Banco Santander (Brasil) SA Q4 FY2020 earnings call

• Strategic Update: 2020 was challenging but had achievements. NPS hit record high, credit quality controlled. Gained market share on asset and liability sides. Developed strong recovery capacity. - Main Highlights of Results: Net income Q4 ~R$3.958 billion, full-year ~R$13.8 billion. NII flat Q-on-Q but up 7% full-year. Fees rebounded in Q4. Provisions under control. - Sustainability: Impacted ~270,000 people with social programs, R$27 billion of ESG business done. - Diversity: 25% employees black, 29% leadership women, high engagement. - Platforms: emDia reached 4 million customers, Santander Auto surpassed R$100 million premiums, Toro awaiting central bank approval, Ben reached ~1.4k HR departments, Sim growing fast, Santander Financiamentos growing.

In 2020 Q4, Santander Brasil had a net income of close to R$3.958 billion, a 1.4% Q-on-Q increase. Full-year net profit was R$13.8 billion (R$15.6 billion before extraordinary provisions in Q2). NII grew 7% year-on-year. Loan portfolio reached R$412 billion, with 76% of individuals' loan book being collateralized. Funding maintained a strong trend, with client funding growing ~29% year-on-year. Fees decreased 1.2% in the year but saw an 8% Q-on-Q increase in Q4. Provisions remained under control, with loan loss provisions at 2.8% for the year and 2.5% in Q4. The deferred loan portfolio totaled R$40.6 billion, with a 5.5% 15 to 90 days NPL.

• ROE: Discontinued previous guidance but aims to maintain strong profitability levels. - Payout: Expected payout around 50% considering ROE and RWA growth. - SELIC: Expect SELIC to start increasing this year, sensitivity of NIM to yield curve movements around 100-200 basis points.

• NPL Peaks: Potential short-term deterioration in NPL and cost of risk, depending on macroeconomic evolution in Brazil. - SELIC Impact: Uncertainty on how SELIC movements will affect NIM, with sensitivity to yield curve changes.

Q: Regarding future ROE, can Banco Santander Brasil deliver ROEs close to 20% in next three years?

A: Discontinued guidance but aims to maintain strong profitability, striving to deliver levels the market will pay for.

Q: When does NPL ratio peak and impact on provisioning?

A: Potential short-term deterioration, depending on macroeconomic evolution in Brazil, with long-term expectation of better cost of risk due to collateralized loans.

Q: Fee revenues from current account and PIX growth?

A: Insurance grew 22% Q-on-Q (3% excluding seasonality), PIX has 15% market share and strong transactionality.

Q: Capital level and payout ratio?

A: Core equity tier 1 at 12.9%, payout around 50% considering RWA growth.

Q: View on SELIC increase and NIM impact?

A: SELIC expected to increase this year, NIM sensitivity to yield curve movements around 100-200 basis points.

Q: Competition in segments and credit cards?

A: Competition across all segments, growing in credit cards with 1 million SX cards sold post-PIX launch.

Q: Need for additional provisions?

A: No additional extraordinary provisions foreseen for now based on current outlook.

Q: Credit recovery process and tax in 2021?

A: Focus on digitalization and partnerships for recovery, tax rate expected to be close to 2020 levels.

Q: Getnet card strategy and contingencies?

A: Getnet growing with various products, contingencies volatile with quarter-to-quarter changes.

Q: Getnet market share growth?

A: Continue to gain market share with competitive advantage, focusing on small micro entrepreneurs and SME layers if profitable.