The tax assessments refer to the collection of CPMF tax on transactions conducted by Santander DTVM in the cash management of its customers’ funds and clearing services provided by Banco to Santander DTVM in 2000, 2001 and 2002. Based on the risk assessment of legal counsel, the tax treatment was accurate. Santander DTVM had a favorable decision at the Board of Tax Appeals (CARF). Banco Santander had a unfavorable decision and was considered responsible for the collection of the CPMF tax. Both decisions were appealed by the respective losing party to the highest jurisdiction of CARF. In June 2015 , Bank and DTVM had obtained a non favorable decision at CARF. On July 3, 2015 Bank and Santander Brasil Tecnologia (current name of Produban Serviços de Informática S.A. and Santander DTVM) filed lawsuit aiming to cancel both tax charges on the period ended on June 30, 2019 amounting R$1,477,325 million. In June 2019 this action has been dismissed, and the resolution has been appealed to the higher court. Based on the evaluation of legal advisors, were consisted provision to the probable loss.
Social Security Contribution (INSS) - R$277,586 in the Bank and R$277,593 in the Consolidated (06/30/2018 - R$268,772 in the Bank and R$268,780 in the Consolidated): Banco Santander and its subsidiaries are involved in administrative and judicial proceedings regarding the collection of income tax on social security and education allowance contributions over several funds that, according to the evaluation of legal advisors, do not have nature of salary.
Tax on Services (ISS) - Financial Institutions - R$196,032 in the Bank and R$212,574 in the Consolidated (06/30/2018 - R$211,513 in the Bank and R$226,947 in the Consolidated): Banco Santander and its subsidiaries discuss administrative and legal requirements , by several municipalities, of the payment of ISS on various revenues arising from operations that are usually not classified as services (Note 22.h).
f) Lawsuits and Administrative Proceedings of Labor
These are lawsuits filed by labor Unions, Associations, Public Prosecutors and former employees claiming labor rights they believe are due, especially payment for overtime and other labor rights, including retirement benefit lawsuits.
For claims considered to be similar and usual, provisions are recognized based on the payments and successes historic. Claims that do not fit the previous criteria have their provisions constituted according to individual assessment performed, and provisions being constituted based on the risk of loss as probable, the law and jurisprudence according to the assessment of loss made by legal counsel.
g) Lawsuits and Administrative Proceedings of Civil
These contingencies are generally caused by: (1) Lawsuits with a request for revision of contractual terms and conditions or requests for monetary adjustments, including supposed effects of the implementation of various government economic plans, (2) lawsuits deriving of financing agreements, (3) lawsuits of execution; and (4) lawsuits of indemnity by loss and damage. For civil lawsuits considered common and similar in nature, provisions are recorded based on the average of cases closed. Claims that do not fit the previous criteria are provisioned according to individual assessment performed, and provisions are based on the risk of loss as probable, the law and jurisprudence according to the assessment of loss made by legal counsel.
The main processes with the classification of risk of loss as probable are described below:
Lawsuits for Indemnity - seeking indemnity for material and emotional damage, regarding the consumer relationship on matters related to credit cards, consumer credit, bank accounts, collection and loans and other operations. In the civil lawsuits considered to be similar and usual, provisions are recorded based on the average of cases closed. Civil lawsuits that do not fit into the previous criteria are provisioned according to the individual assessment made, being the provisions recognized based on the risk of loss as probable, the law and jurisprudence according to the assessment of loss made by legal counsel.
Economic Plans - they referred to lawsuits filed by savings accountholders, related to supposed inflation purge arising from the Economic Plans (Bresser, Verão, Collor I and II), based on the understanding that such plans violated acquired rights relating to the application of inflation indexes on Saving Accounts, Lawsuits Deposits and Time Deposits (CDB). Provisions arising from such lawsuits are recorded based on the individual evaluation of loss made by external legal consultants.
Individual and Consolidated Financial Statements - June 30, 2019 74
The Banco Santander is also party in public class lawsuits on the same matter filed by consumer rights organizations, Public Prosecutor’s Offices and Public Defender’s Offices. The provision is made for the lawsuits with the classification of risk as probable, based on the individual execution orders. The STF is still analyzing the subject and has already ordered the suspension of all the procedures except those that were not already decided in courts or in phase of definitive execution. There are decisions favorable to banks at the STF with regard to the economic phenomenon similar to the savings accounts, as in the case of monetary restatement of time deposits - CDB and agreements (present value table).
However, the Supreme Court´s jurisprudence has not come to a conclusion regarding the constitutionality of the norms that changed Brazil’s monetary standard. On April 14, 2010, the STJ was recently decided that the deadline for the filing of civil lawsuits that argue the government's purge is five years, but this decision has not been handed down on the lawsuits yet. Thus, with this decision, a majority lawsuits, as they were filed after the period of five years is likely to be rejected, reducing the values involved. Still, the STF decided that the deadline for individual savers to become party on the public civil litigations, is also five years, counted from the final unappealable sentence. Banco Santander believes in the success of the arguments defended in these courts based on their content and the legal basis.
At the end of 2017, the General Union Law (AGU), Bacen, Institute of Consumer Protection (Idec), the Brazilian Front of the Money savers (Febrapo), the Brazilian Banks Federation (Febraban) have signed an agreement with the purpose to close all lawsuits related to Economic Plans.
The discussions focused on the definition of the amount that would be paid to each person according to the outstanding balance in the saving account. The total amount of the payments will depend on the number of the additional clients, and also on the number of money savers that approved in the courts the existance of their account and balance in the birthday date of the indexes changes. The term of agreement negotiated between the parties was submitted to the STF which approved the terms of the agreement.
The Management considers that the accrued provisions are due to charge interest in accordance with the plans, including considering the agreement approved by the STF.
h) Civil, Labor, Tax, and Security Social Liabilities Contingent Classified with Loss Risk as Possible
Refer to lawsuits and administrative proceedings involving tax, labor and civil matters classified by legal counsels with loss risk as possible, which they were not recorded.
The tax lawsuits classification with loss risk as possible totaled R$23,369 million in Consolidated, being the main lawsuits as follow:
INSS on Profits or Results (PLR) - Bank and the subsidiaries have several lawsuits and administrative proceedings arising from questioning tax authorities in connection with the taxation for social security purposes of certain items which are not considered to be employee remuneration. As of June 30, 2019, the amounts related to these proceedings totaled approximately R$5,216 million.
Tax on Services (ISS) - Financial Institutions -Banco Santander and its subsidiaries discuss administrative and legal requirements, by several municipalities, of the payment of ISS on various revenues arising from operations that are usually not classified as services. On June 30, 2019, the amounts related to these proceedings totaled approximately R$3,166 million.
Unapproved Compensation - The Bank and its affiliates discuss administrative and legal proceedings with the Federal Revenue Office to grant tax relief with credits arising from overpayments. On June 30, 2019, the amounts related to these proceedings totaled approximately R$2,709 million.
Goodwill Amortization of Banco Real - the Federal Tax Office of Brazil issued infraction notices against the Bank to require the income tax and social payments, including late charges, for the period of 2009. The Tax Authorities considered that the goodwill related to acquisition of Banco Real, amortized for accounting purposes prior to the merger, could not be deduced by Banco Santander for tax purposes. The infraction notice was contested. On July 14, 2015, the Police Judging RFB decided favorably to Banco Santander, fully canceling the tax debt. On November 10, 2016, the appeal was filed, prompting the Bank to lodge an appeal with CARF, which is awaiting judgment. On June 30, 2019, the balance was approximately R$1,398 million.
Credit Losses - Bank and its subsidiaries challenged the tax assessments issued by the Federal Revenue Services claiming the deduction for credit losses because they fail to meet the relevant requirements under applicable law. As of June 30, 2019, the amount related to this claim is approximately R$460 million.
Use of CSLL Tax and Negative Tax Loss -Tax assessments issued by the Federal Revenue Service in 2009 for alleged undue compensation of tax loss carryforwards and negative basis of CSLL, as a consequence of tax assessments drawn up in previous periods. Judgment is pending at the administrative level. As of June 30, 2019, the amount was R$1,040 million.
Individual and Consolidated Financial Statements - June 30, 2019 75
Goodwill Amortization of Banco Sudameris - the Tax Authorities have issued infraction notices to require the income tax and social contribution payments, including late charges, relating to tax deduction of amortization of goodwill from the acquisition of Banco Sudameris, related to the period of 2007 to 2012. Banco Santander timely presented its appeals, which are pending. On June 30, 2019, the amounts related to these proceedings totaled approximately R$625 million.
IRPJ and CSLL - Capital Gain - the Federal Tax Office of Brazil issued infraction notices against Santander Seguros, successor company of ABN AMRO Brasil Dois Participações S.A. (AAB Dois Par), charging income Tax and Social Contribution to related base year 2005. The Federal Tax Office of Brazil claims that capital gain in sales of shares from Real Seguros S.A and Real Vida Previdência S.A. by AAB Dois Par should be taxed by the rate of 34% instead 15%. The assessment was contested administratively based on understanding that tax treatment adopted at the transaction was in compliance with tax laws and capital gain was taxed properly. The administrative lawsuit is awaiting trial. The Banco Santander is responsible for any adverse outcome in this lawsuit as former Zurich Santander Brasil Seguros e Previdência S.A. stockholder. As of June 30, 2019, the amount related to this lawsuit is approximately R$302 million.
The labor claims with classification of loss risk as possible totaled R$294 million in Consolidated, excluding the lawsuits below:
Semiannual Bonus or PLR - refers to Labor claim filed in 1998 by the Banespa Retirement Association (AFABESP) claiming the payment of the semi-annual bonus contemplated in Banespa's regulation, to be distributed as long as there is a profit and provided that it is approved by the board of directors. The Bonus was not paid in 1994 and 1995, since Banespa did not make a profit these years. Partial payments were made from 1996 to 2000, as approved by the Board of Executive Officers. The statute clause was eliminated in 2001. The Regional Labor Court and the Superior Labor Court ordered that Banco Santander, as successor of Banespa, pay this semi-annual bonus for the period from 1996 to the present date. On March 20, 2019, a decision of the Federal Supreme Court (STF) rejected the extraordinary appeal filed by the Bank. Santander Brasil shall file a rescission action and / or an appeal to reverse the decision in the main proceedings and suspend procedural enforcement, a preliminary decision was granted determining the suspension of execution of the decision rendered in the records of the main act.On June 2019, a decision of the Federal Supreme Court authorized the initial phase of judges’ settlement to ascertain the amounts involved. Whatever, the previous court decision prohibits the practices of any processual act including related to their execution and remains valid until Rescission Process judgement. Based on the opinion of its legal advisors, Management classifies the risk of loss as possible. The current court ruling does not define a specific amount to be paid by the defendants.
Readjustment of Banesprev retirement complements by the IGPDI - lawsuit filed in 2002 in Federal Court by the Association of Retired Employees of the Banco do Estado de São Paulo S.A. - Banespa, requesting the readjustment of the retirement supplementation by the IGPDI for Banespa retirees who have been admitted until May 22, 1975. The judgment granted the correction but only in the periods in which no other form of adjustment could be applied. The Bank and Banesprev have appealed this decision and although the appeals have not yet been judged, the Bank's success rate in this matter in the High Courts is around 90%. In Provisional Execution, calculations were presented by the Bank and Banesprev with "zero" result due to the exclusion of participants who, among other reasons, are listed as authors in other lawsuits or have already had some type of adjustment. The amount related to this claim is not disclosed due to the current stage of the lawsuit and such disclosure may impact the progress of the claim.
The liabilities related to civil lawsuits with classification of loss risk as possible totaled R$1,454 million in Consolidated, being the main lawsuits as follow:
Indemnity Lawsuit Arising of the Banco Bandepe - related to mutual agreement on appeal to the Justice Superior Court (STJ - Superior Tribunal de Justiça).
Indemnity Lawsuit Related to Custody Services - provided by Banco Santander at an early stage which was not handed down yet.
Lawsuit Arising from a Contractual Dispute - the acquisition of Banco Geral do Comércio S.A. on appeal to the Court of the State of São Paulo (TJSP - Tribunal de Justiça do Estado de São Paulo).
i) Other Lawsuits Under the Responsibility of Former Controlling Stockholders
Refer to tax, labor and civil lawsuits, in the amounts of R$101,967, R$213 and R$579 (06/30/2018- R$622,238, R$2,598 and R$6,599) in the Bank and R$101,967, R$213 e R$579 (06/30/2018- R$704,322, R$2,598 e R$6,599) in the Consolidated, respectively, recorded in other financial liabilities (Note 21) which the responsible people were the former controlling stockholders of the Bank and acquired companies. Based on the agreement signed, these lawsuits have guaranteed reimbursement from part of the former controllers, whose respective duties were recorded in other receivables - others (Note 12).
Individual and Consolidated Financial Statements - June 30, 2019 76
23. Stockholders’ Equity
a) Capital
According to the by-laws, Banco Santander's capital stock may be increased up to the limit of its authorized capital, regardless of statutory reform, by resolution of the Board of Directors and through the issuance of up to 9,090,909,090 (nine billion, ninety million, nine hundred and nine thousand and ninety) shares, subject to the established legal limits on the number of preferred shares. Any capital increase that exceeds this limit will require stockholders' approval.
The capital stock, fully subscribed and paid, is divided into registered book-entry shares with no par value.
Thousands of Shares | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Common | Preferred | Total | Common | Preferred | Total | |||||||
Brazilian Residents | 80,082 | 105,709 | 185,791 | 63,524 | 89,171 | 152,695 | ||||||
Foreign Residents | 3,738,613 | 3,574,127 | 7,312,740 | 3,755,171 | 3,590,665 | 7,345,836 | ||||||
Total | 3,818,695 | 3,679,836 | 7,498,531 | 3,818,695 | 3,679,836 | 7,498,531 | ||||||
(-) Treasury Shares | (15,226) | (15,226) | (30,452) | (10,915) | (10,915) | (21,830) | ||||||
Total Outstanding | 3,803,469 | 3,664,610 | 7,468,079 | 3,807,780 | 3,668,921 | 7,476,701 |
b) Dividends and Interest on Capital
According to the Bank’s bylaws, stockholders are entitled to a minimum dividend equivalent to 25% of net income for the year, adjusted according to legislation. Preferred shares are nonvoting and nonconvertible, but have the same rights and advantages granted to common shares, in addition to priority in the payment of dividends at a rate that is 10% higher than those paid on common shares, and in the capital reimbursement, without premium, in the event of liquidation of the Bank.
Dividend payments have been calculated and paid in accordance with Brazilian Corporate Law.
Prior to the Annual Stockholders Meeting, the Board of Directors may resolve on the declaration and payment of dividends on earnings based on: (i) balance sheets or earning reserves showed in the last balance sheet; or (ii) balance sheets issued in the period shorter than 6 months, since the total of dividends paid in each half of the fiscal year shall not exceed the amount of capital reserves. These dividends are fully attributed to the mandatory dividend.
06/30/2019 | ||||||||||||
In Thousands | Brazilian Real per Thousand Shares/Units | |||||||||||
of Brazilian Real | Common | Preferred | Units | |||||||||
Interest on Capital (1) (3) | 1,000,000 | 127.5853 | 140.3438 | 267.9291 | ||||||||
Interim Dividends (2) (3) | 1,000,000 | 127.6399 | 140.4039 | 268.0438 | ||||||||
Total | 2,000,000 |
(1) Established by the Board of Directors in March 29, 2019, Common Shares - R$108,4475, preferred - R$129,1922 e Units - R$227,7397 net of taxes and was paid in May 28, 2019, without any remuneration for monetary restatement.
(2) Established by the Board of Directors in June 28, 2019, Common Shares - R$108,4939, preferred - R$119,3433 e Units - R$227,8373 net of taxes and will be paid in July 31, 2019, without any remuneration for monetary restatement.
(3) The amount of interest on stockholders' equity will be fully charged to the mandatory minimum dividends to be distributed by the Bank for the year 2019.
06/30/2018 | ||||||||||||
In Thousands | Brazilian Real per Thousand Shares/Units | |||||||||||
of Brazilian Real | Common | Preferred | Units | |||||||||
Interest on Capital (1) (3) | 600,000 | 76.3304 | 83.9634 | 160.2938 | ||||||||
Interim Dividends (2) (3) | 600,000 | 76.4956 | 84.1451 | 160.6407 | ||||||||
Total | 1,200,000 |
(1) Established by the Board of Directors in March 27, 2018, Common Shares - R$64,8808, preferred - R$71,3689 e Units - R$136,2497 net of taxes and was paid in April 26, 2018, without any remuneration for monetary restatement.
(2) Established by the Board of Directors in June 26, 2018, and was paid in July 27, 2018, without any remuneration for monetary restatement.
(3) The amount of interest on stockholders' equity was fully charged to the mandatory minimum dividends to be distributed by the Bank for the year 2018.
c) Reserves
Net income, after deductions and statutory provisions, will be allocated as follows:
Legal Reserve
According to Brazilian corporate law, 5% to the legal reserve, until it reaches 20% of the share capital. This reserve is intended to ensure the integrity of capital and can only be used to offset losses or increase capital.
Individual and Consolidated Financial Statements - June 30, 2019 77
Capital Reserve
The Bank´s capital reserve consists of: goodwill reserve for subscription of shares and other capital reserves, and can only be used to absorb losses that exceed retained earnings and profit reserves; redemption, reimbursement or acquisition of shares for the Bank´s own issue; capital increase; or payment of dividends to preferred shares under certain circumstances.
Reserve for Equalization Dividend
After the allocation of dividends, the remaining balance if any, may, upon proposal of the Executive Board and approved by the Board of Directors, be allocated to reserve for equalization of dividends, which will be limited to 50% of the share capital. This reserve aims to ensure funds for the payment of dividends, including as interest on own capital, or any interim payment to maintain the flow of stockholders remuneration.
d) Treasury Shares
In the meeting held on November 1, 2018, the Bank’s Board of Directors approved, in continuation of the buyback program that expired on November 1, 2017, the buyback program of its Units and ADRs, by the Bank or its agency in Cayman, to be held in treasury or subsequently sold.
The Buyback Program will cover the acquisition up to37,753,760 Units, representing37,753,760 common shares and37,753,760 preferred shares, or the ADRs, which, on December 31, 2018, corresponded to approximately 1% of the Bank’s share capital. On December 31, 2018, the Bank held 362,227,661 common shares and 390,032,076 preferred shares being traded.
The Buyback has the purpose to (1) maximize the value creation to stockholders by means of an efficient capital structure management; and (2) enable the payment of officers, management level employees and others Bank’s employees and companies under its control, according to the Long Term Incentive Plans. The term of the Buyback Program is 12 months counted from November 6, 2018, and will expire on November 5, 2019.
Bank/Consolidated | ||||||||||||
Shares in Thousands | ||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||
Quantity | Quantity | |||||||||||
Units | Units | |||||||||||
Treasury Shares at Beginning of the Exercise | 13,316 | 1,773 | ||||||||||
Shares Acquisitions | 4,975 | 13,478 | ||||||||||
Payment - Share-Based Compensation | (3,065) | (4,336) | ||||||||||
Treasury Shares at Beginning of the Exercise | 15,226 | 10,915 | ||||||||||
Subtotal - Treasury Shares in Thousands of Reais | R$ 612,398 | R$ 356,672 | ||||||||||
Issuance Cost in Thousands of Reais | R$ 2,410 | R$ 219 | ||||||||||
Balance of Treasury Shares in Thousands of Reais | R$ 614,808 | R$ 356,891 | ||||||||||
Cost/Share Price | Units | Units | ||||||||||
Minimum Cost | R$ 7.55 | R$ 7.55 | ||||||||||
Weighted Average Cost | R$ 31.51 | R$ 27.51 | ||||||||||
Maximum Cost | R$ 49.55 | R$ 36.98 | ||||||||||
Share Price | R$ 45.46 | R$ 27.64 |
e) Consolidated Stockholders’ Equity - Unrealized Income
The consolidated stockholders’ equity is reduced mainly to unrealized income of R$43,457 (06/30/2018 - R$6,118) and long-term incentives of R$1,556. In the first half of 2019, there were realized results in the amounting of R$46,481 (2018 - R$508).
Individual and Consolidated Financial Statements - June 30, 2019 78
f) Non Controlling Interest
Stockholders’ Equity | Non Controlling Interest | |||||||
06/30/2019 | 06/30/2018 | 01/01 to | 01/01 to | |||||
Banco RCI Brasil S.A. (Note 14) | 735,358 | 703,274 | (56,175) | (59,435) | ||||
Olé Consignado (Note 14) | 563,710 | 417,910 | (100,304) | (60,131) | ||||
FI RN Brasil - Financiamento de Veículos (Note 2) | 115,618 | 301,778 | (6,951) | (11,295) | ||||
Getnet S.A. (Note 14) | - | 232,653 | (3,962) | (26,548) | ||||
Banco PSA (Note 14) | 138,116 | 153,151 | (7,717) | (5,856) | ||||
FI Direitos Creditórios RCI Brasil I (Note 2) | - | 148,949 | (4,117) | (7,465) | ||||
Santander FI SBAC | 49,025 | 60,050 | (1,985) | (2,017) | ||||
Banco Hyundai Capital Brasil S.A. | 149,910 | 50,240 | 1,173 | (241) | ||||
Ipanema Empreendimentos e Participações | - | 509 | - | (359) | ||||
Rojo Entretenimento S.A. | 7,079 | 6,850 | (64) | - | ||||
Return Capital Serviços de Recuperação de Créditos S.A. | 862 | - | (1,061) | - | ||||
Santander Leasing (Note 14) | 445 | 442 | - | (20) | ||||
Total | 1,760,123 | 2,075,806 | (181,163) | (173,367) |
24. Operational Ratios
In July 2008 came into force the rules on regulatory capital measurement by the Standardized Approach of Basel II. On 2013 was issued a set of Resolutions and Circulars, aligned with the recommendations of the Basel Committee on Banking Supervision. These rules were repealed by CMN Resolution nº 4,192 and 4,193 which took effect from October 2013, establishing the model for calculating the minimum Regulatory Capital requirements, Tier I and Common Equity Tier I. These Resolutions states that the composition of the Regulatory Capital is done through equity, subordinated debt and hybrid capital instruments.
As required by CMN Resolution nº 4,193/2013, the requirement for PR in 2018 was 11.0%, composed of 8.625% of Reference Equity Minimum plus 1.875% of Capital Conservation Additional. Considering this additional, PR Level I increased to 8.375% and Minimum Principal Capital to 6.875%.
For the base year 2019, the PR requirement remains at 10.5%, including 8.0% of Minimum of Reference Equity and a further 2.5% of Capital Conservation Additional. The PR Level I reaches 8.5% and the Principal Capital Minimum 7.0%.
As a continuation the adoption of the rules established by CMN Resolution nº 4,192/2013, as of January 2015, came into force the Prudential Conglomerate, defined by CMN Resolution nº 4,280/2013.The index is calculated on a consolidated basis based on the information of Consolidated Prudential, as shown below:
06/30/2019 | 06/30/2018 | |||||||||||||
Tier I Regulatory Capital | 67,549,985 | 57,152,800 | ||||||||||||
Principal Capital | 62,709,570 | 52,271,141 | ||||||||||||
Supplementary Capital (Note 20) | 4,840,414 | 4,881,660 | ||||||||||||
Tier II Regulatory Capital (Note 20) | 4,832,630 | 4,953,371 | ||||||||||||
Regulatory Capital (Tier I and II) | 72,382,615 | 62,106,171 | ||||||||||||
Credit Risk (1) | 371,140,824 | 354,413,822 | ||||||||||||
Market Risk (2) | 29,463,676 | 28,802,168 | ||||||||||||
Operational Risk | 46,526,950 | 37,372,300 | ||||||||||||
Total RWA (3) | 447,131,450 | 420,588,290 | ||||||||||||
Basel I Ratio | 15.11 | 13.59 | ||||||||||||
Basel Principal Capital | 14.02 | 12.43 | ||||||||||||
Basel Regulatory Capital | 16.19 | 14.77 |
(1) Exposures to credit risk subject to the calculation of the capital requirement using a standardized approach (RWACPAD) are based on the procedures established by Circular Bacen 3,644, dated March 4, 2013 and its subsequent complements through the wording of Circular Bacen 3,174 of August 20, 2014 and Bacen Circular 3,770 of October 29, 2015.
(2) Includes portions for market risk exposures subject to variations in rates of foreign currency coupons (RWAjur2), price indexes (RWAjur3) and interest rate (RWAjur1/RWAjur4), the price of commodities (RWAcom), the price of shares classified as trading portfolios (RWAacs), and portions for gold exposure and foreign currency transactions subject to foreign exchange (RWAcam).
(3) Risk Weighted Assets.
Banco Santander, quarterly discloses Pillar III information relating to risk management, Regulatory Capital and Risk Weighted Assets. A report with further details of the structure and methodology will be disclosed on the website www.ri.santander.com.br/ri.
Individual and Consolidated Financial Statements - June 30, 2019 79
Financial institutions are required to maintain investments in permanent assets compatible with adjusted regulatory capital. Funds invested in permanent assets, calculated on a consolidated basis, are limited to 50% of adjusted regulatory capital, as per prevailing regulation. Banco Santander classifies for said index. The Bank is in compliance with the requirements aforementioned.
25. Related Parties
a) Key Management Personnel Compensation
The Board of Directors' meeting, held on March 27, 2019 approved, in accordance with the Compensation Committee the maximum global compensation proposal for the directors (Board of Directors and Executive Officers) overall amounting to R$400,000,000.00 (four hundred million reals) for the 2019 financial year, covering fixed remuneration, variable and equity-based and other benefits. The proposal was approved by the Ordinary General Meeting (OGM) accomplished on April 26, 2019.
a.1) Long Term Benefits
The Bank, likewise Banco Santander Spain and other companies controlled by Santander Group, develops long-term compensation programs-tied to the performance of the market price of its shares, based on the achievement of certain goals (Note 34.f).
a.2) Short Term Benefits
The table below shows the salary of Board of Directors and Executive Board and refers to the amount recognized as an expense and paid in the period ended June 30, 2019 and 2018, by Banco Santander and its subsidiaries to their directors for their positions in Banco Santander and other companies in the Santander Conglomerate.
The amounts related to Variable Remuneration and Share-based Remuneration will be paid in subsequent periods.
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |||||||||||||
Fixed Compensation | 45,678 | 44,575 | ||||||||||||
Variable Compensation - in cash | 21,710 | 21,232 | ||||||||||||
Variable Compensation - in shares | 20,775 | 18,101 | ||||||||||||
Others (1) | 19,933 | 43,988 | ||||||||||||
Total Short-Term Benefits | 108,096 | 127,896 | ||||||||||||
Variable Compensation - in cash | 17,902 | 16,252 | ||||||||||||
Variable Compensation - in shares | 19,378 | 16,252 | ||||||||||||
Total Long-Term Benefits | 37,280 | 32,504 | ||||||||||||
Total | 145,376 | 160,400 |
(1) In the first half of 2018, the Management of Banco Santander decided to provision and settle in advance certain benefit, which was practiced by the Bank's liberality, remaining in 2019, the other benefits.
Additionally, in the first semester of 2019, charges were collected on Management compensation in the amount of R$17,431 (2018 - R$18,269).
b) Contract Termination
The termination of the employment relationship of managers for non-fulfillment of obligations or voluntarily by the employee does not give right to any financial compensation and its acquired benefits will be discontinued.
c) Lending Operations
The Bank and its subsidiaries may carry out transactions with related parties, in line with the legislation in force as set forth in articles 6 and 7 of CMN Resolution nº 4,693/18, article 34 of Law 6,404/76 "Law of Corporations" and the Policy for Transactions with Related Parties of Santander published on the Investor Relations website, being considered related parties:
(1) its controllers, natural or legal persons, under the terms of art. 116 of the Law of Corporations;
(2) its directors and members of statutory or contractual bodies;
(3) in relation to the persons mentioned in items (i) and (ii), their spouse, companion and relatives, consanguineous or the like, up to the second degree;
(4) natural persons with qualified equity interest in their capital;
(5) corporate entities with qualified equity interest in their capital;
(6) legal entities in whose capital, directly or indirectly, a Santander Financial Institution has a qualified shareholding;
(7) legal entities in which a Santander Financial Institution has effective operational control or preponderance in the deliberations, regardless of the equity interest; and
Individual and Consolidated Financial Statements - June 30, 2019 80
(8) legal entities that have a director or member of the Board of Directors in common with a Santander Financial Institution.
d) Ownership Interest
The table below shows the direct interest (common and preferred shares):
Shares in Thousands | ||||||||||||||
06/30/2019 | ||||||||||||||
Preferred | Total | |||||||||||||
Common Shares | Preferred | Shares | Total | Shares | ||||||||||
Stockholders' | Common Shares | (%) | Shares | (%) | Shares | (%) | ||||||||
Sterrebeeck B.V. (1) | 1,809,583 | 47.4% | 1,733,644 | 47.1% | 3,543,227 | 47.2% | ||||||||
Grupo Empresarial Santander, S.L. (GES) (1) | 1,107,673 | 29.0% | 1,019,645 | 27.7% | 2,127,318 | 28.4% | ||||||||
Banco Santander, S.A. (1) | 521,964 | 13.7% | 519,268 | 14.1% | 1,041,232 | 13.9% | ||||||||
Employees | 3,156 | 0.1% | 3,159 | 0.1% | 6,315 | 0.1% | ||||||||
Directors (*) | 4,605 | 0.1% | 4,605 | 0.1% | 9,210 | 0.1% | ||||||||
Others | 356,488 | 9.3% | 384,289 | 10.5% | 740,777 | 9.9% | ||||||||
Total Outstanding | 3,803,469 | 99.6% | 3,664,610 | 99.6% | 7,468,079 | 99.6% | ||||||||
Treasury Shares | 15,226 | 0.4% | 15,226 | 0.4% | 30,452 | 0.4% | ||||||||
Total | 3,818,695 | 100.0% | 3,679,836 | 100.0% | 7,498,531 | 100.0% | ||||||||
Free Float (2) | 359,644 | 9.4% | 387,448 | 10.5% | 747,092 | 10.0% | ||||||||
Shares in Thousands | ||||||||||||||
06/30/2018 | ||||||||||||||
Preferred | Total | |||||||||||||
Common Shares | Preferred | Shares | Total | Shares | ||||||||||
Stockholders' | Common Shares | (%) | Shares | (%) | Shares | (%) | ||||||||
Sterrebeeck B.V. (1) | 1,809,583 | 47.4% | 1,733,644 | 47.1% | 3,543,227 | 47.2% | ||||||||
GES (1) | 1,107,673 | 29.0% | 1,019,645 | 27.7% | 2,127,318 | 28.4% | ||||||||
Banco Santander, S.A. (1) | 521,964 | 13.7% | 519,268 | 14.1% | 1,041,232 | 13.9% | ||||||||
Employees | 3,696 | 0.1% | 3,699 | 0.1% | 7,395 | 0.1% | ||||||||
Directors (*) | 5,119 | 0.1% | 5,119 | 0.1% | 10,238 | 0.1% | ||||||||
Others | 359,745 | 9.4% | 387,546 | 10.6% | 747,291 | 10.0% | ||||||||
Total Outstanding | 3,807,780 | 99.7% | 3,668,921 | 99.7% | 7,476,701 | 99.7% | ||||||||
Treasury Shares | 10,915 | 0.3% | 10,915 | 0.3% | 21,830 | 0.3% | ||||||||
Total | 3,818,695 | 100.0% | 3,679,836 | 100.0% | 7,498,531 | 100.0% | ||||||||
Free Float (2) | 363,441 | 9.5% | 391,245 | 10.7% | 754,686 | 10.1% |
(1) Companies of the Santander Spain Group.
(2) Composed of Officials and Others.
(*) None of the members of the Board of Directors and the Executive Board holds 1.0% or more of any class of shares.
e) Related-Party Transactions
Santander has a Policy for Related Party Transactions approved by the Board of Directors, which aims to ensure that all transactions typified by the policy to take effect in view of the interests of Banco Santander and its stockholders. The policy defines the power to approve certain transactions by the Board of Directors. The planned rules also apply to all employees and officers of Banco Santander and its subsidiaries.
Operations and charges for services with related parties are carried out in the ordinary course of business and under reciprocal conditions, including interest rates, terms and guarantees, and do not entail greater risk than the normal collection or have other disadvantages.
Beginning in December 2018, transactions and balances with key management personnel are shown. The main transactions and balance are as follows:
Individual and Consolidated Financial Statements - June 30, 2019 81
Bank | ||||
Assets | Income | Assets | Income | |
(Liabilities) | (Expenses) | (Liabilities) | (Expenses) | |
01/01 to 06/30/2019 | 06/30/2018 | 01/01 to 06/30/2018 | ||
06/30/2019 | ||||
Cash | 298,752 | - | 913,820 | - |
Banco Santander Espanha (2) | 196,421 | - | 892,358 | - |
Banco Santander (México), S.A. (4) | 84,568 | - | 19,539 | - |
Banco Santander Totta, S.A. (4) | 7,037 | - | 1,729 | - |
Others | 10,726 | - | 194 | - |
Interbank Investments | 61,715,374 | 2,279,350 | 58,229,626 | 2,602,209 |
Aymoré CFI (3) | 40,734,870 | 1,519,557 | 36,994,001 | 1,911,098 |
Banco Santander Espanha (1) (2) | 2,299,619 | 62,404 | 5,876,528 | 48,633 |
Banco PSA (3) | 1,142,234 | 46,082 | 1,036,057 | 50,178 |
Banco RCI Brasil S.A. (3) | 3,373,568 | 99,206 | 1,897,954 | 60,841 |
Banco Bandepe(3) | 1,954,523 | 43,993 | 1,149,229 | 35,535 |
Olé Consignado (3) | 12,005,338 | 507,836 | 11,275,857 | 495,924 |
Others | 205,222 | 272 | - | - |
Securities | 365,187 | 10,950 | 11,421,920 | 608,566 |
Santander Leasing (3) | 365,187 | 10,950 | 11,421,920 | 608,566 |
Derivatives Financial Instruments - Net | (1,017,790) | (469,295) | 315,807 | 273,285 |
Real Fundo de Investimento Multimercado Santillana Crédito Privado (Fundo de Investimento Santillana) (4) | (125,517) | 27,021 | 275,740 | (57,005) |
Abbey National Treasury Services Plc (Abbey National Treasury) (4) | - | - | (98,406) | (15,046) |
Banco Santander Espanha (2) | (995,855) | (400,021) | 70,221 | 122,635 |
Santander FI Amazonas (3) | (13,715) | 35,205 | (3,235) | (1,267) |
Santander FI Hedge Strategies (3) (Note 2) | 801,335 | 1,008 | 429,644 | 480,838 |
Getnet S.A. (Note 12) (3) (7) | - | (4,547) | - | - |
Santander Hermes Multi Créd Priv Infra Fundo de Invest | 91,422 | 102,921 | - | - |
Santander FI Diamantina (3) | (775,459) | (230,926) | (358,157) | (256,870) |
Key Management Personnel | - | 43 | - | - |
Interfinancial Relations | 9,235,723 | 1,851 | 8,239,566 | 5,516 |
Getnet S.A. (Nota 12) (3) (7) | 9,225,433 | 894 | 8,223,746 | 2,401 |
Santander Leasing (3) | 10,290 | 958 | 15,820 | 3,115 |
Loan Operations | 16,344 | 1,339 | - | 748 |
Cibrasec(5) | - | 1,078 | - | 748 |
Key Management Personnel (12) | 16,344 | 261 | - | - |
Dividends and Bonuses Receivables | - | - | 529,767 | 623,256 |
Aymoré CFI(3) | - | - | 85,564 | 100,664 |
Santander Leasing (3) | - | - | 249,375 | 293,383 |
Santander CCVM (3) | - | - | 31,107 | 36,596 |
Banco Bandepe(3) | - | - | 163,721 | 192,613 |
Trading Account | 421,901 | 1,075 | 109,301 | 148 |
Abbey National Treasury(4) | - | - | 98,284 | 143 |
Banco Santander Espanha(2) | 421,901 | 1,075 | 11,017 | 5 |
Foreign Exchange Portfolio - Net | 99,330 | (4,202) | 68,809 | (9,027) |
Banco Santander Espanha(2) | 99,330 | (4,202) | 68,809 | (9,027) |
Income Receivable | 930,066 | 1,078,744 | 893,344 | 942,039 |
Zurich Santander Brasil Seguros e Previdência S.A.(8) | 868,001 | 961,115 | 893,344 | 828,528 |
Zurich Santander Brasil Seguros S.A.(8) | 62,066 | 117,630 | - | 113,511 |
Receivables from Affiliates | 21,388 | 360,117 | 60,003 | 469,269 |
Santander Capitalização S.A. (3) | - | - | 20,394 | 130,191 |
Aymoré CFI (3) | - | 243,051 | - | 237,707 |
Santander CCVM (3) | - | 26,505 | - | 35,589 |
Santander Brasil Consórcio (3) | 348 | 9,176 | 299 | 5,400 |
Santander Corretora de Seguros (3) | 12 | 15,816 | - | 18,143 |
Getnet S.A. (3) (7) | 14,906 | 31,870 | 37,665 | 29,836 |
Others | 6,123 | 33,700 | 1,645 | 12,403 |
Other Receivables - Others | 530,124 | 185,078 | 8,944 | 22,926 |
Banco Santander Espanha(2) | 497,488 | - | 6,296 | 6,972 |
Santander Capitalização S.A.(3) | 27,177 | 165,225 | 2,191 | - |
Banco Santander International(4) | - | 17,476 | - | 10,106 |
Individual and Consolidated Financial Statements - June 30, 2019 82
|
|
|
|
|
Santander Securities Services DTVM S.A. (4) | - | 742 | - | 570 |
Key Management Personnel | 7,411 | 97 | - | - |
Others | (1,952) | 1,538 | 457 | 5,278 |
Deposits | (7,750,618) | 93,899 | (8,486,790) | (445,343) |
Santander Leasing(3) | (169,533) | (6,937) | (148,439) | (111,369) |
Banco Santander Espanha(2) | (13,357) | - | (265,492) | (4,415) |
Aymoré CFI(3) | (1,746,182) | (141,986) | (3,294,133) | (178,583) |
Zurich Santander Brasil Seguros e Previdência S.A.(8) | (14,080) | - | - | - |
Zurich Santander Brasil Seguros S.A.(6) | (26,051) | - | - | - |
Santander Brasil Gestão de Recursos Ltda.(4) | (291,076) | (7,629) | (96,223) | (2,867) |
Sancap(3) | (101) | (3) | (10,189) | (354) |
Santander Brasil Asset Management Distribuidora de Títulos e Valores Mobiliários S.A (Santander Brasil Asset)(4) | (22,054) | - | (16,778) | (536) |
Webmotors S.A.(10) | (895) | (13) | (1,327) | (71) |
Fundo de Investimento Santillana(4) | (1,350,355) | (37,181) | (1,769,528) | (56,415) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.)(3)(9) | (51,221) | (1,345) | (86,808) | (391) |
Banco RCI Brasil S.A. (3) | (106,285) | (752) | (124,274) | (2,954) |
Santander Corretora de Seguros(3) | (5,396) | (167) | (79,576) | (3,293) |
Santander Securities Services Brasil DTVM S.A.(4) | (468,267) | (14,677) | (374,845) | (11,797) |
Santander Brasil Consórcio(3) | (1,220) | (33) | (1,328) | (1,097) |
Santander FI Hedge Strategies(3) (Note 2) | (1,448,116) | 319,802 | (2,093,320) | (67,510) |
Santander Capitalização S.A.(3) | (9,842) | - | (5,839) | - |
Santander CCVM(3) | (8,679) | - | (3,671) | - |
Santander Securities Services Brasil Participações S.A.(4) | (59,588) | (1,798) | (72,417) | (2,229) |
Super Pagamentos(3) | (92,071) | (2,008) | (5,085) | - |
Santander Holding Imobiliária S.A.(3) | (140) | - | (33) | (1) |
Getnet S.A.(3) | (14,680) | - | (6,062) | - |
Key Management Personnel | (42,120) | (982) | - | - |
Others | (675,006) | (10,392) | (31,423) | (1,461) |
Repurchase Commitments | (4,861,189) | (156,544) | (15,421,321) | (610,605) |
Fundo de Investimento Santillana(4) | - | - | - | (579) |
Santander FI Amazonas (3) | (361,873) | (7,553) | (247,219) | (7,326) |
Santander FI Financial(3) | - | - | (5,682,063) | (269,237) |
Santander Leasing(3) | (1,310,213) | (42,535) | (6,804,000) | (268,870) |
Banco Bandepe(3) | (30,984) | (2,126) | (226,295) | (3,126) |
Olé Consignado (3) | (2,010) | (46) | (549) | (10) |
Santander CCVM (3) | (98,084) | (2,245) | (27,132) | (650) |
Santander FI SBAC(3) | (2,247,871) | (77,518) | (1,508,771) | (34,519) |
Santander FI Guarujá(3) | (370,525) | (10,264) | (269,593) | (4,349) |
Santander FI Diamantina (3) | (20,000) | (1,294) | (3,159) | (1,640) |
Santander Finance Arrendamento Mercantil (3) | - | - | (334,980) | (10,527) |
Santander FI Unix(3) | (332,346) | (10,015) | (317,560) | (9,769) |
Others | (87,283) | (2,937) | - | (3) |
Key Management Personnel | - | (10) | - | - |
Funds from Acceptance and Issuance of Securities | (104,945) | (2,479) | - | - |
Key Management Personnel | (104,945) | (2,479) | - | - |
Borrowings and Onlendings | (2,455,962) | - | (3,425,931) | - |
Banco Santander Río S.A. | (59,227) | - | (2,165,679) | - |
Santander Brasil EFC(3) | (2,396,735) | - | (1,260,252) | - |
Dividends and Bonuses Payables | (765,198) | - | (538,608) | - |
Banco Santander Espanha(2) | (118,601) | - | (83,622) | - |
Sterrebeeck B.V.(2) | (403,228) | - | (284,303) | - |
GES(2)(4) | (241,864) | - | (170,530) | - |
Banco Madesant - Sociedade Unipessoal, S.A. (Banco Madesant)(4) | (216) | - | (153) | - |
Key Management Personnel (11) | (1,289) | - | - | - |
Payables from Affiliates | (120,036) | (363,827) | (68,898) | (315,729) |
Produban Servicios Informáticos Generales, S.L. (Produban Servicios) (4) | - | - | (21,940) | (22,216) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.) (3) (9) | (46) | (161,815) | (46) | (146,222) |
Ingenieria de Software Bancário, S.L. (Ingeniería) (2) | - | - | (30,700) | (35,716) |
Individual and Consolidated Financial Statements - June 30, 2019 83
Santander Corretora de Seguros (3) | (24,325) | (61,381) | (6,108) | (33,824) |
Banco Santander Espanha (2) | (4,977) | (978) | (3,724) | (33,795) |
Getnet S.A. (3) | (4,685) | (15,282) | (4,707) | (12,241) |
Santander Global Technology, S.L., SOCI | (66,821) | (81,448) | - | - |
Santander Securities Services Brasil | (4,615) | (23,941) | (1,254) | (23,476) |
Others | (14,567) | (18,983) | (419) | (8,239) |
Debt Instruments Eligible to Compose Capital | (9,673,045) | (389,049) | (9,296,966) | (212,297) |
Banco Santander Espanha (2) (6) | (9,673,045) | (389,049) | (9,296,966) | (212,297) |
Donations | - | (8,150) | - | (7,785) |
Fundação Sudameris | - | (8,150) | - | (7,785) |
Other Payables - Others | (7,312,086) | (1,103,716) | (46,536) | (486,365) |
Banco Santander Espanha (2) | - | (4,007) | - | (879) |
GetNet (3) | (3,489,837) | (330,603) | - | - |
TecBan (10) | - | (166,642) | - | (137,482) |
Ingeniería (2) | - | - | - | (17,390) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.) (3) (9) | - | (128,414) | - | (158,777) |
Produban Servicios (4) | - | - | - | (818) |
Aquanima Brasil Ltda.(4) | - | (13,825) | - | (13,268) |
Zurich Santander Brasil Seguros e Previdência S.A. (8) | - | - | (14,333) | - |
Getnet S.A. (3) | (3,489,837) | (330,603) | (28,293) | (152,738) |
Santander Securities Services Brasil | - | (1,698) | (3,910) | (2,031) |
Key Management Personnel | (332,385) | (125,567) | - | - |
Others | (27) | (2,357) | - | (2,982) |
Consolidated | ||||
Assets | Income | Assets | Income | |
(Liabilities) | (Expenses) | (Liabilities) | (Expenses) | |
01/01 to 06/30/2019 | 06/30/2018 | 01/01 to 06/30/2018 | ||
06/30/2019 | ||||
Cash | 353,163 | - | 1,266,101 | - |
Banco Santander Espanha (2) | 261,558 | - | 1,244,639 | - |
Banco Santander México (4) | 84,568 | - | 19,539 | - |
Banco Santander Totta, S.A. (4) | 7,037 | - | 1,729 | - |
Others | - | - | 194 | - |
Interbank Investments | 2,299,619 | 62,506 | 5,876,528 | 48,650 |
Banco Santander Espanha(1)(2) | 2,299,619 | 62,506 | 5,876,528 | 48,650 |
Derivatives Financial Instruments - Net | (1,156,355) | (402,501) | 266,742 | (3,926) |
Fundo de Investimento Santillana(4) | (125,517) | 27,021 | 275,740 | (57,005) |
Abbey National Treasury(4) | - | - | (98,406) | (15,046) |
Banco Santander Espanha(2) | (1,030,838) | (429,565) | 89,408 | 68,125 |
Key Management Personnel | - | 43 | - | - |
Loan Operations | 16,344 | 1,342 | - | 748 |
Cibrasec(5) | - | 1,078 | - | 748 |
Key Management Personnel (12) | 16,344 | 264 | - | - |
Trading Account | 421,901 | (12,541) | 109,301 | (19,137) |
Banco Santander Espanha(2) | 421,901 | (12,541) | 11,017 | (19,280) |
Abbey National Treasury(4) | - | - | 98,284 | 143 |
Foreign Exchange Portfolio - Net | 99,383 | (4,685) | 68,809 | (9,027) |
Banco Santander Espanha(2) | 99,383 | (4,763) | 68,809 | (9,027) |
Banco Santander México (4) | - | - | - | - |
Key Management Personnel | - | 78 | - | - |
Dividends and Bonuses Receivables | (14) | - | - | - |
Webmotors S.A(10) | (14) | - | - | - |
Income Receivable | 964,343 | 1,550,460 | 919,103 | 1,306,437 |
Zurich Santander Brasil Seguros e Previdência S.A. (8) | 902,277 | 1,393,931 | 919,103 | 1,157,846 |
Zurich Santander Brasil Seguros S.A. (8) | 62,066 | 156,529 | - | 148,591 |
Receivables from Affiliates | 505 | 4,123 | 2,613 | 2,173 |
Isban Mexico, S.A. de C.V.(2) | 122 | - | 122 | - |
Individual and Consolidated Financial Statements - June 30, 2019 84
Ingenieria (2) | - | - | 192 | - |
Santander Securities Services Brasil DTVM S.A.(4) | - | 772 | - | 1,851 |
Others | 192 | 3,352 | 2,299 | 322 |
Other Receivables - Others | 573,793 | 23,652 | 6,406 | 27,230 |
Banco Santander Espanha(2) | 566,382 | (44) | 6,389 | 6,972 |
Banco Santander International(4) | - | 17,476 | - | 10,106 |
Santander Securities Services Brasil DTVM S.A.(4) | - | 4,255 | - | 4,299 |
Banco Santander - Chile | - | - | - | 339 |
Santander Participações (3) | - | - | - | 267 |
Key Management Personnel | 7,411 | 170 | - | - |
Others | - | 889 | 17 | 5,247 |
Deposits | (2,365,444) | (65,398) | (2,607,712) | (79,366) |
Banco Santander Espanha(2) | (41,994) | - | (270,851) | (4,415) |
Zurich Santander Brasil Seguros e Previdência S.A.(8) | (14,080) | - | - | - |
Zurich Santander Brasil Seguros S.A.(8) | (26,051) | - | - | - |
Isban Brasil S.A.(4) | - | - | - | (90) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.)(3)(9) | - | - | - | (215) |
Santander Brasil Gestão de Recursos Ltda.(4) | (291,076) | (7,629) | (96,223) | (2,867) |
Fundo de Investimento Santillana(4) | (1,350,355) | (37,181) | (1,769,528) | (56,415) |
Santander Brasil Asset (4) | (22,054) | - | (16,778) | (536) |
Santander Securities Services Brasil DTVM S.A.(4) | (468,267) | (14,677) | (374,845) | (11,797) |
Santander Securities Services Brasil Participações S.A.(4) | (59,588) | (1,798) | (72,417) | (2,229) |
Gestora de Inteligência de Crédito(5) | (42,701) | (3,082) | (2,250) | (663) |
Webmotors S.A.(10) | (895) | (13) | (1,327) | (71) |
Key Management Personnel | (42,128) | (982) | - | - |
Others | (6,255) | (35) | (3,493) | (69) |
Repurchase Commitments | - | - | - | (579) |
Fundo de Investimento Santillana(4) | - | - | - | (579) |
Funds from Acceptance and Issuance of Securities | (104,945) | (2,479) | 96,133 | - |
Key Management Personnel | (104,945) | (2,479) | 96,133 | - |
Borrowings and Onlendings | (59,227) | - | (2,165,679) | - |
Banco Santander Espanha(2) | - | - | (2,165,679) | - |
Banco Santander Río S.A.(4) | (59,227) | - | - | - |
Dividendos e Bonificações a Pagar | (765,198) | - | (538,608) | - |
Sterrebeeck B.V.(2) | (403,228) | - | (284,303) | - |
GES(2)(4) | (241,864) | - | (170,530) | - |
Banco Santander Espanha(2) | (118,601) | - | (83,622) | - |
Banco Madesant(4) | (216) | - | (153) | - |
Key Management Personnel (11) | (1,289) | - | - | - |
Payables from Affiliates | (91,081) | (127,679) | (60,568) | (162,148) |
Banco Santander Espanha(2) | (5,058) | (977) | (5,187) | (33,651) |
Produban Servicios(4) | - | - | (21,940) | (22,830) |
Isban Brasil S.A.(4) | - | - | - | (3,979) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.)(3)(9) | - | - | - | (31,051) |
Ingeniería(2) | - | - | (45,180) | (36,570) |
Santander Brasil Asset(4) | (14,480) | (913) | (70) | (880) |
Santander Securities Services Brasil DTVM S.A.(4) | (4,615) | (23,941) | (1,254) | (23,476) |
Zurich Santander Brasil Seguros e Previdência S.A.(8) | - | - | (537) | - |
Santander Global Technology, S.L., SOCI | (66,821) | (82,084) | - | - |
Others | (107) | (19,764) | (880) | (9,711) |
Debt Instruments Eligible to Compose Capital | (9,673,045) | (389,049) | (9,296,966) | (212,297) |
Banco Santander Espanha(2)(6) | (9,673,045) | (389,049) | (9,296,966) | (212,297) |
Donations | - | (9,595) | - | (9,555) |
Santander Cultural | - | (775) | - | (1,500) |
Fundação Sudameris | - | (8,150) | - | (7,785) |
Fundação Santander | - | (670) | - | (270) |
Other Payables - Others | (360,702) | (176,659) | (35,114) | (213,586) |
Banco Santander Espanha (2) | (2,068) | (4,007) | - | (882) |
Isban Brasil S.A.(4) | - | - | - | (26,270) |
Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A.)(3)(9) | - | - | - | (5,435) |
Ingeniería(2) | - | - | - | (17,390) |
Produban Servicios (4) | - | - | - | (818) |
Aquanima Brasil Ltda.(4) | - | (13,838) | - | (13,268) |
Zurich Santander Brasil Seguros e Previdência S.A. (11) | (21,401) | (11,498) | (31,201) | (9,613) |
Santander Securities Servicies Brasil DTVM S.A. (4) | - | (1,698) | (3,910) | (2,031) |
TecBan(10) | - | - | - | (137,482) |
Key Management Personnel | (336,734) | (144,732) | - | - |
Others | (499) | (886) | (3) | (397) |
Individual and Consolidated Financial Statements - June 30, 2019 85
(1)Refers to investments in foreign currency (overnight) with maturity on July 1, 2019 and interest rates of 2.35% p.a. (06/30/2018 - with maturity on January 2, 2019 and interest rates of 2.38% p.a.) maintained by the Banco Santander Brasil and its Grand Cayman Branch.
(2)Controller - Banco Santander is indirectly controlled by Banco Santander Spain (Note 1 and 26.d), through its subsidiary GES and Sterrebeeck B.V.
(3)Direct or indirect controlled by Banco Santander.
(4)Direct or indirect controlled by Banco Santander Espanha.
(5)Jointly Controlled - Banco Santander.
(6)Refers to the portion acquired by the Controller with the PR Optimization Plan carried out in the first half of 2014.
(7)Corresponds to receivable values related to the Acquiring business.
(8)Significant Influence of Banco Santander Espanha.
(9)Company acquired on February 28, 2018, on the same date, Produban Serviços de Informática S.A. was changed to Santander Brasil Tecnologia S.A. (Note 36.f).
(10)Jointly Controlled - Santander Corretora de Seguros.
(11) Of the total dividends approved in 2019, R$1,139 is allocated to the Key Management Personnel, with the amount of the provision being paid.
(12) The balance with key management personnel refers to operations contracted before the term of the mandates.
26. Income from Services Rendered and Banking Fees
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Asset Management | 346,878 | 397,864 | 516,439 | 509,829 |
Checking Account Services | 1,873,701 | 1,618,943 | 1,892,797 | 1,624,027 |
Lending Operations and Income from Guarantees Provided | 485,154 | 592,126 | 665,565 | 784,533 |
Lending Operations | 210,489 | 272,934 | 390,900 | 465,341 |
Income Guarantees Provided | 274,665 | 319,192 | 274,665 | 319,192 |
Insurance Fees | 1,204,946 | 1,087,005 | 1,514,185 | 1,337,795 |
Cards (Debit and Credit) and Acquiring Services | 2,080,008 | 1,742,245 | 3,086,364 | 2,722,640 |
Collection | 750,878 | 750,157 | 752,596 | 752,501 |
Brokerage, Custody and Placement of Securities | 383,149 | 272,794 | 477,403 | 353,094 |
Others | 118,596 | 130,253 | 278,416 | 324,406 |
Total | 7,243,310 | 6,591,387 | 9,183,765 | 8,408,825 |
27. Personnel Expenses
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Compensation | 1,912,978 | 1,912,114 | 2,128,141 | 2,083,650 |
Charges | 678,171 | 774,152 | 793,190 | 864,704 |
Benefits | 664,550 | 651,484 | 750,843 | 715,049 |
Training | 25,574 | 24,451 | 28,084 | 26,848 |
Others | 4,471 | 4,464 | 5,569 | 4,506 |
Total | 3,285,744 | 3,366,665 | 3,705,827 | 3,694,757 |
28. Other Administrative Expenses
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Depreciation and Amortization (1) | 1,078,880 | 981,025 | 1,351,054 | 1,242,880 |
Outsourced and Specialized Services | 964,954 | 888,511 | 1,206,162 | 1,096,786 |
Communications | 194,991 | 192,051 | 207,100 | 204,207 |
Data Processing | 1,180,580 | 966,231 | 1,194,657 | 999,215 |
Advertising, Promotions and Publicity | 205,397 | 190,291 | 299,385 | 231,939 |
Rentals | 379,251 | 352,397 | 393,495 | 362,629 |
Transportation and Travel | 72,323 | 67,478 | 91,862 | 82,904 |
Financial System Services | 114,040 | 121,843 | 144,806 | 158,088 |
Security and Money Transport | 309,572 | 304,460 | 311,110 | 305,241 |
Asset Maintenance and Upkeep | 110,891 | 122,543 | 118,901 | 124,466 |
Water, Electricity and Gas | 109,147 | 94,407 | 111,923 | 96,598 |
Materials | 20,668 | 24,502 | 22,583 | 25,844 |
Others | 246,463 | 180,987 | 409,648 | 285,548 |
Total | 4,987,157 | 4,486,726 | 5,862,686 | 5,216,345 |
Individual and Consolidated Financial Statements - June 30, 2019 86
(1) On june 30, 2019, includes investiments goodwill amortization of R$65,851 (2018 - R$26,153) in the Bank and R$177,542 (2018 - R$139,154) in the Consolidated, held on time, length and proportion of the projected results which are subject to annual verification.
29. Tax Expenses
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Cofins (Contribution for Social Security Financing) (1) | 1,029,014 | 548,727 | 1,361,260 | 820,993 |
ISS (Tax on Services) (3) | 294,777 | 307,571 | 573,589 | 407,773 |
PIS (Tax on Revenue) (1) | 163,160 | 84,331 | 230,069 | 142,659 |
Others (2) | 105,951 | 99,140 | 148,203 | 140,667 |
Total | 1,592,902 | 1,039,769 | 2,313,121 | 1,512,092 |
(1) Includes the constitution of deferred taxes assets PIS and Cofins on adjustment to market value of securities and derivative financial instruments.
(2) Includes provisions updates for PIS and Cofins of Law 9,718/1998.
(3) Includes ISS payment effected by Santander Leasing for the city of São Paulo, referring lease operations on the period between January 2014 and December 2017, in the amount of R$195.569.
30. Other Operating Income
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Net Income Pension and Capitalization | - | - | 260,053 | 186,080 |
Reversal of Operating Provisions - Fiscal (Note 22.c) (1) | - | 19,591 | - | 42,714 |
Reversal of Provision for Financial Guarantees Provided (Note 21) | 25,482 | 105,590 | 25,482 | 105,590 |
Monetary Adjustment of Escrow Deposits | 287,940 | 274,784 | 330,032 | 336,075 |
Recoverable Taxes | 34,525 | 87,996 | 52,685 | 113,559 |
Recovery of Charges and Expenses | 636,538 | 637,826 | 507,536 | 513,114 |
Monetary Variation | 704,568 | 642,083 | 705,068 | 642,819 |
Others (2) | 489,408 | 997,329 | 698,619 | 1,138,951 |
Total | 2,178,461 | 2,765,199 | 2,579,475 | 3,078,902 |
(1) On June 30, 2018, includes the amount of R$51,215 in the Bank and R$52,606 in the Consolidated referring to the program of installments and cash payment of tax and social security debts established by MP 783/2017 and reissues.
(2) On June 30, 2018, it mainly includes the effect of the increase in the cost contribution established for purposes of the post-employment benefit plan in the amount of R$816,157 (note 21 and 34).
31. Other Operating Expenses
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Operating Provisions | ||||
Fiscal (Note 22.c) | 15,878 | - | 933 | - |
Labor (Note 22.c) | 264,252 | 513,504 | 307,277 | 537,196 |
Civil (Note 22.c) | 92,356 | 276,710 | 160,783 | 326,345 |
Credit Cards (5) | 2,145,895 | 1,032,007 | 1,706,974 | 1,059,492 |
Actuarial Losses - Pension Plan (Note 34.a) | 109,879 | 120,355 | 109,097 | 119,489 |
Legal Fees and Costs | 80,043 | 89,658 | 96,314 | 103,017 |
Serasa and SPC (Credit Reporting Agency) | 33,118 | 30,603 | 33,983 | 31,365 |
Brokerage Fees | 48,512 | 35,382 | 48,602 | 36,768 |
Commissions | 242,676 | 229,554 | 853,169 | 804,870 |
Rating recoverable value (2) | - | 305,864 | - | 305,864 |
Others (1) | 1,521,772 | 1,736,160 | 2,257,234 | 2,212,072 |
Total | 4,554,381 | 4,369,797 | 5,574,366 | 5,536,478 |
Individual and Consolidated Financial Statements - June 30, 2019 87
(1) On June 30, 2019 and 2018, mainly includes monetary restatement on provisions for judicial and administrative proceedings and legal obligations, provisions for the benefit guarantee fund and other provisions.
(2) On June 30, 2018, includes the recognition of impairment of intangible assets and property, plant and equipment recorded as a result of technical analyzes, which have shown a significant reduction in the expected future economic benefits of these assets (Note 16).
32. Non-Operating Income
Bank | Consolidated | |||
01/01 to 06/30/2019 | 01/01 to 06/30/2018 | 01/01 to 06/30/2019 | 01/01 to 06/30/2018 | |
Result on sale of Investments | - | - | 4,369 | 8,588 |
Result on Sale of Other Assets | 6,573 | 50,567 | 1,111 | 40,248 |
Reversal (Recognition) of Allowance for Losses on Other Assets (1) | (1,714) | (14,675) | (119,930) | (10,574) |
Expense on Assets Not in Use | (28,462) | (19,800) | (28,725) | (19,929) |
Gains (Losses) of Capital | 971 | (2,279) | 535 | (2,263) |
Other Income (Expenses) | 37,228 | 7,182 | 31,258 | 11,206 |
Total | 14,596 | 20,995 | (111,382) | 27,276 |
(1) On June 30, 2019 and 2018, it mainly includes reversal of provisions for devaluations on real estate.
33. Income Tax and Social Contribution
Bank | Consolidated | ||||||||||
01/01 to | 01/01 to 06/30/2018 | 01/01 to | 01/01 to 06/30/2018 | ||||||||
Income Before Taxes on Income and Profit Sharing | 10,157,045 | 4,126,202 | 11,267,989 | 4,929,376 | |||||||
Profit Sharing(1) | (841,678) | (839,779) | (925,262) | (900,141) | |||||||
Interest on Capital (2) | - | (600,000) | - | (600,000) | |||||||
Unrealized Income | - | - | 16,261 | (284) | |||||||
Income Before Taxes | 9,315,367 | 2,686,423 | 10,358,988 | 3,428,951 | |||||||
Total Income and Social Contribution Tax at the Rates of 25% and 20%, Respectively (5) | (3,726,147) | (1,208,890) | (4,143,595) | (1,543,028) | |||||||
Equity in Subsidiaries (3) | 643,619 | 299,067 | 8,688 | (312,529) | |||||||
Nondeductible Expenses, Net of Non-Taxable Income | 790,087 | 161,324 | 901,833 | 176,895 | |||||||
Exchange Variation - Foreign Branches | (202,412) | 2,725,675 | (202,412) | 2,725,675 | |||||||
Income and Social Contribution Taxes on Temporary Differences and Tax Losses from Previous Exercises | 27,023 | 283,729 | 60,852 | 265,893 | |||||||
Effects of Change in Rate of CSLL (4) | - | - | 53,743 | 79,489 | |||||||
Other Adjustments Social Contribution Taxes 5% (5) | - | 18,647 | - | 18,256 | |||||||
Other Adjustments, Including Profits Provided Abroad | 24,110 | 225,463 | (15,501) | 525,427 | |||||||
Income and Social Contribution Taxes | (2,443,720) | 2,505,015 | (3,336,392) | 1,936,078 |
(1) The basis of calculation is the net income, after IR and CSLL.
(2) As of January 2019, pursuant to CMN Resolution nº 4.706, the amounts related to the declared capital remuneration must be recognized against the appropriate account of retained earnings, by the net amount of the tax effects.
(3) As a result of equity in subsidiaries are not included interest on capital received and receivable.
(4) Effect of rate differences for the other non-financial companies, which the social contribution tax rate is 9%.
(5) Temporary rate increase of CSLL from September 2015 to December 2018 (Note 3.s).
Individual and Consolidated Financial Statements - June 30, 2019 88
Foreign Exchange Hedge of the Grand Cayman Branch, Luxembourg Branch and the Subsidiary Santander Brasil EFC
Banco Santander operates two branchs, one in the Cayman Islands and one in Luxembourg, and a subsidiary called Santander Brasil Establecimiento Financiero de Credito, EFC, or “Santander Brasil EFC” (independent subsidiary in Spain) which are used mainly to raise funds in the capital and financial markets, providing credit lines that are extended to customers for trade-related financings and working capital (Note 13).
To protect the exposures to foreign exchange rate variations, the Bank uses derivatives and international funding. 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 or deductible to PIS/Cofins/IR/CSLL, while gains or losses from derivatives used as hedges are taxable or deductible. The purpose of these derivatives are to protect the after-tax results.
Tax treatment distinct from such exchange rate differences results in volatility in "Operating Income before Taxation" and in the caption "Income Taxes". Following are the effects of the operations carried out, as well as the total effect of the Currency Hedge for the year ended in June 30, 2019 and 2018:
01/01 to | 01/01 to 06/30/2018 | ||||||||||
R$ | |||||||||||
Financial Operations | |||||||||||
Result generated by the exchange rate variations on the Bank's investment in the Cayman and EFC Agency | (554,543) | 6,566,088 | |||||||||
Result generated by derivative contracts used as hedge | 967,148 | (12,462,906) | |||||||||
Tax Expenses | |||||||||||
Tax effect of derivative contracts used as hedge - PIS/COFINS | (44,950) | 476,406 | |||||||||
Income Tax and Social Contribution | |||||||||||
Tax effect of derivative contracts used as hedge - IR/CS | (367,655) | 5,420,412 |
34. Employee Benefit Plans - Post-Employment Benefits
a) Supplemental Pension Plan
Banco Santander and its subsidiaries sponsor the closed pension entities for the purpose of granting pensions and supplementary pensions over those granted by the Social Security, as defined in the basic regulations of each plan.
I) Banesprev
Plan I: defined benefit plan fully sponsored by Banco Santander, it covers employees hired after May 22, 1975 called Participants Recipients, and those hired until May 22, 1975 called Participants Aggregates, who are also entitled to death benefits. This plan is closed to new entrants since March 28, 2005.
Plan II: defined benefit plan, constituted from July 27, 1994, effective of the new text of the Statute and Regulations of the Basic Plan II, Plan I participants who chose the new plan began to contribute to the rate of 44.9% stipulated by the actuary for funding each year, introduced in April 2012 extraordinary cost to the sponsor and participants, as agreed with the PREVIC - Superintendence of Pension Funds, due to deficit in the plan. This plan is closed to new entrants since June 3, 2005.
Plan V: defined benefit plan fully sponsored by Banco Santander, it covers employees hired until May 22, 1975, closed and paid off.
Supplemental Pension Plan Pré 75: defined benefit plan was created in view of the privatization of Banespa and is managed by Banesprev and offered only to employees hired before May 22, 1975, which its effective date is January 1, 2000. This plan is closed to new entrants since April 28, 2000.
Plan III: variable contribution plan, for employees hired after May 22,1975, previously served by the Plans I and II. This plan receives contributions from the sponsor and the participants. The benefits are in the form of defined contribution during the period of contribution and defined benefit during the receipt of benefit, if paid as monthly income for life. Plan is closed to new entrants since September 1, 2005.
Plan IV: variable contribution plan, designed for employees hired as of November 27, 2000, in which the sponsor only contributes to the risk benefits and administrative expenses. In this plan the benefit is set in the form of defined contribution during the period of contribution and defined benefit during the receipt of benefits in the form of monthly income for life, in whole or in part of the benefit. The risk benefits of the plan are in defined benefit. This plan is closed to new entrants since July 23, 2010.
Individual and Consolidated Financial Statements - June 30, 2019 89
Three plans (DCA, DAB and CACIBAN): additional retirement and former employees associated pension, arising from the process of acquisition of the former Banco Meridional, established under the defined benefit plan. The plans are closed to new participants prior to the acquisition of Grupo Bozano Simonsen by Banco Santander in November 1999. .
Plano Sanprev I: defined benefit plan, established on September 27, 1979, covering employees enrolled in the plan sponsor and it is in process of extinction since June 30, 1996.
Plan Sanprev II: plan that provides insurance risk, pension supplement temporary, disability retirement annuity and the supplemental death and sickness allowance and birth, including employees enrolled in the plan sponsor and is funded solely by sponsors through monthly contributions, as indicated by the actuary. This plan is closed to new entrants since March 10, 2010.
Plan Sanprev III: variable contribution plan covering employees of the sponsors who made the choice to contribute, by contribution freely chosen by participants from 2% of their salary. That the benefit plan is a defined contribution during the contribution and defined benefit during the receipt of the benefit, being in the form of monthly income for life, in whole or in part of the benefit. This plan is closed to new entrants since March 10, 2010.
II) Sanprev - Santander Associação de Previdência (Sanprev)
Closed-End Private Pension Entity (EFPC) that used to manage three benefit plans, 2 in the Defined Benefit modality and 1 in the modality of Variable Contribution, whose process of management transfer of these plans to Banesprev occurred in January 2017. According to Portaria 389 of PREVIC, of May 8, 2018, it was approved the closure of the authorization of operation of Sanprev.
III) Bandeprev - Bandepe Previdência Social (Bandeprev)
Defined benefit plan, sponsored by Banco Bandepe and Banco Santander, managed by Bandeprev. The plans are divided into basic plan and special retirement supplement plan, with different eligibility requirements, contributions and benefits by subgroups of participants. The plans are closed to new entrants since 1999 for Banco Bandepe’s employees and for others since 2011.
IV) Other Plans
SantanderPrevi - Sociedade de Previdência Privada (SantanderPrevi): it´s a closed-end private pension entity with the purpose of constitution and implementation of social security pension plans, complementary to the social security contribution, in the form of actual legislation.
The Retirement Plan of SantanderPrevi is structured as Defined Contribution and closed to new members since July 2018 as approved by PREVIC, with contributions shared between sponsors and plan participants. The appropriate values by the sponsors in the first semester of 2019 was R$68,366 (2018 - R$42,697) in the Bank and R$73,271 (2018 - R$47,199) in the Consolidated.
It has 10 cases of lifetime income with benefits arising from the previous plan.
SBPREV - Santander Brasil Open Pension Plan: as from January 2, 2018, Santander started to offer this new optional supplementary pension plan for new employees hired and for employees who are not enrolled in any other pension plan managed by the Closed Entities Complementary Pension Plan of the Group. This new program includes the PGBL- Free Benefit Generation Plan and VGBL-Free Benefit Generator Life managed by Icatu Seguros, the Open Entity of Complementary Pension Plan, which are open for new accessions, with similar characteristics to SantanderPrevi's plan. the instituting / stipulating companies and the participants in the plans.
The appropriated values by the sponsors in the first semester of 2019 were R$2,524 (06/30/2018 – R$266) in the Bank and R$2,999 (06/30/2018 – 272) in the Consolidated.
Determination of Net Actuarial Assets (Liabilities)
Bank | ||||||||||||
06/30/2019 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Conciliation of Assets and Liabilities | ||||||||||||
Present Value of Actuarial Obligations | (25,375,054) | (4,178) | (1,438,801) | |||||||||
Fair Value of Plan Assets | 22,395,703 | 4,700 | 2,258,949 | |||||||||
(2,979,351) | 522 | 820,148 | ||||||||||
Being: | ||||||||||||
Superavit | 898,535 | 522 | 820,148 | |||||||||
Deficit | (3,877,886) | - | - | |||||||||
Amount not Recognized as Assets | 589,374 | 522 | 817,340 | |||||||||
Net Actuarial Asset (Note 12) | 309,161 | - | 2,808 | |||||||||
Net Actuarial Liability (Note 21) | (3,877,886) | - | - | |||||||||
Contributions effected on the Actuarial Liabilities | 27,827 | - | 127 | |||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (109,719) | (7) | (153) | |||||||||
Other Equity Valuation Adjustments | (4,965,786) | 511 | 1,999 | |||||||||
Actual Return on Plan Assets | 3,105,096 | 483 | 395,197 |
Individual and Consolidated Financial Statements - June 30, 2019 90
Bank | ||||||||||||
06/30/2018 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Conciliation of Assets and Liabilities | ||||||||||||
Present Value of Actuarial Obligations | (19,588,667) | (4,075) | (1,356,704) | |||||||||
Fair Value of Plan Assets | 18,252,911 | 4,465 | 1,733,896 | |||||||||
(1,335,756) | 390 | 377,192 | ||||||||||
Being: | ||||||||||||
Superavit | 591,345 | 390 | 377,192 | |||||||||
Deficit | (1,927,101) | - | - | |||||||||
Amount not Recognized as Assets | 431,740 | 390 | 374,957 | |||||||||
Net Actuarial Asset (Note 12) | 159,605 | - | 2,235 | |||||||||
Net Actuarial Liability (Note 21) | (1,927,101) | - | - | |||||||||
Contributions effected on the Actuarial Liabilities | 16,958 | - | 44 | |||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (120,130) | (7) | (218) | |||||||||
Other Equity Valuation Adjustments | (2,895,041) | 497 | 1,314 | |||||||||
Actual Return on Plan Assets | 227,123 | 190 | (9,415) | |||||||||
Consolidated | ||||||||||||
06/30/2019 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Conciliation of Assets and Liabilities | ||||||||||||
Present Value of Actuarial Obligations | (25,886,133) | (4,178) | (1,438,801) | |||||||||
Fair Value of Plan Assets | 23,141,470 | 4,700 | 2,258,949 | |||||||||
(2,744,663) | 522 | 820,148 | ||||||||||
Being: | ||||||||||||
Superavit | 1,176,952 | 522 | 820,148 | |||||||||
Deficit | (3,921,615) | - | - | |||||||||
Amount not Recognized as Assets | 801,250 | 522 | 817,340 | |||||||||
Net Actuarial Asset (Note 12) | 375,702 | - | 2,808 | |||||||||
Net Actuarial Liability (Note 21) | (3,921,615) | - | - | |||||||||
Contributions effected on the Actuarial Liabilities | 28,111 | - | 127 | |||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (108,937) | (7) | (153) | |||||||||
Other Equity Valuation Adjustments | (4,994,425) | 511 | 1,999 | |||||||||
Actual Return on Plan Assets | 3,234,405 | 483 | 395,197 | |||||||||
Consolidated | ||||||||||||
06/30/2018 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Conciliation of Assets and Liabilities | ||||||||||||
Present Value of Actuarial Obligations | (19,986,318) | (4,075) | (1,356,704) | |||||||||
Fair Value of Plan Assets | 18,817,326 | 4,465 | 1,733,896 | |||||||||
(1,168,992) | 390 | 377,192 | ||||||||||
Being: | ||||||||||||
Superavit | 773,934 | 390 | 377,192 | |||||||||
Deficit | (1,942,926) | - | - | |||||||||
Amount not Recognized as Assets | 569,204 | 390 | 374,957 | |||||||||
Net Actuarial Asset (Note 12) | 204,730 | - | 2,235 | |||||||||
Net Actuarial Liability (Note 21) | (1,942,926) | - | - | |||||||||
Contributions effected on the Actuarial Liabilities | 17,315 | - | 44 | |||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (119,264) | (7) | (218) | |||||||||
Other Equity Valuation Adjustments | (2,932,436) | 497 | 1,314 | |||||||||
Actual Return on Plan Assets | 186,212 | 190 | (9,415) |
Individual and Consolidated Financial Statements - June 30, 2019 91
Opening of gains (losses) actuarial from experience, financial assumptions and demographic hypotheses:
Bank | ||||||||||||
06/30/2019 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Experience Plan | (223,239) | 20 | (6,600) | |||||||||
Changes in Financial Assumptions | (2,934,524) | - | - | |||||||||
Changes in Demographic Assumptions | - | - | - | |||||||||
Gain (Loss) Actuarial - Obligation | (3,157,763) | 20 | (6,600) | |||||||||
Return on Investment, Return Unlike Implied Discount Rate | 2,226,438 | 292 | 310,004 | |||||||||
Gain (Loss) Actuarial - Asset | 2,226,438 | 292 | 310,004 | |||||||||
Change in Irrecoverable Surplus | (148,597) | (305) | (302,812) | |||||||||
Bank | ||||||||||||
06/30/2018 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Experience Plan | (42,337) | 39 | (8,683) | |||||||||
Changes in Financial Assumptions | 953,711 | - | - | |||||||||
Changes in Demographic Assumptions | - | - | - | |||||||||
Gain (Loss) Actuarial - Obligation | 911,374 | 39 | (8,683) | |||||||||
Return on Investment, Return Unlike Implied Discount Rate | (185,549) | (12) | (92,910) | |||||||||
Gain (Loss) Actuarial - Asset | (185,549) | (12) | (92,910) | |||||||||
Change in Irrecoverable Surplus | 42,971 | (19) | 101,784 | |||||||||
Consolidated | ||||||||||||
06/30/2019 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Experience Plan | (225,677) | 20 | (6,600) | |||||||||
Changes in Financial Assumptions | (2,993,914) | - | - | |||||||||
Changes in Demographic Assumptions | - | - | - | |||||||||
Gain (Loss) Actuarial - Obligation | (3,219,591) | 20 | (6,600) | |||||||||
Return on Investment, Return Unlike Implied Discount Rate | 2,327,751 | 292 | 310,004 | |||||||||
Gain (Loss) Actuarial - Asset | 2,327,751 | 292 | 310,004 | |||||||||
Change in Irrecoverable Surplus | (187,003) | (305) | (302,812) | |||||||||
Consolidated | ||||||||||||
06/30/2018 | ||||||||||||
Santander- | ||||||||||||
Banesprev | previ | Bandeprev | ||||||||||
Experience Plan | (38,211) | 39 | (8,683) | |||||||||
Changes in Financial Assumptions | 972,794 | - | - | |||||||||
Changes in Demographic Assumptions | - | - | - | |||||||||
Gain (Loss) Actuarial - Obligation | 934,583 | 39 | (8,683) | |||||||||
Return on Investment, Return Unlike Implied Discount Rate | (255,197) | (12) | (92,910) | |||||||||
Gain (Loss) Actuarial - Asset | (255,197) | (12) | (92,910) | |||||||||
Change in Irrecoverable Surplus | 98,733 | (19) | 101,784 |
The table below shows the duration of the actuarial obligations of the plans sponsored by Banco Santander on December 31, 2018 and 2017, applicable to June 30, 2019 and 2018:
Plans | Duration (in Years) | |||||||||||
12/31/2018 | 12/31/2017 | |||||||||||
Banesprev | ||||||||||||
Plan I | 11.35 | 11.26 | ||||||||||
Plan II (1) | 12.82 | 11.51 | ||||||||||
Plan III | 9.39 | 9.03 | ||||||||||
Plan IV | 14.00 | 13.86 | ||||||||||
Plan V (1) | 9.54 | 8.82 | ||||||||||
Pré-75 (1) | 10.41 | 9.57 | ||||||||||
Meridional DCA, DAB e CACIBAN | 6,37/5,79/6,79 | 6,41/5,82/6,87 | ||||||||||
Sanprev | ||||||||||||
Plan I | 6.47 | 6.46 | ||||||||||
Plan II | 10.83 | 10.94 | ||||||||||
Plan III | 9.66 | 9.46 | ||||||||||
Bandeprev | ||||||||||||
Plan Básico | 9.57 | 9.46 | ||||||||||
Plan Especial I | 6.70 | 6.75 | ||||||||||
Plan Especial II | 6.52 | 6.61 | ||||||||||
SantanderPrevi | ||||||||||||
SantanderPrevi | 7.30 | 7.20 |
(1) Except for Plans II, V and Pre-75, whose duration is 06/30/2019.
Individual and Consolidated Financial Statements - June 30, 2019 92
b) Health and Dental Care Plan
Cabesp -Caixa Beneficente dos Funcionários do Banco do Estado de São Paulo: entity that covers health and dental care expenses of employees hired until Banespa privatization in 2000, as defined in the entity's bylaws.
HolandaPrevi’s Retirees (current corporate name of SantanderPrevi): for the health care plan Retirement has lifetime nature and is a closed group. In his termination the employee should have completed 10 years of employment with Banco Real and 55 years of age. In this case it was offered the continuity of health care plan where the employee pays 70% and the Bank pays 30% of the monthly payment. This rule lasted until December, 2002 and after this period that the employee got terminated with the status Retired Holandaprevi, he pays 100% of the health plan monthly payment.
Former Employees of Banco Real (Retiree by Circulares): it grants entitlement to healthcare to former employee of Banco Real, with lifetime benefit it was granted in the same condition as the active employee, in this case, with the same coverage and plan design.
Eligible only for basic plans and premium apartment, if the beneficiary chooses for the apartment plan he pays the difference between the plans plus the co-participation in the basic plan. Not allowed new additions of dependents. It is subsidized in 90% of the plan.
Bandeprev’s Retirees: health care plan granted to Bandeprev’s retirees as a lifetime benefit, for which Banco Santander is responsible for subsidizing 50% of the benefits of employees retired until November 27, 1998. For whom retired after this date, the subsidy is 30%.
Officer with Lifetime Benefits (Lifetime Officers): lifetime health care benefit granted to a small closed group of former directors coming from Banco Sudameris, being 100% subsidized by the Bank.
Free Clinic: health care plan (free clinic) is offered for a lifetime to retirees who have contributed to the Foundation Sudameris for at least 25 years and has difference in default if the user chooses apartment. The plan is only offered in standard infirmary where the cost is 100% of the Foundation Sudameris.
Life Insurance for Banco Real Retirees (Life Insurance): granted for Retirees Circulars: indemnity in case of Natural Death, Disease Disability, Accidental Death. The subsidy is 45% of the value. It is a closed group.
Life Insurance Assistance Boxes (Life Insurance): included in the bulk of the life insurance in December 2018 the insurance of the retirees of the DCA, DAB and CACIBAN plans. This insurance was granted to retirees of the former Southern Bank, coverage was according to the choice of retiree at the time of joining the benefit. The Bank's allowance is 50% of the premium amount for the holder and some retirees have the spouse clause bearing 100% of the cost. It is a closed mass.
Additionally, it is assured to retired employees, since they meet to certain legal requirements and fully pays their respective contributions, the right to be maintaining as a beneficiary of the Banco Santander health plan, in the same conditions for healthcare coverage, taken place during their employment contract. Banco Santander provisions related to this retired employees are calculated using actuarial calculations based in the present value of the current cost.
Bank | ||||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||||
Cabesp | Other Plans | Cabesp | Other Plans | |||||||||||
Conciliation of Assets and Liabilities | ||||||||||||||
Present Value of Actuarial Obligations | (4,862,349) | (712,139) | (3,245,421) | (714,695) | ||||||||||
Fair Value of Plan Assets | 4,686,901 | - | 3,537,263 | - | ||||||||||
(175,448) | (712,139) | 291,842 | (714,695) | |||||||||||
Being: | ||||||||||||||
Superavit | - | - | 291,842 | - | ||||||||||
Deficit | (175,448) | (712,139) | - | (714,695) | ||||||||||
Amount not Recognized as Assets | - | - | 291,842 | - | ||||||||||
Net Actuarial Asset (Note 12) | - | - | - | - | ||||||||||
Net Actuarial Liability (Note 22) | (175,448) | (712,139) | - | (714,695) | ||||||||||
Contributions effected on the Actuarial Liabilities | 43,743 | 20,348 | 27,367 | 17,821 | ||||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (689) | (31,774) | 766,763 | (33,095) | ||||||||||
Other Equity Valuation Adjustments | (1,066,284) | (182,358) | (794,250) | (211,709) | ||||||||||
Actual Return on Plan Assets | 819,799 | - | 70,664 | - | ||||||||||
Consolidated | ||||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||||
Cabesp | Other Plans | Cabesp | Other Plans | |||||||||||
Conciliation of Assets and Liabilities | ||||||||||||||
Present Value of Actuarial Obligations | (5,075,712) | (712,139) | (3,394,370) | (714,695) | ||||||||||
Fair Value of Plan Assets | 4,892,565 | - | 3,699,606 | - | ||||||||||
(183,147) | (712,139) | 305,236 | (714,695) | |||||||||||
Being: | ||||||||||||||
Superavit | - | - | 305,236 | - | ||||||||||
Deficit | (183,147) | (712,139) | - | (714,695) | ||||||||||
Amount not Recognized as Assets | - | - | 305,236 | - | ||||||||||
Net Actuarial Asset (Note 12) | - | - | - | - | ||||||||||
Net Actuarial Liability (Note 22) | (183,147) | (712,139) | - | (714,695) | ||||||||||
Contributions effected on the Actuarial Liabilities | 44,803 | 20,348 | 28,043 | 17,821 | ||||||||||
Revenues (Expenses) Recorded on the Actuarial Liabilities (Note 32) | (882) | (31,774) | 784,624 | (33,095) | ||||||||||
Other Equity Valuation Adjustments | (1,045,676) | (182,358) | (782,926) | (211,709) | ||||||||||
Actual Return on Plan Assets | 855,584 | - | 89,592 | - |
Individual and Consolidated Financial Statements - June 30, 2019 93
Opening of gains (losses) actuarial from experience, financial assumptions and demographic hypotheses:
Bank | ||||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||||
Cabesp | Other Plans | Cabesp | Others Plans | |||||||||||
Experience Plan | (61,083) | (366) | (62,179) | 2,130 | ||||||||||
Changes in Financial Assumptions | (863,421) | - | 255,960 | - | ||||||||||
Changes in Demographic Assumptions | - | - | - | - | ||||||||||
Gain (Loss) Actuarial - Obligation | (924,503) | (366) | 193,781 | 2,130 | ||||||||||
Return on Investment, Return Unlike Implied Discount Rate | 637,331 | - | (98,711) | - | ||||||||||
Gain (Loss) Actuarial - Assets | 637,331 | - | (98,711) | - | ||||||||||
Change in Irrecoverable Surplus | 68,671 | - | (291,842) | - | ||||||||||
Consolidated | ||||||||||||||
06/30/2019 | 06/30/2018 | |||||||||||||
Cabesp | Other Plans | Cabesp | Others Plans | |||||||||||
Experience Plan | (63,572) | (366) | (65,180) | 2,130 | ||||||||||
Changes in Financial Assumptions | (900,333) | - | 266,776 | - | ||||||||||
Changes in Demographic Assumptions | - | - | - | - | ||||||||||
Gain (Loss) Actuarial - Obligation | (963,905) | (366) | 201,595 | 2,130 | ||||||||||
Return on Investment, Return Unlike Implied Discount Rate | 665,139 | - | (86,806) | - | ||||||||||
Gain (Loss) Actuarial - Obligation | 665,139 | - | (86,806) | - | ||||||||||
Change in Irrecoverable Surplus | 71,698 | - | (305,236) | - |
The table below shows the duration of the actuarial obligations of the plans sponsored by Banco Santander on December 31, 2018 and 2017, applicable to June 30, 2019 and 2018:
Duration (in Years) | ||||||||||||||
Plans | 12/31/2018 | 12/31/2017 | ||||||||||||
Cabesp (2) | 15.50 | 13.02 | ||||||||||||
Bandepe | 14.73 | 14.47 | ||||||||||||
Free Clinic | 11.04 | 10.88 | ||||||||||||
Lifelong Directors | 8.63 | 8.49 | ||||||||||||
Circular (1) | 11,72 e 10,68 | 12,40 e 10,15 | ||||||||||||
Life Insurance | 7.82 | 7.64 |
(1) The duration 11,72 (12/31/2018 - 12,40) refers to the plan of Former Employees of Banco ABN Amro and 10,68 (12/31/2018 - 10,15) to the plan of Former Employees of Banco Real.
(2) Exception Cabesp, the duration was updated to 30/06/2019.
Individual and Consolidated Financial Statements - June 30, 2019 94
c) Management of The Assets of the Plan
The main asset categories as percentage of total assets of the plan on December 31, 2018 and 2017, applicable to June 30, 2019 and 2018, were the following:
Bank/Consolidated | ||||||||||||||
12/31/2018 | 12/31/2017 | |||||||||||||
Equity Instruments | 4.8% | 4.6% | ||||||||||||
Debt Instruments | 94.6% | 94.7% | ||||||||||||
Real Estate | 0.3% | 0.4% | ||||||||||||
Others | 0.3% | 0.4% |
d) Actuarial Assumptions Adopted
Bank/Consolidated | |||||||||||
06/30/2019 | 06/30/2018 | ||||||||||
Pension | Health | Pension | Health | ||||||||
Nominal Discount Rate for Actuarial Obligation | 7,7% (1) e 9,1% | 7,9% (2) e 9,3% | 10,12% (1) e 9,5% | 10,17% (2) e 9,7% | |||||||
Rate Calculation of Interest Under Assets to the Next Year | 7,7% (1) e 9,1% | 7,9% (2) e 9,3% | 10,12% (1) e 9,5% | 10,17% (2) e 9,7% | |||||||
Estimated Long-term Inflation Rate | 4.0% | 4.0% | 4.5% | 4.5% | |||||||
Estimated Salary Increase Rate | 5.0% | 5.0% | 5.0% | 5.0% | |||||||
Boards of Mortality | AT2000 | AT2000 | AT2000 | AT2000 |
e) Sensitivity Analysis
The assumptions regarding rates related to the cost of medical care have a significant effect on the amounts recognized in the income statement. The change of one percentage point in health care cost rates would have the following effects:
Sensibility | ||||||||||||||
12/31/2018 | 12/31/2017 | |||||||||||||
(+) 1.0% | (-) 1.0% | (+) 1.0% | (-) 1.0% | |||||||||||
Effect on Current Service Cost and Interest on the Actuarial Liabilities | 69,961 | (62,469) | 57,001 | (63,510) | ||||||||||
Effect on the Present Value of Obligations | 761,619 | (680,061) | 597,410 | (665,700) |
f) Share-Based Compensation
Banco Santander has long-terms compensation plans linked to the market price of the shares. The members of the Executive Board of Banco Santander are eligible for these plans, as well as other members selected by the Board of Directors, whose selection will take into account seniority of the group. For the Board of Directors members in order to be eligible, it is necessary to exercise Executive Board functions.
f.1) Local and Globla Program
Below are the long-term compensation programs and their technical features.
Program | Plan | Liquidity Type | Vesting Period | Period of Exercise/Settlement | ||||
Local | SOP 2013 (1) | Banco Santander Brasil Shares | Jun/2013 to Jun/2016 | from 06/30/2016 to 06/30/2018 | ||||
Local | Long-Term Incentive Plan - Private Ultra High (2) | Money | Dec/2017 to Dec/19 | On March/20 and March/21 | ||||
Global | Global Long-Term – ILP CRDIV - Granted 2015 (3) (4) | Santander Global Group Shares | 2015 to 2016 | In 2019 |
(1)The Units amount to be exercised by the participants was determined according to the result of a Bank performance parameter: Total Return to Shareholder (RTA) and adjusted by the Risk-Weighted Asset Return (RORWA) and budgeted in each fiscal year. The final achievement of the plan was 89.61%.
(2It aims the growth and profitability of the Private business and the recognition of the Participant's contribution.
(3) Subject to the achievement of the Santander Group's RTA performance indicator, comparing the Group's performance in this indicator with respect to the main global competitors.
(4) Plans do not cause dilution of the Bank's share capital, since they are paid in shares of Bank Santander Espana
Individual and Consolidated Financial Statements - June 30, 2019 95
a) Fair Value and Plans Performance Parameters
i. Private Ultra High
Each participant has a target in Reais, if the indicators are reached, the target will be applied on the reference value, the first, paid in March 2020 and the second in March 2021.
Phase 1 (Reference Value) | Phase 2 (Calculation of Cash Incentive) | |
BAI (Earnings Before PrivateSegment income Tax) 2017 | BAI 50% | |
MOL - 25% (Private Ultra High Segment Net Margin Indicator) | ||
AUM - 25% (Private Ultra High Segment Assets Under Management Indicator) |
ii. Long-Term Incentive Global Plan CRDIV - Grant 2015
The targets of shares agreed to each participant will be obtained through the application of the coefficients in two stages: initially for eligibility verification (2015-2016) and a second time to calculate the due number of shares (2016, 2017 e 2018).
Phase 1 | Phase 2 | |
RTA versus Competitors | RTA versus Competitors | |
ROTE (Return on Tangible Capital) of the Bank versus Budget | ROTE Bank versus Budget | |
Employee Satisfaction | ||
Clients Satisfaction | ||
Business Link vs. Budget |
Each executive has a target in Reais, which was converted into shares of the Santander Group (SAN) for a price of R$17,473, which will be delivered in 2019, with a restriction of one year after delivery.
Number of Shares | Date of Commencement of the Period | Date of Expiry of Period | ||||
Granted | Employees | |||||
2nd Long -Term Incentive Global Plan CRDIV - | 1,775,049 | 2016 | Executives | Jan-15 | Dec-18 | |
Delivered shares - mar 19 (no lockup) (1) | (138,815) | 2016 | Executives | Jan-15 | Dec-18 | |
Canceled shares (granted 2015) | (580,320) | 2016 | Executives | Jan-15 | Dec-18 | |
Balance Plans on June 30, 2019 | 1,055,914 |
b) Impact Results
The impacts on income are recorded in the Personnel Expenses line, as follows:
Phase 1 | Phase 2 | |
RTA versus Competitors | RTA versus Competitors | |
ROTE (Return on Tangible Capital) of the Bank versus Budget | ROTE Bank versus Budget | |
Employee Satisfaction | ||
Clients Satisfaction | ||
Business Link vs. Budget |
f.2) Referenced Variable Remuneration in Shares
On September 29, 2015, the Board of Directors approved the proposed new incentive plan (deferral) for payment of the variable compensation of directors and certain employees, which was approved in EGM of December 14, 2015.
The approval of the last proposal of the incentive plan (deferment) to pay the variable remuneration of administrators and certain employees occurred on October 25, 2016, as approved by the EGM held on December 21, 2016.
In this proposal, certain requirements for future deferred payment of a portion of the variable compensation due to its managers and other employees were considered, considering the long-term sustainable financial bases and adjustments in future payments based on the risks assumed and the changes in the cost of capital.
The variable Banco Santander compensation plan is divided into two programs: (i) Collective Identified and (ii) Collective Unidentified. The impacts on income are recorded in the Personnel Expenses line, as follows:
Program | Participant | Liquidity Type | ||||
Collective Identified | Members of the Executive Committee, Statutory Officers and other executives who assume significant and responsible risks of control areas | 50% in cash indexed to 100% of CDI and 50% in shares (Units SANB11) | ||||
Unidentified Collective | Management-level employees and employees who are benefited by the Deferral Plan | 100% cash indexed to 100% of CDI |
Individual and Consolidated Financial Statements - June 30, 2019 96
35. Risk Management Structure
Banco Santander in Brazil follows the model based on a prudent risk management. It has specialized management structure for each risks listed below, as well as an area that carries out the Integrated Risk Management of the Group, disseminates Risk Pro Culture, manages risk self-assessment and controls Risk Appetite (RAS) - which is approved by the Board of Directors -, attending the requirements of the local regulator and the international good practices, aiming to protect capital and ensure business profitability.
The fundamental principles that rule the risk governance model are:
· All employees are responsible for the management of risk;
· Senior Management Engagement;
· Independence of risk control and management functions;
· Comprehensive approach to management and control of risks;
· Risk management and control must be based on timely, accurate and sufficiently granular management information.
A. Credit Risk
The credit risk management is based in monitoring of credit portfolio and new credit operation indicators. Considering the economic scenario, profitability and defaults projections are estimated under control of appetite for risk. These projections are the basis for a redefinition of credit policies, which affect both the credit evaluation for a specific customer as customers with similar profile.
Another relevant aspect is the preventive management of credit, which is fundamental in maintaining the quality of Banco Santander's portfolio. The monitoring of the customer portfolio is a daily routine of the entire commercial area, with the support of the central areas.
To measure the quality of a client’s or facility’s credit, the Bank uses its own models score/rating, made by Metodology and independent Validation areas.
On credit restructuring and recovery the Bank uses specific collection teams, which may be:
• Internal teams specializing in with direct action against defaulting clients with delays exceeding 60 days and more significant amounts; and
• External partners specializing in collecting, notifying and filing high-risk clients.
Sale of non-performing loans portfolio is a recurrent part of the recovery strategy (only credit rights), but the Santander may maintain relationships and transactional means with assigned clients.
Besides, the bank constitutes provision in accordance with the current legislation of Bacen and National Monetary System (Note 8.e).
B. Market Risk Management
The management of the market risk consists on developing, measuring and monitoring the use of limits previously approved in internal committees, relevant to the value at risk of the portfolios, the sensitivities arising from variation in market data (interest rates, indices, prices, exchange rates, etc.), liquidity gaps, among others, which might affect the positions of Banco Santander's portfolios in the various markets where it operates.
C. Operational Risk, Cybersecurity Risk and Internal Controls
Santander's operational risk management model is based on the market best practices and its premise is to evaluate, monitor, control and implement improvements to reduce exposure to risks and losses, in line with the risk appetite approved by the Board of Directors and we adopted the definition of the Basel Committee and Brazilian Central Bank for operational risk. Our governance model is based on the three lines of defense and has people, structures, policies, methodologies and tools to assure support the proper operational risk management.
To address cyber security, comprehensive measures have been implemented to reduce the risk of threats that affect our technology platforms and our business. Banco Santander considered the best practices established in the ISO-27002 standard as the basis for the model. These measures include, but are not limited to, access and privilege management, separation of test and production environments, network security analysis, incident management, basic hardware and software configuration, activity log correlation, security prevention and remediation. malware and security analysis of thirdparty operations.
The Internal Controls Model is based on the methodology developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), covering the strategic, operational, financial disclosure and compliance components and allows compliance with the requirements of regulators BACEN, CVM, B3, SUSEP and SarbanesOxley - SOX (Security Exchange Commission).
Individual and Consolidated Financial Statements - June 30, 2019 97
D. Compliance and Reputacional Risk Management
Compliance risk management has a proactive focus on this risk, policies, implementation of process, including monitoring, training, advisory, risk assessment and corporate communication of standards and regulations to be applied to each businesses area of the Banco Santander.
E. Unit for the Prevention of Money Laundering and Financing of Terrorism
Area responsible for promoting the development of the prevention of money laundering and combating the financing of terrorism in the different business units, as well as responsible for the guidelines of the Bank's customer acceptance policy, establishes regulations, procedures and acculturation related to the subject monitors the risks inherent in the products and transactions carried out.
F. Social and Environmental Risk
Banco Santander’s Social and Environmental Responsibility Policy (PRSA), which complies with National Monetary Council Resolution 4,327/2014 and the SARB 14 self-regulation issued by Febraban, establishes guidelines and consolidates specific policies for social-environmental practices used in business and stakeholder relations. These practices including social and environmental risk management, impacts and opportunities related themes, such as, adequacy in the concession or use of credit, supplier management and analysis of the social and environmental risk which is carried out through the analysis of the socio-environmental practices of wholesale and segment Empresas 3 retail clients, that have limits or credit risk greater than BRL5 million and are included in one of the 14 sectors of social and environmental attention. In other to mitigate operational, capital, credit and reputational risk. Since 2009 Santander is Equator Principles signatory, which standards are applied in order to mitigate social and environmental risks when financing big projects.
The commitments assumed in the PRSA are detailed in others Bank policies, such as, the Anti-Corruption Policy, Supplier Relationships and Homologation Policies and Social-Environmental Risk Policies, besides that the Private Social Investment Policy, which aims to guide the strategy of this topic and present guidelines for social programs that strengthen this strategy.
G. Structure of Capital Management
Santander adopts a robust governance that supports all processes related to effective capital management in order to:
• Clearly define the functions of each team involved in the capital management;
• Ensure that the capital limits established in management, risk appetite and the Risk Identification Assessment (RIA) are fulfilled;
• Ensure that the actions related to the institution's strategy consider the impacts generated in the capital allocation;
• Ensure that the Senior Management actively participates in capital management and that it´s recurrently informed about the behavior of capital indicators.
Santander Brasil has a director responsible for capital management, appointed by the Board of Directors. Furthermore, there is an institutional policy of capital management, which serves as a guideline for calculation, management, control and reporting of the Capital, fulfilling all the defined requirements for a capital management structure established in the Resolution 4,557/2017.
For further information, see the "Risk and Capital Management Structure - Resolution nº. 4,557 / BACEN" in "Corporate Governance" and "Risk Management" at https://www.ri.santander.com.br/
36. Corporate Restructuring
Several social movements were implemented in order to reorganize the operations and activities of entities according to the business plan of the Conglomerate Santander.
a) Acquisition of Summer Empreendimentos Ltda.
On May 14, 2019, Banco Santander and its wholly owned subsidiary Santander Holding Imobiliária S.A. executed a binding agreement with the partners of Summer Empreendimentos Ltda. defining the negotiation terms for the purchase and sale of shares fully representing the capital of Summer Empreendimentos. The operation closing is subject to accomplishment of conditions precedent usual to this type of transaction, including the previous authorization by the Brazilian Central Bank.
b) Put option of equity interest in Banco Olé Bonsucesso Consignado 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 Aymoré CFI. The closing of the transaction is conditioned to implementation of the proceedings set forth in the Investment Agreement.
Individual and Consolidated Financial Statements - June 30, 2019 98
c) Acquisition of residual equity interest in Getnet S.A.
On December 19, 2018, Banco Santander and the Minority shareholders of Getnet S.A. executed an amendment to the Shares’ Sale and Purchase Agreement and Other Covenants of Getnet S.A., in which Banco Santander commits to acquire all of the Minority shareholders’ shares, corresponding to 11.5% of Getnet S.A. capital stock, per the amount of R$1,431,000. The acquisition was approved by Bacen on February 18, 2019 and closed on February 25, 2019, as a consequence Santander Brasil has become the holder of 100% of the shares representatives of the capital stock of Getnet S.A.
d) Formation of Esfera Fidelidade S.A.
On August 14, 2018, Esfera Fidelidade was incorporated, with equity fully owned by Banco Santander. Esfera Fidelidade act in the development and management of customer loyalty programs. On November 26, 2018, Esfera Fidelidade had its capital stock increased in the amount of R$10,000, amounting the full share capital of R$10,000, divided into 10,001,000 (ten million and one thousand) nominative common shares without par value, entirely held by Banco Santander. The company started its operation in November 2018.
e) Investment in Loop Gestão de Pátios S.A.
On June 26, 2018, Webmotors S.A., company with 70% interest indirectly owned by Banco Santander, signed an investment agreement with Allpark Empreendimentos, Participações e Serviços S.A. and Celta LA Participações S.A., in order to acquire an equity interest corresponding to 51% of the capital stock of Loop Gestão de Pátios S.A., through capital increase and issuance of new shares of Loop to be fully subscribed and paid-in by Webmotors. Loop operates in the segment of commercialization and physical and virtual auction of motor vehicles. On September 25, 2018, the transaction was completed with increase of the capital stock, in the amount of R$23,900, through issuance of shares representing 51% of equity interest in Loop, which were fully subscribed and paid-in by Webmotors.
f) Formation of BEN Benefícios e Serviços S.A.
On June 11, 2018,BEN Benefícios,with equity fully owned by Banco Santander,was incorporated, toact in the supply and administration of meal, food, transportation, cultural and similar vouchers, via printed or electronic and magnetic cards.
In the EGM held on August 1, 2018, BEN Benefícios had its capital increased in R$ 45,000, passing the capital stock to the amount of R$ 45,001, divided into 45,001,000 (forty-five million and one hundred thousand) registered common shares without par value, fully owned by Banco Santander.
In the EGM held on March 27, 2019, Santander Brasil approved the capital increase in the amount of R$44,999, totalizing R$90,000 of capital stock distributed into 90,000,000 (ninety million) common shares without par value, fully held by Santander Brasil.
BEN Benefícios started its activities in the first quarter of 2019.
g) Acquisition of Isban Brasil S.A. and Produban Serviços de Informática S.A.
On February 19 and 28, 2018, Banco Santander purchased, respectively, the totality of shares of Isban Brasil, formerly held by Ingeniería de Software Bancário, S.L., and of Produban Serviços de Informática, formerly held by Produban Servicios Informáticos Generales, S.L., for the amount of R$61,078 and R$42,731, respectively. The parties involved in the transactions had Banco Santander, S.A. (Santander Spain) as common indirect controller, being such transactions carried-out under market conditions. At the EGM held on February 19, 2018, was approved the capital increase of Isban Brasil in the amount of R$33,000, through the issuance of 11,783,900 (eleven million, seven hundred and eighty-three thousand and nine hundred) shares, without par value, entirely subscribed and paid in by Banco Santander. On February 28, 2018, the company Isban Brasil was merged into Produban Serviços de Informática S.A. and on the same date, Produban Serviços de Informática had its corporate name changed to Santander Brasil Tecnologia S.A. In continuity, on February 28, 2018, Produban Servicios Informáticos Generales, S.L. (currently named Santander Global Technology, S.L.) approved the merger of the spin-off share of Produban Serviços de Informática into Produban Brasil Tecnologia e Serviços de Informática Ltda. (currently named Santander Global Technology Brasil Ltda.).
h) Formation of Santander Auto S.A.
On December 20, 2017, Banco Santander and HDI Seguros S.A. (HDI Seguros), executed documents to form a partnership for the issuance, offering and sale of auto insurance, in a 100% digital way, through creation of a new insurance company - Santander Auto, to be held 50% by Sancap, a company controlled by Banco Santander, and 50% by HDI Seguros. On February 2, 2018 the partnership was approved by the Administrative Council of Economic Defense (Conselho Administrativo de Defesa Econômica – CADE), on April, 30, 2018, was approved by the Brazilian Central Bank and, on May, 15, 2018, SUSEP's prior approval was obtained. On October 9, 2018, through transformation of the corporate vehicleL.G.J.S.P.E. Investments and Participations S.A., Sancap and HDI Seguros formed Santander Auto S.A., with capital of R$15,000. On January 9, 2019, Susep granted to Santander Auto the authorization to operate insurance throughout national territory.
Individual and Consolidated Financial Statements - June 30, 2019 99
i) Formation of Gestora de Inteligência de Crédito S.A.
On April 14, 2017, the definitive documents necessary for the creation of a new credit bureau, Gestora de Inteligência de Crédito, were signed by the stockholders, whose control will be shared among the stockholders who will hold 20% of the its share capital each. In the EGM held on October 5, 2017, the capital increase of Gestora de Crédito was approved in the total amount of R$285,205, so that the capital stock increased from R$65,823 to R$351,028. The Company will develop a database with the objective of aggregating, reconciling and processing registration and credit information of individuals and legal entities, in accordance with the applicable standards, providing a significant improvement in the processes of granting, pricing and directing credit lines. The Company began operations in 2019 on a partial basis (negative and positive), and the Bank estimates that it will be fully operational by the end of 2019. The start of operation is scheduled for the second half of 2019.
j) Formation of Banco Hyundai Capital Brasil S.A.
On April 28, 2016, Aymoré CFI and Banco Santander executed with Hyundai Capital Services, Inc. (Hyundai Capital) the necessary documents for the formation of Banco Hyundai and an insurance brokerage company with the purpose to provide, respectively, auto finance and financial and insurance brokerage services to clients and dealers of Hyundai in Brazil.
On April 11, 2018, the parties incorporated, with an equity interest of 50% held by Aymoré CFI and 50% held by Hyundai Capital, a non-operational entity named BHJV Assessoria e Consultoria em Gestão Empresarial Ltda. On May 8, 2018, Aymoré CFI and Hyundai Capital took resolution on the conversion of BHJV Assessoria into the non-operational joint-stock corporation named Banco Hyundai Capital Brasil S.A., as well as the capital stock increase in R$99,995, passing to the amount of R$100,000, divided into 100,000,000 (one hundred million) nominative common shares without par value. On December 13, 2018, the incorporation procedure of Banco Hyundai Capital Brasil S.A. was concluded.
In the EGM held on February 19, 2019, the shareholders of Banco Hyundai approved the capital increase in the amount of R$200,000, summing the total value of R$300,000 distributed into 300,000,000 (three hundred million) common shares without par value, held in the proportion of 50% by Aymoré CFI and 50% by Hyundai Capital.
On February 21, 2019, the authorization to operate granted by Bacen for the functioning of Banco Hyundai was published in the Federal Official Gazette. Banco Hyundai began operations in April 2019. On May 13, 2019, BACEN authorized Banco Santander to hold an indirect interest in a company to be incorporated under the name Hyundai Corretora de Seguros Ltda. (Hyundai Corretora). Hyundai Corretora was incorporated on July 22, 2019, with the beginning of its operations subject to registration of the company as insurance brokerage with SUSEP.
k) Creation of PI Distribuidora de Títulos e Valores Mobiliários S.A.
On May 3, 2018, Santander Finance Arrendamento Mercantil S.A., an indirectly controlled subsidiary of Banco Santander, was converted into a distribution company of bonds and securities and had its corporate name changed to SI Distribuidora de Títulos e Valores Mobiliários S.A. The conversion process of approved by Bacen on November 21, 2018. On December 17, 2018, SI Distribuidora de Títulos e Valores Mobiliários S.A. had its corporate name changed to PI Distribuidora de Títulos e Valores Mobiliários S.A., being the corporate name change process approved by Bacen on January 22, 2019. The company started its operations on March 14, 2019.
37. Other Information
a) The co-obligations and risks on guarantees provided on behalf of clients, recorded in compensation accounts, amounted to R$39,740,761 (12/31/2018- R$40,396,524) in the Bank and R$39,889,632 (12/31/2018 - R$40,761,287) in the Consolidated.
b) The total amount of Santander Conglomerate investment funds and assets under management is R$1,961,554 (06/30/2018 - R$1,867,850) and the total amount of investment funds and assets managed is R$218,082,770 (06/30/2018 - R$201,412,246) recorded in compensation accounts.
c) The insurance contracted in effect on June 30, 2019, the global bank, fires, vehicles and other, have coverage amount of R$1,779,044 (06/30/2018 - R$1,316,447) in the Bank and R$1,786,758 (06/30/2018 - R$1,323,806) in the Consolidated and global bank, was hired insurance with coverage amount of R$496,125 (06/30/2018 - R$148,499) in the Bank and Consolidated, may be used alone or together, provided they do not exceed the contracted amount. In addition, on June 30, 2019 there are other current policies related to other assets in the amount of R$7,615,565.
d) On June 30, 2019 and June 30, 2018, there were no active related operations and obligations for active related operations.
e) Clearing and Settlement Agreements - CMN Resolution nº 3,263/2005 - Banco Santander has an agreement for the compensation and settlement of obligations under the National Financial System (SFN), signed with individuals and legal entities, whether or not members of the SFN, resulting in in greater guarantee of financial settlement, with the parties that have this modality of agreement. These agreements establish that the payment obligations to Banco Santander arising fromcredit and derivative operations, in the event of default by the counterparty, will be offset against Banco Santander's payment obligations to the counterparty.
Individual and Consolidated Financial Statements - June 30, 2019 100
f) Other Obligations - Banco Santander rents properties, mainly used for branches, based on a standard contract which may be cancelled at its own criteria and includes the right to opt for renewals and adjustment clauses, classified as operating lease. The total of the future minimum payments of non-cancellable operating leases is shown below:
06/30/2019 | 06/30/2018 | |||||||
Up to 1 Year | 716,354 | 688,054 | ||||||
Between1 to 5 Years | 1,522,719 | 1,548,857 | ||||||
More than 5 Years | 167,106 | 227,220 | ||||||
Total | 2,406,179 | 2,464,131 |
Additionally, Banco Santander has contracts with no maturity date determined, totaling R$692 (06/30/2018 - R$893) corresponding to the monthly rent contracts with this feature. Payment of operating leases recognized as expenses in the first semester of 2019, were at the valued of R$188,211 (2018 - R$346,409).
Monthly rental contracts will be adjusted on an annual basis, as per prevailing legislation, at Market General Price Index (IGPM) variation. The lessee is entitled to unilaterally rescind the agreement, at any time, in accordance with contractual clauses and legislation.
38. Subsequent Event
On July 22, 2019, was legally incorporated the limited liability company Hyundai Corretora de Seguros Ltda. (Hyundai Insurance Brokerage). Hyundai Insurance Brokerage has a capital stock in the amount of R$2,000 divided into 2,000,000 (two million) quotas, with individual par value of R$1.00, fully subscribed and pending of payment, divided between its quotaholders Santander Corretora de Seguros, Investimentos e Serviços S.A. and Hyundai Capital Services, Inc. in the proportion of 50% to each.
Individual and Consolidated Financial Statements - June 30, 2019 101
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
For purposes of compliance with Article 25, § 1, VI, CVM Instruction 480, of December 7, 2009, the Executives' of Banco Santander (Brasil) S.A. (Banco Santander or Company) declare that they have discussed, reviewed and agreed to the Financial Statements under the BRGAAP criterion of Banco Santander, which includes the Independent Auditors' Report on the Financial Statements under the BRGAAP criterion of Banco Santander for the semester ended on June 30, 2019, and the documents that comprise them, being: Management Report, balance sheets, income statement, statement of changes in equity, statement of cash flows, statement of value added and explanatory notes, which were prepared in accordance with accounting practices adopted in Brazil, in accordance with Law No. 6,404, of December 15, 1976 (the Brazilian Corporation Law), the rules of the Central Bank of Brazil in accordance with the model of the National Financial System Institutions Accounting Plan (COSIF) and other applicable regulations and legislation. These Financial Statements and the accompanying documents were the subject of an unqualified report of the Independent Auditors and a recommendation for approval issued by the Company's Audit Committee.
Members of Banco Santander´s Executive Board on June 30, 2019:
Chief Executive Officer
Sérgio Agapito Lires Rial
Senior Vice-President Executive Officers
José de Paiva Ferreira
Vice-President Executive Officer and Investor Relations Officer
Angel Santodomingo Martell
Vice-President Executive Officers
Alberto Monteiro de Queiroz Netto
Alessandro Tomao
Antonio Pardo de Santayana Montes
Carlos Rey de Vicente
Jean Pierre Dupui
Juan Sebastian Moreno Blanco
Manoel Marcos Madureira
Mário Roberto Opice Leão
Patrícia Souto Audi
Vanessa de Souza Lobato Barbosa
Individual and Consolidated Financial Statements - June 30, 2019 102
Executive Officers
José Roberto Machado Filho
Officers without specific designation
Alexandre Grossmann Zancani
Amancio Acúrcio Gouveia
André de Carvalho Novaes
Carlos Aguiar Neto
Cassio Schmitt
Claudenice Lopes Duarte
Daniel Fantoni Assa
Ede Ilson Viani
Elita Vechin Pastorelo Ariaz
Franco Luigi Fasoli
Germanuela de Almeida de Abreu
Gilberto Duarte de Abreu Filho
Gustavo Alejo Viviani
Igor Mario Puga
Jean Paulo Kambourakis
José Teixeira de Vasconcelos Neto
Leopoldo Martinez Cruz
Luis Guilherme Mattos de Oliem Bittencourt
Luiz Masagão Ribeiro Filho
Marino Alexandre Calheiros Aguiar
Nilton Sergio Silveira Carvalho
Rafael Bello Noya
Ramón Sanchez Díez
Ramon Sanchez Santiago
Reginaldo Antonio Ribeiro
Roberto Alexandre Borges Fischetti
Robson de Souza Rezende
Rodrigo Cury
Sérgio Gonçalves
Thomas Gregor Ilg
Ulisses Gomes Guimarães
Individual and Consolidated Financial Statements - June 30, 2019 103
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In order to comply with the provisions of article 25, paragraph 1, item V, of the Instruction of the Securities and Exchange Commission (CVM) 480, of December 7, 2009, the members of the Executive Board of Banco Santander (Brasil) S.A. or Company) declare that they have discussed, reviewed and agreed to the Financial Statements under the BRGAAP criterion of Banco Santander, which includes the Independent Auditors' Report on the Financial Statements under the BRGAAP criterion of Banco Santander for the semester ended on June 30, 2019, and the documents that comprise them, being: Management Report, balance sheets, income statement, statement of changes in equity, statement of cash flows, statement of value added and explanatory notes, which were prepared in accordance with accounting practices adopted in Brazil, in accordance with Law No. 6,404, of December 15, 1976 (the Brazilian Corporation Law), the rules of the Central Bank of Brazil in accordance with the model of the National Financial System Institutions Accounting Plan (COSIF) and other applicable regulations and legislation. These Financial Statements and the accompanying documents were the subject of an unqualified report of the Independent Auditors and a recommendation for approval issued by the Company's Audit Committee.
Members of Banco Santander´s Executive Board on June 30, 2019:
Chief Executive Officer
Sérgio Agapito Lires Rial
Senior Vice-President Executive Officers
José de Paiva Ferreira
Vice-President Executive Officer and Investor Relations Officer
Angel Santodomingo Martell
Vice-President Executive Officers
Alberto Monteiro de Queiroz Netto
Alessandro Tomao
Antonio Pardo de Santayana Montes
Carlos Rey de Vicente
Jean Pierre Dupui
Juan Sebastian Moreno Blanco
Patrícia Souto Audi
Manoel Marcos Madureira
Mário Roberto Opice Leão
Vanessa de Souza Lobato Barbosa
Executive Officers
José Roberto Machado Filho
Officers without specific designation
Alexandre Grossmann Zancani
Amancio Acúrcio Gouveia
André de Carvalho Novaes
Carlos Aguiar Neto
Cassio Schmitt
Claudenice Lopes Duarte
Daniel Fantoni Assa*
Ede Ilson Viani
Elita Vechin Pastorelo Ariaz
Franco Luigi Fasoli
Germanuela de Almeida de Abreu
Gilberto Duarte de Abreu Filho
Gustavo Alejo Viviani
Individual and Consolidated Financial Statements - June 30, 2019 104
Igor Mario Puga
Jean Paulo Kambourakis
José Teixeira de Vasconcelos Neto
Leopoldo Martinez Cruz
Luis Guilherme Mattos de Oliem Bittencourt
Luiz Masagão Ribeiro Filho
Marino Alexandre Calheiros Aguiar
Nilton Sergio Silveira Carvalho
Rafael Bello Noya
Ramón Sanchez Díez
Ramon Sanchez Santiago
Reginaldo Antonio Ribeiro
Roberto Alexandre Borges Fischetti
Robson de Souza Rezende
Rodrigo Cury
Sérgio Gonçalves
Thomas Gregor Ilg
Ulisses Gomes Guimarães
Individual and Consolidated Financial Statements - June 30, 2019 105
(Free Translation into English from the Original Previously Issued in Portuguese) | |
| BANCO SANTANDER (BRASIL) S.A. AND SUBSIDIARIES |
In thousands of Brazilian Real - R$, unless otherwise stated. |
The Audit Committee of Banco Santander (Brazil) S.A. ("Santander"), lead institution of the Economic and Financial Conglomerate ("Conglomerate”), acts as single entity for all the institutions part of the Conglomerate, including those entities under the supervision of the Superintendence of Private Insurance - Susep.
According to its Charter, available on Santander´s Investors Relations website (www.ri.santander.com.br), the Audit Committee, among its attributions, advises the Board of Directors on the oversight of the quality of the financial statements, its compliance with the applicable rules and legislation, the effectiveness and independence of the work performed by the internal and independent auditors, as well as on the effectiveness of the internal control system and operational risk management. Besides that, the Audit Committee also recommends amendments and improvements on policies, practices and procedures identified in the course of its duties, whenever deemed necessary.
The Audit Committee is currently comprised by four independent members, appointed at the Board of Directors´ meeting of May 3, 2019. It acts through meetings with executives, auditors and specialists, conducts analyzes based on the reading of documents, and information submitted to it, as well as taking initiatives in relation to other procedures deemed necessary. The Audit Committee's evaluations are primarily based on information received from Senior Management, internal and independent auditors and the areas responsible for monitoring internal controls and operational risks. The Committee also monitors and acts on the results of inspections and notes of the regulatory and self-regulatory bodies and the corresponding measures adopted by Management to handle such notes, and holds regular meetings with representatives of the Central Bank of Brazil, others regulators, whenever requested.
The Committee's minutes and reports are regularly sent to the Board of Directors, with which the Coordination of the Audit Committee met regularly in the first semester of 2019.
With regard to its attributions, the Audit Committee performed the following activities:
I –Financial Statements
BrGaap, Prudential Conglomerate and IFRS - The Audit Committee reviewed the financial statements of the institutions and companies that comprise the Conglomerate, confirming its adequacy. In this regard, it acknowledged the results recorded in the first semester ended June 30, 2019, of the Company and the Prudential Conglomerate in BRGaap standard, in addition to the individual and consolidated Financial Statements. The Audit Committee also took note of the Condensed consolidated Interim Financial Statements, in accordance with the international financial reporting standards ("IFRS").
II –Internals Controls and Operational Risks Management
The Audit Committee received information and held meetings with the Executive Vice-Presidency of Risks (CRO) - including attending meetings of the Risk and Compliance Committee -, the Executive Vice-Presidency of Tactics, Technology and Operations, the Compliance Director and the relevant professionals, responsible for the management, implementation and dissemination of the Conglomerate's internal controls and risk management culture and infrastructure. It also verified cases dealt by the “Canal Aberto” (Whistleblowing channel) and by the Information Security and Anti-Fraud areas. Such verifications were conducted in accordance with Resolutions CMN 2,554/98 and 4,557/17, Sarbanes-Oxley Act (SOX) and Circular Susep 249/04.
III –Internal Audit
The Committee met formally with the Director responsible for the area and with other Internal Audit professionals on several occasions during the first semester of 2019, to discuss the audit works performed, the reports issued and their respective conclusions and recommendations, focusing on recommendations for improvements in areas where controls were considered "To be improved" or "Unsatisfactory", where applicable. On other occasions, Internal Audit professionals attended the meetings of the Audit Committee, providing expert information. In addition, the Committee reviewed and approved the Internal Audit Work Plan for 2019.
Individual and Consolidated Financial Statements - June 30, 2019 106
IV –Independent Audit
Regarding the Independent Audit work performed by PricewaterhouseCoopers Auditores Independentes ("PwC"), the Audit Committee met formally on several occasions in the first semester of 2019. At these meetings, highlighted the following topics: discussions involved the financial statements for the first semester of 2019, accounting practices, the business continuity plan, and any deficiencies and recommendations raised in the internal control report. The Audit Committee evaluated the proposals submitted by PwC for the performance of other services, in order to verify the absence of conflicts of interest or potential risk of loss of independence. During the period, the Committee also: (i) reviewed and approved the Independent Audit Work Plan for 2019; (ii) monitored the negotiation process of the fees submitted, recommending its approval to Board of Directors; and (iii) presented the annual and formal evaluation of the auditors' performance. The Committee also met with KPMG Auditores Independentes (KPMG), responsible for the audit of Banco RCI S.A., member of the Conglomerate.
V -Ombudsman
In accordance with Resolution CMN 4,433/15 and CNSP Resolution 279/13, specific works were carried out in the first semester of 2019, which were presented to the Audit Committee that discussed and evaluated them.
VI –Others Activities
Besides the activities described above, as part of the work inherent to its attributions, the Audit Committee met with senior management and several areas of the Conglomerate, furthering its analysis, with emphasis on the following topics: (i) the adequacy of Pension Plans; (ii) inspections reports and notes from regulators, ongoing inspections and the correspondent action plans adopted to meet the requests; (iii) monitoring of tax, labor and civil litigation; (iv) review and approval of the Tax Credit Realization Study; and (v) follow-up on the adoption and impacts of IFRS 16 leasing.
During the period, members of the Audit Committee also participated in training, lectures and programs on topics related to its activities, and on regulations of interest and impact to the Conglomerate.
VII –Conclusion
Based on the work and assessments carried out, and considering the context and scope in which it carries out its activities, the Audit Committee concluded that the work carried out isappropriate andprovides transparency andquality to the Financial Statements of Banco Santander and the Prudential Conglomeratefor the six-month period ended June 30, 2019, recommending their approvals by the Board of Directors of Santander.
São Paulo, 19 de julho de 2019.
Audit Committee
Deborah Stern Vieitas – Coordinator
Luiz Carlos Nannini – Financial Expert
Maria Elena Cardoso Figueira
Julio Sergio de Souza Cardozo
Individual and Consolidated Financial Statements - June 30, 2019 107
Banco Santander (Brasil) S.A. | ||
By: | /S/ Amancio Acurcio Gouveia | |
Amancio Acurcio Gouveia Officer Without Specific Designation | ||
By: | /S/ Carlos Rey de Vicente | |
Carlos Rey de Vicente Vice - President Executive Officer |