As Of               Filer                 Filing    For·On·As Docs:Size

10/26/23  Banco Santander (Brasil) S.A.     6-K         9/30/23    1:3.8M

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Current, Quarterly or Annual Report by a Foreign    HTML   3.81M 
                Issuer                                                           

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of September, 2023

 

Commission File Number: 001-34476

 

BANCO SANTANDER (BRASIL) S.A.

(Exact name of registrant as specified in its charter)

 

Avenida Presidente Juscelino Kubitschek, 2041 and 2235
Bloco A – Vila Olimpia
São Paulo, SP 04543-011
Federative Republic of Brazil

 

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F ___X___ Form 40-F _______

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): 

Yes _______ No ___X____

 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): 

Yes _______ No ___X____

 Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934: 

Yes _______ No ___X____

 If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):  N/A

 

Free Translation into English from the Original Previously Issued in Portuguese

 

BANCO SANTANDER (BRASIL) S.A.   CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS
TABLE OF CONTENTS				Page

 

Consolidated Condensed Balance Sheet.............................................................................................................................................................. 5

Consolidated Condensed Statements of Income................................................................................................................................................ 7

Consolidated Condensed Statements of Comprehensive Income................................................................................................................... 8

Consolidated Condensed Statements of Changes in Stockholders' Equity.................................................................................................... 9

Consolidated Condensed Statement of Cash Flows......................................................................................................................................... 10

1.Operating context, presentation of condensed consolidated interim financial statements and other information................. 11

2.Basis of consolidation................................................................................................................................................................................... 14

3.Financial assets.............................................................................................................................................................................................. 18

4.Non-current assets held for sale................................................................................................................................................................ 20

5.Investments in associates and joint ventures.......................................................................................................................................... 20

6.Tangible assets.............................................................................................................................................................................................. 22

7.Intangible assets - Goodwill........................................................................................................................................................................ 23

8.Intangible assets - Other intangible assets............................................................................................................................................... 24

9.Financial liabilities......................................................................................................................................................................................... 24

10.Provision for legal and administrative proceedings, commitments and other provisions............................................................. 26

11.Stockholders’ equity.................................................................................................................................................................................... 30

12.Income Tax..................................................................................................................................................................................................... 32

13.Detailing of income accounts..................................................................................................................................................................... 32

14.Employee Benefit Plan................................................................................................................................................................................. 34

15.Operating segments..................................................................................................................................................................................... 38

16.Related party transactions.......................................................................................................................................................................... 39

17.Fair value of financial assets and liabilities........................................................................................................................................ 43

18.    Other disclosures....................................................................................................................................................................................... 47

19.Subsequent Events.................................................................................................................................................................................... 54

APPENDIX I – Condensed Consolidated Statement of Added Value............................................................................................................. 55

Performance Commentary................................................................................................................................................................................... 56

Composition of Management Bodies................................................................................................................................................................. 62

Declaration of directors on the financial statements...................................................................................................................................... 64

Statement by the Directors on the Independent Auditors' Report............................................................................................................... 65

 

 

 

 

 

 

Report on review of consolidated condensed
interim financial statements

 

 

To the Board of Directors and Stockholders

Banco Santander (Brasil) S.A.

 

 

Introduction

 

We have reviewed the consolidated condensed balance sheet of Banco Santander (Brasil) S.A. ("Bank") and its subsidiaries as at September 30, 2023 and the related consolidated condensed statements of income and comprehensive income for three and nine-months then ended, and changes in stockholders' equity and cash flows for nine-months then ended, and explanatory notes.

 

Management is responsible for the preparation and presentation of these consolidated condensed interim financial statements in accordance with the International Accounting Standard (IAS) 34 - "Interim Financial Reporting" issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on these consolidated condensed interim financial statements based on our review.

 

Scope of review

 

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" and ISRE 2410 - "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently did not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

 

 

Conclusion

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated condensed interim financial statements referred to above are not prepared, in all material respects, in accordance with the International Accounting Standard IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB).

 

Other matters

 

Condensed statement of Value Added

 

The consolidated condensed interim financial statements referred to above include the consolidated condensed statement of value added for nine-months ended September 30, 2023, prepared under the responsibility of the Bank's management and presented as supplementary information for IAS 34 purposes. This statement has been subjected to review procedures performed together with the review of the consolidated condensed interim financial statements, for the purpose of concluding whether it is reconciled with the consolidated condensed interim financial statements and accounting records, as applicable, and if its form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that this consolidated condensed statement of value added has not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the consolidated condensed interim financial statements taken as a whole.

 

São Paulo, October 25, 2023

 

Consolidated Condensed Balance Sheet

ASSETS	Note		09/30/2023		12/31/2022
Cash			24,543,149		22,003,439
Financial Assets Measured At Fair Value Through Profit Or Loss	3.a		223,501,871		145,515,302
Debt instruments			70,709,119		66,191,454
Equity instruments			3,594,722		2,605,279
Derivatives	18		32,104,525		20,234,506
Loans and advances to customers			2,524,213		1,894,282
Balances With The Brazilian Central Bank			114,569,292		54,589,781
Financial Assets Measured At Fair Value Through Other Comprehensive Income	3.a		52,983,216		55,425,671
Debt instruments			52,968,083		55,392,178
Equity instruments			15,133		33,493
Financial Assets Measured At Amortized Cost	3.a		726,461,191		663,824,373
Loans and amounts due from credit institutions			31,530,458		20,713,315
Loans and advances to customers			499,092,417		488,735,746
Debt instruments			112,212,218		81,329,013
Reserves at the Central Bank of Brazil			83,626,098		73,046,299
Hedging Derivatives	18		-		1,741,318
Non-Current Assets Held For Sale	4		834,888		699,136
Investments in Associates and Joint Ventures	5.a		1,611,283		1,727,570
Tax Assets			51,351,798		46,445,994
Current			9,243,581		7,838,406
Deferred			42,108,217		38,607,588
Other Assets			6,233,841		8,274,529
Tangible Assets	6.a		7,327,869		8,190,763
Intangible Assets			32,104,787		31,602,734
Goodwill	7		27,852,568		27,889,327
Other intangible assets	8		4,252,219		3,713,407
Total Assets			1,126,953,893		985,450,829

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY
	Note		09/30/2023		12/31/2022
Financial Liabilities Measured At Fair Value Through Profit Or Loss  Held For Trading	9.a		56,965,110		49,668,266
Trading derivatives	18		26,590,993		18,699,325
Short positions			24,309,096		22,047,423
Other financial liabilities			6,065,021		8,921,518
Financial Liabilities Measured at Amortized Cost	9.a		922,406,946		795,284,100
Deposits from Brazilian Central Bank and deposits from credit institutions			138,098,763		116,079,014
Customer deposits			567,010,042		489,953,489
Marketable debt securities			126,565,000		107,120,875
Debt Instruments Eligible to Compose Capital			19,949,728		19,537,618
Other financial liabilities			70,783,413		62,593,104
Hedging Derivatives	18		975,226		-
Provisions	10.a		11,077,084		9,115,143
Provisions for pension funds and similar obligations			2,342,596		1,775,202
Provisions for judicial and administrative proceedings, commitments and other provisions			8,734,488		7,339,941
Tax Liabilities			8,175,651		7,810,800
Current			4,713,651		4,168,800
Deferred			3,462,000		3,642,000
Other Liabilities			13,603,504		12,892,344
Total Liabilities			1,013,203,521		874,770,653
Stockholders' Equity			117,829,358		114,669,276
Share Capital	11.a		55,000,000		55,000,000
Reserves	11.c		61,233,922		54,701,499
Treasury shares	11.d		(1,108,131)		(1,219,316)
Profit for the period attributable to the Parent			7,403,567		14,287,093
Dividends	11.b		(4,700,000)		(8,100,000)
Other Comprehensive Income			(4,463,748)		(4,486,442)
Stockholders' Equity Attributable to the Parent			113,365,610		110,182,834
Non - Controlling Interests			384,762		497,342
Total Stockholders' Equity			113,750,372		110,680,176
Total Liabilities and Stockholders' Equity			1,126,953,893		985,450,829

The explanatory notes are an integral part of the condensed consolidated financial statements.

Consolidated Condensed Statements of Income

	Notes		07/01 to 09/30/2023	07/01 to 09/30/2022	01/01 to 09/30/2023		01/01 to 09/30/2022
Interest and similar income			32,651,076	30,246,468	95,654,433		84,520,329
Interest expense and similar charges			(20,447,496)	(19,200,246)	(61,054,645)		(48,523,287)
Net Interest Income			12,203,580	11,046,222	34,599,788		35,997,042
Income from equity instruments			4,365	14,286	32,918		34,290
Income from companies accounted by the equity method	5.a		55,339	68,523	161,232		134,382
Fee and commission income			5,550,211	5,325,205	16,611,338		15,785,974
Fee and commission expense			(1,658,446)	(1,697,816)	(4,936,170)		(4,739,143)
Gains (losses) on financial assets and liabilities (net)			651,266	518,809	3,593,915		3,518,275
Financial Assets Measured At Fair Value Through Profit Or Loss			1,168,165	2,058,927	4,513,674		7,037,292
Financial instruments not measured at fair value through profit or loss			(580,548)	(989,412)	(1,010,383)		(3,463,885)
Other			63,649	(550,706)	90,624		(55,132)
Exchange differences (net)			(164,194)	965,905	(962,092)		(864,525)
Other operating expense			(244,171)	(380,748)	(629,324)		(406,085)
Total Income			16,397,950	15,860,386	48,471,605		49,460,210
Administrative expenses			(4,782,339)	(4,566,374)	(14,308,950)		(13,312,160)
Personnel expenses	13.a		(2,663,712)	(2,495,056)	(7,973,596)		(7,281,855)
Other administrative expenses	13.b		(2,118,627)	(2,071,318)	(6,335,354)		(6,030,305)
Depreciation and amortization			(692,871)	(655,029)	(2,067,307)		(1,911,975)
Tangible assets	6.a		(458,850)	(467,051)	(1,409,763)		(1,391,872)
Intangible assets	8		(234,021)	(187,978)	(657,544)		(520,103)
Provisions (net)			(1,159,747)	179,882	(3,320,546)		(715,974)
Impairment losses on financial assets (net)			(6,223,191)	(6,246,856)	(20,331,669)		(17,611,790)
Financial Instruments Measured At Amortized Cost	3.b.2		(6,223,191)	(6,246,856)	(20,331,669)		(17,611,790)
Impairment losses on other assets (net)			(73,952)	(51,625)	(141,308)		(108,084)
Other intangible assets	8		(2,979)	(6,940)	(8,116)		(20,001)
Other assets			(70,973)	(44,685)	(133,192)		(88,083)
Gains (losses) on disposal of assets not classified as non-current assets held for sale			12,221	14,508	983,080		23,264
Gains (losses) on non-current assets held for sale not classified as discontinued operations			19,267	53,378	17,097		126,322
Operating Income Before Tax			3,497,338	4,588,270	9,302,002		15,949,813
Income taxes	12		(716,666)	(1,161,732)	(1,868,966)		(4,516,313)
Net income for the semester			2,780,672	3,426,538	7,433,036		11,433,500
Profit attributable to the Parent			2,770,946	3,454,181	7,403,567		11,397,678
Profit attributable to non-controlling interests			9,726	(27,643)	29,469		35,822

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

 

Consolidated Condensed Statements of Comprehensive Income

		07/01 a 09/30/2023		07/01 a 09/30/2022		01/01 a 09/30/2023		01/01 a 09/30/2022
Profit for the Period		2,780,672		3,426,538		7,433,036		11,433,500
Other Comprehensive Income that will be subsequently reclassified for profit or loss when specific conditions are met:	,	(513,166)		(273,291)		460,866		657,178
Financial Assets Measured At Fair Value Through Other Comprehensive Income	,	(554,497)		(109,873)		(23,659)		(461,137)
Financial Assets Measured At Fair Value Through Other Comprehensive Income	,	(1,030,512)		(423,612)		(66,606)		(874,207)
Taxes	,	476,015		313,739		42,947		413,070
Cash flow hedges		41,331		(163,418)		484,525		(196,041)
Valuation adjustments		78,813		(247,415)		923,917		(379,657)
Taxes		(37,482)		83,997		(439,392)		183,616
Other Comprehensive Income that won't be reclassified for Net income:		(17,735)		16,649		(438,172)		116,333
Defined Benefits plan		(17,735)		16,649		(438,172)		116,333
Defined Benefits plan		(244)		96,976		(695,937)		318,697
Taxes		(17,491)		(80,327)		257,765		(202,364)
Total Comprehensive Income		2,249,771		3,169,896		7,455,730		10,892,655
Attributable to the parent		2,240,044		3,197,539		7,426,261		10,856,833
Attributable to non-controlling interests		9,727		(27,643)		29,469		35,822
Total		2,249,771		3,169,896		7,455,730		10,892,655

The explanatory notes are an integral part of the condensed consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Statements of Changes in Stockholders' Equity

		Stockholders´ Equity Attributable to the Parent
	Note	Share Capital		Reserves		Treasury shares			Profit Attributed to the Parent		Dividends and Remuneration		Stockholders´ Equity Attributable to the Parent		Financial Assets Measured At Fair Value Through Other Comprehensive Income		Defined Benefits plan		Translation adjustments investment abroad		Gains and losses - Cash flow hedge and Investment		Total		Non-controlling Interests		Total Stockholders´ Equity
Balances at December 31, 2021		55,000,000		48,880,561		(713,039)			15,528,052		(9,649,000)		109,046,574		(47,576)		(2,924,221)		859,370		(1,294,001)		105,640,146		334,349		105,974,495
Total comprehensive income		-		-		-			11,397,678		-		11,397,678		(461,137)		116,333		-		(196,041)		10,856,833		35,822		10,892,655
Consolidated Net Income for the Period		-		-		-			11,397,678		-		11,397,678		-		-		-		-		11,397,678		35,822		11,433,500
Other comprehensive income		-		-		-			-		-		-		(461,137)		116,333		-		(196,041)		(540,845)		-		(540,845)
Financial Assets Measured At Fair Value Through Other Comprehensive Income		-		-		-			-		-		-		(461,137)		-		-		-		(461,137)		-		(461,137)
Employee benefit plan		-		-		-			-		-		-		-		116,333		-		-		116,333		-		116,333
Gain and loss - Cash flow and investment hedge		-		-		-			-		-		-		-		-		-		(196,041)		(196,041)		-		(196,041)
Appropriation of net income from prior years		-		15,528,052		-			(15,528,052)		-		-		-		-		-		-		-		-		-
Dividends and interest on capital from prior years	11.b	-		(9,649,000)		-			-		9,649,000		-		-		-		-		-		-		-		-
Dividends and interest on capital	11.b	-		-		-			-		(6,400,000)		(6,400,000)		-		-		-		-		(6,400,000)		-		(6,400,000)
Treasury shares	11.d	-		-		(416,887)			-		-		(416,887)		-		-		-		-		(416,887)		-		(416,887)
Other		-		8,496		-			-		-		8,496		-		-		-		-		8,496		95,260		103,756
Balances at September 30, 2022		55,000,000		54,768,109		(1,129,926)			11,397,678		(6,400,000)		113,635,861		(508,713)		(2,807,888)		859,370		(1,490,042)		109,688,588		465,431		110,154,019
Balances at December 31, 2022		55,000,000		54,701,499		(1,219,316)			14,287,093		(8,100,000)		114,669,276		(755,009)		(2,895,520)		859,370		(1,695,283)		110,182,834		497,342		110,680,176
Total comprehensive income		-		-		-			7,403,567		-		7,403,567		(23,659)		(438,172)		-		484,525		7,426,261		29,469		7,455,730
Net Income Attributable to the Parent Company		-		-		-			7,403,567		-		7,403,567		-		-		-		-		7,403,567		29,469		7,433,036
Other comprehensive income		-		-		-			-		-		-		(23,659)		(438,172)		-		484,525		22,694		-		22,694
Financial Assets Measured At Fair Value Through Other Comprehensive Income		-		-		-			-		-		-		(23,659)		-		-		-		(23,659)		-		(23,659)
Employee benefit plan		-		-		-			-		-		-		-		(438,172)		-		-		(438,172)		-		(438,172)
Gain and loss - Cash flow and investment hedge		-		-		-			-		-		-		-		-		-		484,525		484,525		-		484,525
Appropriation of net income from prior years		-		14,287,093		-			(14,287,093)		-		-		-		-		-		-		-		-		-
Dividends and interest on capital from prior years	11.b	-		(8,100,000)		-			-		8,100,000		-		-		-		-		-		-		-		-
Dividends and interest on capital	11.b	-		-		-			-		(4,700,000)		(4,700,000)		-		-		-		-		(4,700,000)		-		(4,700,000)
Treasury shares	11.d	-		-		111,185			-		-		111,185		-		-		-		-		111,185		-		111,185
Share-based compensation		-		90,332		-			-		-		90,332		-		-		-		-		90,332		-		90,332
Prescribed Dividends		-		51,959		-			-		-		51,959		-		-		-		-		51,959		-		51,959
Unrealized Profit		-		189,761		-			-		-		189,761		-		-		-		-		189,761		-		189,761
Other		-		13,278		-			-		-		13,278		-		-		-		-		13,278		(142,049)		(128,771)
Balances as of September 30, 2023		55,000,000		61,233,922		(1,108,131)			7,403,567		(4,700,000)		117,829,358		(778,668)		(3,333,692)		859,370		(1,210,758)		113,365,610		384,762		113,750,372
Changes in the Period		-		6,532,423		111,185			(6,883,526)		3,400,000		3,160,082		(23,659)		(438,172)		-		484,525		3,182,776		(112,580)		3,070,196

The explanatory notes are an integral part of the condensed consolidated financial statements.

 

Consolidated Condensed Statement of Cash Flows

	Note		01/01 to 09/30/2023		01/01 to 09/30/2022
1. Cash Flows From Operating Activities
Net income for the period			7,433,036		11,433,500
Adjustments to profit			32,545,612		62,950,437
Depreciation of tangible assets	6.a		1,409,763		1,391,872
Amortization of intangible assets	8		657,544		520,103
Impairment losses on other assets (net)			141,308		108,084
Provisions and Impairment losses on financial assets (net)			23,652,215		18,327,764
Net Gains (losses) on disposal of tangible assets, investments and non-current assets held for sale			(1,000,177)		(149,586)
Income from companies accounted by the equity method	5.a		(161,232)		(134,382)
Deferred tax assets and liabilities			(3,957,667)		(444,529)
Monetary Adjustment of Escrow Deposits			(560,933)		(533,472)
Recoverable Taxes			(432,726)		(383,156)
Effects of Changes in Foreign Exchange Rates on Cash and Cash Equivalents			(5,764)		(607)
Effects of Changes in Foreign Exchange Rates on Assets and Liabilities			12,742,182		43,928,355
Other			61,099		319,991
Net (increase) decrease in operating assets			(109,691,343)		(89,081,191)
Financial Assets Measured At Fair Value Through Profit Or Loss			(102,161,407)		(86,496,340)
Financial Assets Measured at Fair Value through Other Comprehensive Income			1,858,278		34,286,607
Financial Assets Measured At Amortized Cost			(13,474,384)		(33,223,569)
Other assets			4,086,170		(3,647,889)
Net increase (decrease) in operating liabilities			123,897,455		26,177,076
Financial Liabilities Measured At Fair Value Through Profit Or Loss Held For Trading			7,296,844		10,602,075
Financial liabilities at amortized cost			111,064,932		15,416,453
Other liabilities			5,535,679		158,548
Tax paid			(5,031,876)		(4,904,320)
Total net cash flows from operating activities (1)			49,152,884		6,575,502
2. Cash Flows From Investing Activities
Investments			(2,962,982)		(3,124,128)
Subsidiary acquisition			-		(406,920)
Tangible assets			(1,220,604)		(1,447,631)
Intangible assets			(1,317,993)		(947,056)
Non-collective assets for sale			(424,385)		(322,521)
Disposal			1,429,890		1,452,387
Subsidiary			182,428		-
Tangible assets			727,229		871,098
Intangible assets			108,715		196,515
Non-Current Assets Held For Sale			271,410		214,275
Dividends and interest on capital received			140,108		170,499
Total net cash flows from investing activities (2)			(1,533,092)		(1,671,741)
3. Cash Flows From Financing Activities
Acquisition (Disposal) of own shares	11.d		111,185		(416,887)
Issuance of other long-term liabilities			54,420,276		46,802,503
Dividends and interest on capital paid			(4,049,563)		(5,826,096)
Payments of other long-term liabilities			(33,136,977)		(26,360,906)
Interest Payments on Debt Instruments Eligible to Capital			(625,779)		(451,958)
Net increase in non-controlling interests			(134,214)		20,446
Capital Increase in Subsidiaries, by Non-Controlling Interests			-		72,018
Total net cash flows from financing activities (3)			16,584,928		13,839,120
Exchange variation on Cash and Cash Equivalents (4)			5,764		607
Net Increase in Cash and cash equivalents  (1+2+3+4)			64,210,484		18,743,488
Cash and cash equivalents at the beginning of the period			49,565,334		32,668,749
Cash and cash equivalents at the end of the period			113,775,818		51,412,237

The explanatory notes are an integral part of the condensed consolidated financial statements.

 

 

1.       Operating context, presentation of condensed consolidated interim financial statements and other information

a)   Operational Context

Banco Santander (Brasil) S.A. (Banco Santander or Banco), directly and indirectly controlled by Banco Santander, S.A., headquartered in Spain (Banco Santander Spain), is the leading institution of the Financial and Prudential Conglomerates (Santander Conglomerate) before the Central Bank of Brazil (Bacen), constituted as a joint-stock company, headquartered at Avenida Presidente Juscelino Kubitschek, 2041, Cj.281, Bloco A, Cond. JK Tower – Vila Nova Conceição – São Paulo - SP. Banco Santander operates as a bank multiple and develops its operations through the commercial, investment, credit, financing and investment, real estate credit, leasing and foreign exchange. Through controlled companies, it also operates in the markets of payment institution, syndicate management, securities brokerage, insurance brokerage, loan financing consumption, digital platforms, benefit management, management and recovery of non-performing loans, capitalization and pension plans and supply and administration of food, meal and other vouchers. Operations are conducted in the context of a set of institutions that operate in an integrated manner in the financial market. The benefits and costs corresponding to the services provided are absorbed between them and are carried out in the normal course of business and under commutative conditions. The Board of Directors authorized the issuance of condensed consolidated interim financial statements for the period ended September 30, 2023 at the meeting held on October 24, 2023.

The referred Financial Statements and the documents that compose them, were subject to a report without reservation by the Auditors Independent, of recommendation for approval issued by the Audit Committee of Banco Santander.

 

b)    Presentation of condensed consolidated interim financial statements (prepared in accordance with IAS 34)

The Condensed Consolidated Interim Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and the interpretations issued by the IFRS Interpretations Committee (current name of the International Financial Reporting Interpretations Committee – IFRIC). All relevant information specifically relating to Banco Santander's financial statements, and only with respect to these are being evidenced, and correspond to the information used by Banco Santander in its administration.

 

For better comparison purposes, some comparative balances were reclassified in the statement of cash flows relating to the result of financial guarantees provided, effects of changes in exchange rates on assets and liabilities and reduction (increase) in other financial assets and liabilities.

 

c) Other information            

c.1) Adoption of new standards and interpretations

The following amendments to standards were adopted for the first time for the financial year beginning January 1, 2023:

• IFRS 17 - In May 2017, the IASB issued the IFRS for insurance contracts which aims to replace IFRS 4. From January 1, 2023. This standard aims to provide greater transparency and ensure that an entity presents relevant information and that faithfully represents the essence of insurance operations in the financial statements, one of the main changes being the recognition of profits as a measure of the delivery of insurance services. Banco Santander assessed and concluded that the impact of adopting IFRS 17 is immaterial.

 

· Amendment to IAS 1 "Presentation of Financial Statements”:the purpose is to clarify that liabilities are classified as current or non-current, depending on the rights that exist at the end of the period. The ranking is not affected by the entity's expectations or events after the reporting date. The amendments to IAS 1 are effective as of January 1, 2023 and there is no impact for Santander.

 

· Amendment to IAS 8 - Accounting Policies, Estimate Changes and Error Rectification: clarifies how entities should distinguish changes in accounting policies from changes in accounting estimates, since changes in estimates accounting principles are applied prospectively to future transactions and other future events, but changes in accounting policies are generally applied retrospectively to past transactions and other past events, as well as to the current period. Without impact for Santander

 

· Amendment to IAS 12- Income Tax: requires entities to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. This usually applies to lease transactions (right-of-use assets and lease liabilities) and decommissioning obligations and restoration, as an example, and will require the recognition of additional deferred tax assets and liabilities. Santander already adopts this procedure.

 

 

 

· Amendment to IAS 21- Effects of Changes in Exchange Rates and Conversion of Financial Statements: If a currency is not convertible, it may be difficult to determine an appropriate exchange rate. Although uncommon, a lack of convertibility may arise when a government imposes exchange controls that prohibit the exchange of a currency or that limit the volume of foreign currency transactions. The amendment to IAS 21 clarifies how entities should assess whether a currency is easily convertible and how they should determine a spot exchange rate for a currency that is difficult to exchange, as well as requiring the disclosure of information that allows users of the Financial Statements to understand the impacts of a currency without convertibility. These changes are effective from January 1, 2025. Santander is evaluating the impacts of this change.

There are no other IFRS standards or IFRIC interpretations that have not yet come into force that could have a significant impact on the Bank's financial statements.

 

c.2) Estimates used      

Consolidated results and calculation of consolidated equity are impacted by accounting policies, assumptions, estimates and measurement methods used by the Bank's managers in preparing the financial statements. the bank does estimates and assumptions that affect the reported amounts of assets and liabilities for future periods. All estimates and assumptions required, in accordance with IFRSs, are Management's best estimate in accordance with the applicable standard.

 

In the condensed consolidated interim financial statements, estimates are made by the Bank's Management and of consolidated entities in order to quantify certain assets, liabilities, income and expenses and disclosures in the notes.

 

c.2.1) Critical estimates              

The critical estimates and assumptions that have the most significant impact on the accounting balances of certain assets, liabilities, revenues and expenses and in the disclosures of explanatory notes, are described below:

 

i. Valuation of the fair value of certain financial instruments

Financial instruments are initially recognized at fair value and those that are not measured at fair value in profit or loss are adjusted for transaction costs.

Financial assets and liabilities are subsequently measured, at the end of each period, using valuation techniques. This calculation is based on assumptions, which take into account Management's judgment based on information and market conditions prevailing at the balance sheet date.

Banco Santander classifies fair value measurements using the fair value hierarchy that reflects the model used in the measurement process, segregating financial instruments between Levels I, II or III.

Note 18.b of the Consolidated Interim Financial Statements as of September 30, 2023, presents the accounting practice and sensitivity analysis for the Financial Instruments, respectively.

ii. Provisions for losses on credits due to impairment

 

The carrying amount of impaired financial assets is adjusted by recording a provision for impairment of “Losses on financial assets (net) – Financial Assets measured at amortized cost” in the consolidated statement of income result. The reversal of previously recorded losses is recognized in the consolidated statement of income in the period in which the impairment decreases and can be objectively related to a recovery event.

 

To individually measure the impairment loss on loans assessed for impairment recoverable, the Bank considers the conditions of the counterparty, such as its economic and financial situation, level of indebtedness, income generation capacity, cash flow, management, corporate governance and quality of internal controls, track record payment terms, industry experience, contingencies and credit limits, as well as asset characteristics such as their nature and purpose, type, sufficiency and guarantees of liquidity level and total amount of credit, and also based on historical experience of impairment and other circumstances known at the time of valuation.

 

To measure the impairment loss on loans that are collectively assessed for impairment, the Bank separates financial assets into groups taking into account the characteristics and similarities of credit risk, or that is, according to the segment, type of assets, guarantees and other factors associated with the historical experience of write-down recoverable and other circumstances known at the time of valuation.

 

Note 6 to the Consolidated Interim Financial Statements of September 30, 2023, presents the accounting practice and credit risk measurement measures, respectively.

iii. Provisions for pension funds

Defined benefit plans are registered based on an actuarial study, carried out annually by a specialized company, end of each year, effective for the subsequent period and are recognized in the consolidated income statement in the Interest and similar expenses and Provisions (net) lines.

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

iv. Provisions, assets and contingent liabilities

Provisions for judicial and administrative proceedings are set up when the risk of loss of the judicial or administrative action is assessed as probable and the amounts involved can be measured with sufficient certainty, based on the nature, complexity and history of the actions and the opinion of legal advisors internal and external.

 

v. Goodwill

The registered goodwill is subject to an impairment test, at least once a year or in a shorter period, in case of any indication of impairment of the asset.

 

The basis used for the impairment test is the value in use and, for this purpose, the cash flow is estimated for a period minimum of 5 years. The cash flow was prepared considering several factors, such as: (i) macroeconomic interest rate projections, inflation, exchange rate and others; (ii) behavior and growth estimates of the national financial system; (iii) increase in costs, returns, synergies and investment plan; (iv) customer behavior; and (v) growth rate and adjustments applied to perpetuity flows. The adoption of these estimates involves the probability of occurrence of future events and the change of any of these factors could have a different outcome. The cash flow estimate is based on a valuation prepared by the company independent expert, annually or whenever there are signs of a reduction in its recovery value, which is reviewed and approved by the Administration.

 

Additional details are in note 7.

 

vi. Expectation of realization of tax credits

Deferred tax assets and liabilities include temporary differences, identified as the amounts expected to be recovered or paid on differences between the carrying values of assets and liabilities and their respective calculation bases, and tax loss credits and the negative basis of the accumulated CSLL. These values are measured at the rates expected to apply in the period in which the asset is realized or the liability is settled. Deferred tax assets are only recognized for temporary differences to the extent that it is considered probable that the consolidated entities will have sufficient future taxable profits against which the assets deferred taxes can be used.

 

Other deferred tax assets (accumulated tax loss credits) are only recognized if it is considered probable that the consolidated entities will have sufficient future taxable profits to use.

 

Recognized deferred tax assets and liabilities are reviewed at each balance sheet date, making adjustments appropriate based on the findings of the analyzes carried out. The expected realization of the Bank's deferred tax assets is based on projections of future results and based on technical study.

 

 

2.       Basis of consolidation

The direct and indirect controlled entities and investment funds included in Banco Santander's Condensed Consolidated Financial Statements are highlighted below. Similar information on companies accounted for by the equity method by the Bank is provided in note 5.

			Quantity of Shares or Quotas Owned (in Thousands)			09/30/2023
Investments		Activity	Common Shares and Quotas	Preferred Shares	Direct Participation	Consolidated Participation
Controlled by Banco Santander
Aymoré Crédito, Financiamento e Investimento S.A. (Aymoré CFI)		Financial	50,159	-	100.00%	100.00%
Ben Benefícios e Serviços Instituição de Pagamentos S.A.(BEN Benefícios)		Payment Method	90,000	-	100.00%	100.00%
Esfera Fidelidade S.A.		Services provision	10,001	-	100.00%	100.00%
Gira - Gestão Integrada de Recebíveis do Agronegócio S.A.		Technology	381	-	80.00%	80.00%
Em Dia Serviços Especializados em Cobrança Ltda.		Collection and Recovery of Credit Management	257,306	-	100.00%	100.00%
Return Capital Serviços de Recuperação de Créditos S.A.		Collection and Recovery of Credit Management	32,007	-	100.00%	100.00%
Rojo Entretenimento S.A.		Services Provision	7,417	-	94.60%	94.60%
Sanb Promotora de Vendas e Cobrança Ltda.		Provision of Digital Media Services	71,181	-	100.00%	100.00%
Sancap Investimentos e Participações S.A. (Sancap)		Holding	23,538,159	-	100.00%	100.00%
Santander Brasil Administradora de Consórcio Ltda. (Santander Brasil Consórcio)		Buying Club	872,186	-	100.00%	100.00%
Santander Corretora de Câmbio e Valores Mobiliários S.A.(Santander CCVM)		Broker	14,067,640	14,067,640	99.99%	99.99%
Santander Corretora de Seguros, Investimentos e Serviços S.A. (Santander Corretora de Seguros)		Broker	7,184	-	100.00%	100.00%
Santander Holding Imobiliária S.A.		Holding	558,601	-	100.00%	100.00%
Santander Leasing S.A. Arrendamento Mercantil (Santander Leasing)		Leasing	164	-	100.00%	100.00%
F1RST Tecnologia e Inovação Ltda.		Other Activities	241,941	-	100.00%	100.00%
SX Negócios Ltda.		Other Activities	75,050	-	100.00%	100.00%
Tools Soluções e Serviços Compartilhados Ltda.		Other Activities	192,000	-	100.00%	100.00%
Controlled by Aymoré CFI
Banco Hyundai Capital Brasil S.A.		Bank	150,000	-	0.00%	50.00%
Solution 4Fleet Consultoria Empresarial S.A. (Solution 4Fleet)		Technology	328	-	0.00%	80.00%
Controlled by Santander Leasing
Banco Bandepe S.A.		Bank	3,589	-	0.00%	100.00%
Santander Distribuidora de Títulos e Valores Mobiliários S.A. (Santander DTVM)		Distributor	461	-	0.00%	100.00%
Controlled by Sancap
Santander Capitalização S.A. (Santander Capitalização)		Capitalization	64,615	-	0.00%	100.00%
Evidence Previdência S.A.		Private Pension	42,819,564	-	0.00%	100.00%
Controlled by Santander Holding Imobiliária S.A.
Summer Empreendimentos Ltda.		Real Estate	17,084	-	0.00%	100.00%
Apê11 Tecnologia e Negócios Imobiliários S.A. (Apê11)		Technology	3,808	-	0.00%	90.00%
Controlled by Santander Distribuidora de Títulos e Valores Mobiliários S.A.
Toro Corretora de Títulos e Valores Mobiliários Ltda. (Toro CTVM)		Broker	21,559	-	0.00%	62.51%
Toro Investimentos S.A.		Broker	44,101	-	0.00%	14.78%
Controlled by Toro Corretora de Títulos de Valores Mobiliários Ltda.
Toro Investimentos S.A.		Investments	228,461	-	0.00%	76.55%
Jointly Controlled Companies by Sancap
Santander Auto S.A.		Technology	22,452	-	0.00%	50.00%
Controlled by Toro Investimentos S.A.
Toro Asset		Investments	918,264	-	0.00%	100.00%
Mobills Labs Soluções em Tecnologia Ltda.		Technology	1,122,000	-	0.00%	100.00%
Controlled by Mobills Labs Soluções em Tecnologia Ltda.
Mob Soluções em Tecnologia Ltda.		Technology	20	-	0.00%	100.00%
Controlled by Monetus Investimentos S.A.
Mobills Corretora De Seguros Ltda.		Broker	3,010	-	0.00%	100.00%

 

Consolidated Investment Funds

·         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) (3);                                          

·         Venda de Veículos Fundo de Investimento em Direitos Creditórios (Venda de Veículos FIDC) (1);       

·         Prime 16 – Fundo de Investimento Imobiliário (atual denominação do BRL V - Fundo de Investimento Imobiliário - FII) (2);

·         Santander FI Hedge Strategies Fund (Santander FI Hedge Strategies) (3);                                                                

·         Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema VI - Não Padronizado (Fundo Investimento Ipanema NPL VI) (4);                                                                                                                                    

·         Santander Hermes Multimercado Crédito Privado Infraestrutura Fundo de Investimentos;

·         Fundo de Investimentos em Direitos Creditórios Atacado – Não Padronizado (4);

·         Atual - Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior;

·         Fundo de Investimentos em Direitos Creditórios – Getnet (5);

·         Santander Flex Fundo de Investimento Direitos Creditórios (6);

·         San Créditos Estruturados – Fundo de Investimento em Direitos Creditórios Não Padronizado (6); e

·         D365 – Fundo De Investimento em Direitos Creditórios (7);

·         Fundo de Investimento em Direitos Creditórios Tellus (8).

 

(1) The Renault manufacturer (an entity not belonging to the Santander Conglomerate) sells its duplicates to the Fund. This Fund exclusively purchases duplicates from the Renault manufacturer. In turn, Banco RCI Brasil S.A. holds 100% of its subordinated shares.

(2) Banco Santander appeared as a creditor in certain overdue credit operations that had real estate as collateral. The operation to recover these credits consists of the contribution of properties as collateral for the capital of the Real Estate Investment Fund and the consequent transfer of the Fund's shares to Banco Santander, through payment in payment of the credit operations.

(3) 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. Santander Paraty does not have its own equity position, with all records coming from the financial position of Santander FI Hedge Strategies.

(4) Atual – Fundo de Investimento Multimercado Crédito Privado Investimento no Exterior (“FIM”) is the exclusive shareholder of the funds. FIM began to be consolidated in August 2020, being controlled by Return Capital Serviços de Recuperação de Crédito S.A.

(5) This fund began to be consolidated in June 2022 and is controlled through Aymoré CFI, holding 100% of the shares in this fund.

(6) This fund began to be consolidated in September 2022 and is controlled through Return Capital Serviços de Recuperação de Crédito S.A., holding 100% of the shares in these funds.

(7) This fund began to be consolidated in June 2023 and is controlled through Return Capital Serviços de Recuperação de Crédito S.A., holding 100% of the shares in this fund;

(8) This fund began to be consolidated in September 2023 and is controlled through Return Capital Serviços de Recuperação de Crédito S.A., it holds 100% of the shares in this fund.

 

Corporate movements were implemented with the aim of reorganizing the operations and activities of the entities in accordance with the business plan of the Santander Conglomerate.

 

a)     Sale of the entire stake held in Banco PSA Finance Brasil S.A. and Stellantis Corretora de Seguros e Serviços Ltda.

On August 31, 2023, Aymoré Crédito, Financiamento e Investimento S.A. (“Aymoré”) and Santander Corretora de Seguros, Investimentos e Serviços S.A. (“Santander Corretora de Seguros”) concluded the sale operation of equity interests held (the ) by Aymoré, representing 50% (fifty percent) of the share capital of Banco PSA Finance Brasil S.A. (“Banco PSA”), to Stellantis Financial Service, S.A. and (b) by Santander Corretora de Seguros, representing 50% (fifty percent) of the share capital of Stellantis Corretora de Seguros e Serviços Ltda. (“Stellantis Corretora”), for Stellantis Services Ltd. (“Operation”).

With the conclusion of the Transaction, Aymoré no longer holds a shareholding in Banco PSA and Santander Corretora de Seguros no longer holds a shareholding in Stellantis Corretora.

 

b)    Acquisition of participation and investment in Fit Economia de Energia S.A.

On August 1, 2023, Santander Corretora de Seguros, Investimentos e Serviços S.A. entered into, with HB Fit Participações Ltda., a contract for the acquisition and investment in Fit Economia de Energia S.A. (“Company”), so that, a Once the operation is completed, you will hold 65% of the Company's share capital (“Operation”).

The completion of the Transaction will be subject to compliance with certain suspensive conditions usual in similar transactions, including obtaining the relevant regulatory authorizations.

c)     Joint-venture between Banco Santander (Brasil) S.A. and Sodexo Pass International and Sodexo Pass do Brasil Serviços de Inovação Ltda

On June 24, 2023, Banco Santander signed, together with Sodexo Pass International and Sodexo Pass do Brasil Serviços de Inovação Ltda., a joint-venture agreement, so that, once the operation is completed, it will hold 20% of the share capital of Sodexo Pass do Brasil Serviços e Comércio S.A. (“Operation”).

The completion of the Transaction will be subject to compliance with certain suspensive conditions usual in similar transactions, including obtaining the relevant regulatory authorizations.

d)    Acquisition of the entire shareholding in Toro Participações S.A.

On June 7, 2023, Banco Santander signed, together with the shareholders of Toro Participações S.A. (“Toro Participações”), a contract for the acquisition of all shares in Toro Participações, so that, once the operation is completed, it will be indirectly hold 100% of the share capital of Toro Corretora de Títulos e Valores Mobiliários S.A. and Toro Investimentos S.A. (“Operation”).

The completion of the Transaction will be subject to compliance with certain suspensive conditions usual in similar transactions, including obtaining the relevant regulatory authorizations.

e)     Sale of Santander Corretora's stake in Webmotors S.A. for carsales.com Investments PTY LTD

 

On April 28, 2023, Santander Corretora de Seguros, Investimentos e Serviços S.A. (“Santander Corretora”) concluded the sale of shares representing 40% of the share capital of Webmotors S.A. (“Webmotors”) to Carsales.com Investments PTY LTD (“Carsales”) (“Operation”).

 

With the conclusion of the Operation, Santander Corretora now holds 30% and Carsales holds 70% of the share capital of Webmotors.

f)     Investment by Santander Corretora de Seguros, Investimentos e Serviços S.A. at Biomas – Serviços Ambientais, Restauração e Carbono S.A.

On November 9, 2022, Santander Corretora de Seguros, Investimentos e Serviços S.A. (“Santander Corretora”) entered into an investment agreement to become a shareholder (“Operation”) of Biomas – Serviços Ambientais, Restauração e Carbono S.A. (“Biomas ”). Biomas is a company created with the purpose of providing services aimed at the development and execution of activities aimed at the restoration and conservation of biodiversity and natural ecosystems, therefore aligning with the ESG (Environmental, Social and Governance) purposes of the Santander Group.

 

On March 21, 2023, with the conclusion of the Operation, Santander Corretora will hold 16.66% of Biomas' shareholding.

 

g)    Investment by Lexisnexis Serviços de Análise de Risco Ltda. at Gestora de Inteligência de Crédito S.A.

On December 20, 2022, Banco Santander, together with the other shareholders, closed the investment operation, through the subscription of new shares, by Lexisnexis Serviços de Análise de Risco Ltda. (“Lexisnexis”) at Gestora de Crédito Crédito S.A. (“GIC”). Upon completion of the subscription, Lexisnexis becomes a shareholder holding shares equivalent to 20% (twenty percent) of GIC's share capital.

With the request for closure and the entry of Lexisnexis into the GIC, Santander now holds 15.56% of the shares issued by the GIC.

 

h)    Total spin-off of Atual Serviços de Recuperação de Créditos and Meios Digitais S.A. to Return Capital S.A. and Em Dia Serviços Especializados em Cobrança Ltda.

On October 31, 2022, Atual Serviços de Recuperação de Créditos e Meios Digitais S.A. (“Atual”) was completely split, with its assets identified by both of its direct subsidiaries, Return Capital S.A. (“Return”) and Em Dia Serviços Especializados em Cobrança Ltda. (“Up to date”) in accordance with the proportions provided for in the Protocol and Justification of the operation. With the implementation of the total spin-off, Return had its capital increased by R$ 3,990,617 and “Em dia” by R$ 267,027.05, both becoming directly owned by Banco Santander (Brasil) S.A., the sole partner of “Em dia”.

 

i)      Acquisition of interest in SX Tools Soluções e Serviços Compartilhados Ltda.

On September 26, 2022, Banco Santander subscribed to the capital increase in SX Tools Soluções e Serviços Comparados Ltda (“SX Tools”), becoming the sole partner of the company. As of September 30, 2022, the capital payment was pending. SX Tools will primarily operate in the provision of services to Banco Santander and Group companies and will focus on hiring technology suppliers aimed at providing such services.

 

 

j)      Sale Acquisition of interest in the CSD Central of Registration and Deposit Services to the Financial and Capital Markets S.A

On January 21, 2022, Santander Corretora de Seguros, Investimentos e Serviços S.A. (“Santander Corretora”), together with other investors, together with CSD Central de Serviços de Registro e Depósito ao Mercados Financeiro e de Capitais S.A. (“CSD BR”) and their respective shareholders, certain investment agreement and other covenants (“Agreement”) with a view to subscribing to a minority interest in CSD BR (“Operation”). CSD BR operates as a registrar of financial assets, derivatives, securities and insurance policies, authorized by the Central Bank of Brazil, the Securities and Exchange Commission and the Private Insurance Superintendence. After compliance with the precedent conditions established in the Agreement, the closing of the Transaction took place on May 26, 2022, so that Santander Corretora now holds 20% (twenty percent) of the shareholding in CSD BR.

 

k)     Sale of the entire stake held in Paytec Tecnologia em Pagamentos Ltda. and Paytec Logistics and Warehouse Ltda.

 

On May 26, 2022, Banco Santander entered into, with Getnet Adquirência e Serviços para Meios de Controle S.A. – Institution of Payment (“Getnet IP”), the contract for the purchase and sale of shares, transfer of ownership and other covenants, 100% of the shares of Paytec Tecnologia em Escolhas Ltda. ("Operation"). With the implementation of the Operation, Getnet IP now directly holds 100% of the shares of Paytec Tecnologia em Escolhas Ltda and indirectly controls Paytec Logística e Armazém Ltda.

 

l)      Acquisition of Equity Interest in Monetus Investimentos Ltda. and Monetus Corretora de Seguros Ltda

On June 15, 2021, Santander Distribuidora de Títulos e Valores Mobiliários S.A. (“Santander DTVM”, new corporate name of PI Distribuidora de Títulos e Valores Mobiliários S.A.), Toro Corretora de Títulos e Valores Mobiliários S.A. (“Toro CTVM”) , and Toro Investimentos S.A. (“Toro Investimentos” and, together with Toro CTVM, “Toro”) celebrated, together with the partners of Monetus Investimentos Ltda., and Monetus Corretora de Seguros Ltda. (together “Monetus”), investment agreement and other covenants, whereby, once the operation is completed, Toro Investimentos would hold 100% of the share capital of Monetus (“Operation”). Monetus, originally from Belo Horizonte, carries out its activities through an automated investment application based on objectives. After compliance with the applicable conditions precedent, the closing of the Transaction was formalized on January 4, 2022.

 

m)   Acquisition of Equity Interest in Mobills Labs Soluções em Tecnologia Ltda. e Mob Solutions in Technology Ltda.

On June 15, 2021, Santander Distribuidora de Títulos e Valores Mobiliários S.A. (“Santander DTVM”, new corporate name of PI Distribuidora de Títulos e Valores Mobiliários S.A.), Toro Corretora de Títulos e Valores Mobiliários S.A. (“Toro CTVM”) , and Toro Investimentos S.A. (“Toro Investimentos” and, together with Toro CTVM, “Toro”) celebrated, together with the partners of Mobills Labs Soluções em Tecnologia Ltda., and Mob Soluções em Tecnologia Ltda (together “Mobills”) , investment agreement and other covenants, whereby, once the operation is completed, Toro Investimentos would hold 100% of the share capital of Mobills (“Operation”). Headquartered in Ceará, Mobills has a variety of financial applications that have a large user base, especially those related to financial planning. After compliance with the applicable conditions precedent, the closing of the Transaction was formalized on January 4, 2022.

 

3.       Financial assets

a)     Classification by nature and category

The classification by nature and category for the purpose of valuing the Bank's assets, except for the items related to “Cash and reserves at the Central Bank of Brazil” and “Derivatives used as Hedge”, on September 30, 2023 and December 31, 2022 is shown below:

 

								09/30/2023
		Financial Assets Measured At Fair Value Through Profit Or Loss		Financial Assets Measured At Fair Value Through Other Comprehensive Income		Financial Assets Measured At Amortized Cost		Total
Balances With The Brazilian Central Bank		114,569,292		-		83,626,098		198,195,390
Loans and amounts due from credit institutions		-		-		31,530,458		31,530,458
Of which:
Loans and amounts due from credit institutions		-		-		31,539,463		31,539,463
Impairment losses (note 3-b.2)		-		-		(9,005)		(9,005)
Loans and advances to customers		2,524,213		-		499,092,417		501,616,630
Of which:
Loans and advances to customers, (1)		2,524,213		-		531,382,711		533,906,924
Impairment losses (note 3-b.2)		-		-		(32,290,294)		(32,290,294)
Debt instruments		70,709,119		52,968,083		112,212,218		235,889,420
Of which:
Debt instruments		70,709,119		52,968,083		113,523,416		237,200,618
Impairment losses (note 3-b.2)		-		-		(1,311,198)		(1,311,198)
Equity instruments		3,594,722		15,133		-		3,609,855
Trading derivatives		32,104,525		-		-		32,104,525
Total		223,501,871		52,983,216		726,461,191		1,002,946,278
								12/31/2022
		Financial Assets Measured At Fair Value Through Profit Or Loss		Financial Assets Measured At Fair Value Through Other Comprehensive Income		Financial Assets Measured At Amortized Cost		Total
Balances With The Brazilian Central Bank		54,589,781		-		73,046,299		127,636,080
Loans and amounts due from credit institutions		-		-		20,713,315		20,713,315
Of which:
Loans and amounts due from credit institutions		-		-		20,725,914		20,725,914
Impairment losses (note 3-b.2)		-		-		(12,599)		(12,599)
Loans and advances to customers		1,894,282		-		488,735,746		490,630,028
Of which:
Loans and advances to customers,(1)		1,894,282		-		522,761,008		524,655,290
Impairment losses (note 3-b.2)		-		-		(34,025,262)		(34,025,262)
Debt instruments		66,191,454		55,392,178		81,329,013		202,912,645
Of which:
Debt instruments		66,191,454		55,392,178		82,502,775		204,086,407
Impairment losses (note 3-b.2)		-		-		(1,173,762)		(1,173,762)
Equity instruments		2,605,279		33,493		-		2,638,772
Trading derivatives		20,234,506		-		-		20,234,506
Total		145,515,302		55,425,671		663,824,373		864,765,346

(1)    As of September 30, 2023, the balance recorded under “Loans and advances to customers” referring to operations in the loan portfolio assigned is of R$28,472 (12/31/2022 - R$32,647) and R$27,564 (12/31/2022 - R$32,138) of "Other financial liabilities - Financial Liabilities Associated with Transfer of Assets”.

 

 

b) Valuation adjustments arising from impairment of financial assets

b.1) Financial assets measured at fair value through Other Comprehensive Income

As indicated in explanatory note 2 to the Bank's consolidated Interim Financial Statements for the quarter ended September 30, 2023, changes in the carrying amount of financial assets and liabilities are recognized in the statement consolidated statement of income and except in the case of financial assets measured at fair value through other comprehensive income, in which changes in fair value are temporarily recognized in consolidated equity, under “Other income comprehensive”.

 

Debits or credits in "Other Comprehensive Income" arising from changes in fair value, remain in equity consolidated net income of the Bank until the respective assets are derecognized, when they are recognized in the statement consolidated result. As part of the fair value measurement process, when there is evidence of impairment losses of these instruments, the amounts are no longer recognized in shareholders' equity under the caption "Financial Assets Measured at Fair Value through Other Comprehensive Income” and are reclassified to the Consolidated Statement of Income at cumulative value on that date.

 

On September 30, 2023, the Bank analyzed the variations in the fair value of the various assets that make up this portfolio and concluded that,on that date, there were no significant differences whose origin could be considered as arising from impairment losses (impairment). Consequently, all changes in the fair value of these assets are presented in "Other Income Comprehensive”. Changes in the balance of other comprehensive income in the interim period are recognized in the statement Consolidated Other Comprehensive Income.

 

In the second quarter of 2022, in accordance with the best corporate governance practices, Management approved the change in the business model of bonds and securities held for the purpose of collecting contractual cash flows and sell to held with the objective of collecting contractual cash flows, in the amount of R$ 11 billion with no impact on result, with the balance in Equity reversed in full.

 

This decision is based on a response to changes brought About by the approval of Law 14.031/20 and, with the aim of adapting the new interest rate risk management conditions, the pre-fixed government securities LTNs that were used to cover the interest differential were reclassified on April 1, 2022. Such change in legislation entails changing the Model of Management used by Management to manage these securities, and it is estimated that the LTNs maturing in 2024 do not fit more in “Kept to Collect and Sell” models, and with the extinction of the fiscal asymmetry of investments abroad, such securities will be used exclusively for purposes of collecting cash flows.

 

Thus, with the reclassification carried out on April 1, 2022, the Federal Public Securities - LTNs maturing in 2024 are no longer recorded at Fair Value in Other Comprehensive Income, and become effective for Principal Payment Only and Interest. This event results in the full reversal of the mark-to-market amount recorded in Other Comprehensive Income on the reclassification date in the gross total of R$ 1,025 million, reducing, on the other hand, the value of the registered asset.

 

b.2) Financial assets measured at amortized cost - loans, other amounts with credit institutions and advances to customers

The changes in the provisions for impairment of assets included in “Financial assets measured at amortized cost - loans, other amounts with credit institutions and advances to customers” in the period ended on September 30, 2023 and 2022 were the following:

		01/01 to 09/30/2023		01/01 to 09/30/2022
Balance at beginning of the period	.	35,211,623	.	29,723,376
Provision for losses on financial assets	.	19,380,366	.	16,805,846
Write-off of impaired balances against recorded impairment allowance	.	(20,967,869)	.	(12,288,509)
Exchange Variation		(13,623)		(13,728)
Balance at end of the period   (Note 3.a)	.	33,610,497	.	34,226,985
Provision for contingent liabilities (note 10.a)	.	487,021	.	550,746
Total balance of allowance for impairment losses, including provisions for contingent liabilities	.	34,097,518	.	34,777,731
Loans written-off recovery	.	1,104,544	.	697,549
Discount granted	.	(2,055,847)	.	(1,503,494)

 

Considering the amounts recognized in "Recognition (Reversal) for losses on financial assets", "Recoveries of loans written off as a loss" and "Discount Granted" total R$20,331,669 and R$17,611,790 in the periods ended on 30 September 2023 and 2022, respectively

 

 

c) Non-recoverable assets

A financial asset is considered non-recoverable when there is objective evidence of the occurrence of events that: (i) cause an adverse impact on the estimated future cash flows on the date of the transaction, in the case of debt instruments (loans and debt securities); (ii) mean that their book value cannot be fully recovered, in the case of equity instruments; (iii) arising from the breach of loan clauses or terms, and (iv) during the bankruptcy process.

The details of changes in the balance of financial assets classified as “Loans, advances to customers and Debt Instruments” considered as non-recoverable due to credit risk in the periods ended September 30, 2023 and 2022 are as follows:

		01/01 to 09/30/2023		01/01 to 09/30/2022
Balance at beginning of the period		39,146,979		26,923,312
Net additions		23,229,225		24,892,016
Write-off of impaired balances against recorded impairment allowance		(22,904,532)		(13,611,673)
Balance at end of the period		39,471,672		38,203,655

 

d) Provisions for contingent commitments

IFRS 9 requires that the provision for expected credit losses be recorded for financial guarantee contracts provided, that have not yet been honored. It should be measured and accounted for at the provision expense that reflects the credit risk in the event of honored guarantees and the endorsed customer does not comply with its contractual obligations. Below is the movement of these provisions for the periods ended September 30, 2023 and 2022.

 

		01/01 to 09/30/2023		01/01 to 09/30/2022
Balances at the beginning of the period		340,005		417,001
Constitution of provisions for contingent liabilities		103,815		(45,148)
Balances at the end of period		443,820		371,853

 

4.       Non-current assets held for sale

Non-current assets held for sale include assets not in use.

 

 

5.       Investments in associates and joint ventures

Joint Control

Banco Santander considers investments classified as jointly controlled when they possess a shareholders' agreement, which sets that the strategic, financial and operating decisions and require the unanimous consent of all investors.

Significant Influence

Associates are entities over which the Bank is in a position to exercise significant influence (significant influence is the power to participate in the financial and operating decisions of the investee) but it does not control or has joint control over the investee.

a)     Breakdown

				Participation %
	Activity	Country		09/30/2023	12/31/2022
Jointly Controlled by Banco Santander
Banco RCI Brasil S.A.	Bank	Brazil		39.89%	39.89%
Estruturadora Brasileira de Projetos S.A. - EBP (1)(2)	Other Activities	Brazil		11.11%	11.11%
Gestora de Inteligência de Crédito (1)	Credit Bureau	Brazil		15.56%	15.56%
Santander Auto S.A.	Other Activities	Brazil		50.00%	50.00%
Jointly Controlled by Santander Corretora de Seguros
Tecnologia Bancária S.A. - TECBAN (1)	Other Activities	Brazil		18.98%	18.98%
Hyundai Corretora de Seguros	Insurance Broker	Brazil		50.00%	50.00%
PSA Corretora de Seguros e Serviços Ltda. (4)	Insurance Broker	Brazil		0.00%	50.00%
CSD Central de Serviços de Registro e Depósito aos Mercados Financeiro e de Capitais S.A	Other Activities	Brazil		20.00%	20.00%
Biomas - Serviços Ambientais, Restauração e Carbono S.A.	Other Activities	Brazil		16.67%	0.00%
Jointly Controlled by Webmotors S.A.
Loop Gestão de Pátios S.A. (Loop)	Other Activities	Brazil		51.00%	51.00%
Car10 Tecnologia e Informação S.A. (Car10)	Other Activities	Brazil		66.67%	66.67%
Jointly Controlled by TecBan		Brazil
Tbnet Comércio, Locação e Administração Ltda. (Tbnet)	Other Activities	Brazil		100.00%	100.00%
TecBan Serviços Integrados Ltda.	Other Activities	Brazil		100.00%	100.00%
Jointly Controlled by Tbnet
Tbforte Segurança e Transporte de Valores Ltda. (Tbforte)	Other Activities	Brazil		100.00%	100.00%
Significant Influence of Banco Santander
CIP S.A. (4)	Other Activities	Brasil		17.52%	17.87%
Significant Influence of Santander Corretora de Seguros
Webmotors S.A. (2)(5)	Other Activities	Brazil		30.00%	70.00%

 

		09/30/2023				12/31/2022
		Assets	Liabilities	Profit (Loss)		Assets	Liabilities	Profit (Loss)
Jointly Controlled by Banco Santander		12,870,377	12,811,270	59,105		13,013,828	12,914,541	169,596
Banco RCI Brasil S.A.		11,304,323	11,243,240	61,082		11,232,921	11,078,109	211,111
Estruturadora Brasileira de Projetos S.A. - EBP		6,922	6,789	133		6,831	11,427	390
Gestora de Inteligência de Crédito		1,255,945	1,288,510	(32,566)		1,565,100	1,642,454	(68,330)
Santander Auto S.A.		303,187	272,731	30,456		208,976	182,551	26,425
Jointly Controlled by Santander Corretora de Seguros		2,884,178	2,876,707	7,470		3,199,816	3,143,227	56,588
Tecnologia Bancária S.A. - TECBAN		2,633,135	2,627,476	5,659		2,973,912	2,921,075	52,837
Hyundai Corretora de Seguros		4,995	4,543	452		4,025	4,037	(12)
PSA Corretora de Seguros e Serviços Ltda.		-	-	-		5,400	3,358	2,041
CSD Central de Serviços de Registro e Depósito aos Mercados Financeiro e de Capitais S.A		215,722	212,398	3,324		216,479	214,757	1,722
Biomas - Serviços Ambientais, Restauração e Carbono S.A.		30,326	32,290	(1,965)		-	-	-
Significant Influence of Banco Santander		3,073,067	2,679,900	393,167		2,652,068	2,374,932	277,136
CIP S.A.		3,073,067	2,679,900	393,167		2,652,068	2,374,932	277,136
Significant Influence of Banco Santander		487,964	410,257	77,707		393,592	316,559	77,033
Webmotors S.A.		487,964	410,257	77,707		393,592	316,559	77,033
Total		19,315,586	18,778,134	537,449		19,259,304	18,749,259	580,353

(1) The Bank exercises joint control over the entity with the other majority shareholders, through a shareholders' agreement where no business decision

can be taken by a single shareholder.

(2) In accordance with the shareholders' agreement, control is shared by Santander Corretora de Seguros and Carsales.com Investments PTY

LTD. (Carsales).

(3) Pursuant to the shareholders' agreement, control is shared by Santander Corretora de Seguros and PSA Services LTD.

(4) In March 2022, the Interbank Payments Chamber – CIP was demutualized. The non-profit association went through a spin-off, part of which was     incorporated into a new for-profit company CIP S.A.

(5) Banco Santander Brasil S.A, through its subsidiary Santander Corretora de Seguros, sold part of its shareholding in Webmotors

S.A, to Carsales, thus disposing of 40% of the company's share capital in the Consolidated, as detailed in note 2.

 

			Investments				Results
			09/30/2023	12/31/2022			01/01 to 09/30/2023	01/01 to 09/30/2022
Jointly Controlled by Banco Santander			611,273	645,686			43,666	78,310
Banco RCI Brasil S.A.			508,770	552,572			33,025	44,923
Estruturadora Brasileira de Projetos S.A. - EBP			759	746			14	29
Gestora de Inteligência de Crédito			57,341	61,590			(4,601)	(11,740)
Santander Auto S.A.			44,403	30,778			15,228	9,588
CIP S.A			-	-			-	35,510
Jointly Controlled by Santander Corretora de Seguros			289,572	288,006			1,083	56,072
Webmotors S.A.			-	-			-	36,917
Tecnologia Bancária S.A. - TECBAN			241,280	243,649			(317)	18,710
Hyundai Corretora de Seguros			1,480	1,254			226	(76)
PSA Corretora de Seguros e Serviços Ltda.			-	540			1,925	402
CSD Central de Serviços de Registro e Depósito aos Mercados Financeiro e de Capitais S.A			42,139	42,563			(424)	119
Biomas - Serviços Ambientais, Restauração e Carbono S.A.			4,673	-			(327)	-
Significant Influence of Banco Santander			475,375	407,441			82,093	-
CIP S.A			475,375	407,441			34,390	-
Significant Influence of Santander Corretora de Seguros			235,063	386,437			34,390	-
Webmotors S.A.			235,063	386,437			34,390	-
Total			1,611,283	1,727,570			161,232	134,382

 

The Bank does not have guarantees granted to companies with joint control and significant influence.

The Bank does not have contingent liabilities with significant possible risk of loss related to investments for companies with joint control and significant influence.

b)    Changes

Below are the changes in the balance of this item in the period ended on September 30, 2023 and 2022:

		01/01 to 09/30/2023				01/01 to 09/30/2022
		Joint Control		Significant Influence		Joint Control		Significant Influence
Balance at beginning of exercise		1,320,129		407,441		1,232,646		-
Change in scope of consolidation		(386,437)		386,437		(11,604)		-
Adjustment to market value		(29,727)		(651)		(29,935)		-
Add / Lower		(2,111)		(185,371)		(255)		-
Equity in earnings of subsidiaries		44,749		116,483		134,382		-
Dividends proposed / received		(50,757)		(13,956)		(12,410)		-
Jointly Controlled Capital Increase		5,000		54		50,430		356,745
Balance at end of exercise		900,846		710,437		1,363,254		356,745
Total Investments				1,611,283				1,719,999

 

 

c)     Impairm ent losses

No impairment losses were recognized on investments in associates and joint ventures in September 30, 2023, and December 31, 2022.

d)    Other information

Details of the principal jointly controlled entities:

·         Banco RCI Brasil S.A.:A company incorporated in the form of a joint stock company with headquarters in Paraná, aims to the main practice of investment, leasing, credit, financing and investment operations, with a view to sustain the growth of the automotive brands Renault and Nissan in the Brazilian market, with operations focused on, mainly to financing and leasing to the final consumer. It is a financial institution that is part of the RCI Group Banque and Santander Conglomerate, their operations being conducted in the context of a set of institutions that operate in the financial market. According to the Shareholders' Agreement, the main decisions that impact this company are taken jointly between Banco Santander and other controlling shareholders.

6.       Tangible assets

Tangible assets of the Bank relate to property, plant and equipment for its own use. The Bank does not have tangible assets held as investment property nor leased out under operating leases. The Bank is also not a part of any financial lease contracts as of and during the period ended September 30, 2023 and 2022.

a)     Breakdown

The detail, by class of asset, of the tangible assets in the consolidated balance sheets is as follows:

		Land and buildings		Data Processing Systems		Furniture and equipment of use and vehicles		Property Lease		Works in progress and others		Total
Balance as of December 31, 2022		1,720,703		1,596,896		2,908,708		1,976,596		(12,140)		8,190,763
Addition		94,097		589,547		498,660		38,300		-		1,220,604
Write-off		(138,120)		(147,195)		(53,506)		(388,408)		-		(727,229)
Depreciation of the period		(316,506)		(17,777)		(687,463)		(388,017)		-		(1,409,763)
Transfers		72,105		(114,199)		95,588		-		-		53,494
Balance as of September  30, 2023		1,432,279		1,907,272		2,761,987		1,238,471		(12,140)		7,327,869
Balance as of December 31, 2021		1,803,756		1,690,184		2,982,561		2,319,424		(12,140)		8,783,785
Addition		38,777		221,597		420,464		766,793		-		1,447,631
Write-off		(22,172)		(188,240)		(367,803)		(292,883)		-		(871,098)
Depreciation of the period		(56,809)		(246,155)		(647,046)		(441,862)		-		(1,391,872)
Transfers		-		57,616		(38,437)		-		-		19,179
Balance as of September  30, 2022		1,763,552		1,535,002		2,349,739		2,351,472		(12,140)		7,987,625

 

The depreciation expenses has been included in the heading “Depreciation and amortization” in the income statement.

 

b)    Losses due to non-recovery

In the period ended September 30, 2023, there was no impact of an impairment expense.

c)     Tangible asset purchase commitments       

As of September 30, 2023, the Bank has no contractual commitments for the acquisition of tangible assets (12/31/2022 – R$ 50,047)

7.       Intangible assets - Goodwill

The goodwill constitutes the surplus between the acquisition cost and the Bank's participation in the net fair value of the acquiree's assets, liabilities and contingent liabilities. When the excess is negative (discount), it is recognized immediately in income. In accordance with IFRS 3 Business Combinations, goodwill is accounted for at cost and is not amortized, but tested annually for impairment purposes or whenever there are indications of impairment of the cash-generating unit to which he was allocated. Goodwill is accounted for at cost less accumulated impairment losses. Impairment losses recognized on goodwill are not reversed. Gains and losses on disposal of an entity include the carrying amount of goodwill relating to the entity sold.

The goodwill recorded is subject to the impairment test (note 1.c.2.1.v) and was allocated according to the operating segment (note 15).

Based on the assumptions described above, no impairment of goodwill was identified on S eptember 30, 2023. Throughout the third quarter of 2023, no indication of impairment of goodwill was identified.

		09/30/2023		12/31/2022
Breakdown
Banco ABN Amro Real S.A. (Banco Real)		27,217,565		27,217,565
Em Dia Serviços Especializados em Cobranças Ltda.		184,447		236,626
Toro Corretora de Títulos e Valores Mobiliários Ltda.		160,770		160,771
Olé Consignado (current corporate name of Banco Bonsucesso Consignado)		62,800		62,800
CSD Central de Serviços de Registro e Depósito aos Mercados Financeiro e de Capitais S.A.		42,135		42,135
Return Capital Serviços de Recuperação de Créditos S.A. (current corporate name of Ipanema Empreendimentos e Participações S.A.)		41,324		24,346
Monetus Investimentos S.A.		39,919		39,919
Mobills Labs Soluções em Tecnologia Ltda.		39,589		39,589
Solution 4Fleet Consultoria Empresarial S.A.		32,590		32,590
Santander Brasil Tecnologia S.A.		16,381		16,381
Apê11 Tecnologia e Negócios Imobiliários S.A.		9,777		9,777
Gira - Gestão Integrada de Recebíveis do Agronegócio S.A.		5,271		5,271
Banco PSA Finance Brasil S.A.		-		1,557
Total		27,852,568		27,889,327
				Commercial Bank
				12/31/2022
Key assumptions:
Basis for determining the recoverable amount
Period of the projections of cash flows (1)				5 years
Perpetual growth rate				5.1%
Discount rate (2)				12.9%

(1) The projections of cash flow are prepared using Management´s growth plans and internal budget, based on historical data, market expectations and conditions such as industry growth, interest rate and inflation.                               

(2) The discount rate is calculated based on the capital asset pricing model (CAPM). The discount rate before tax on December 31, 2022 was 19.09%.

 

A quantitative goodwill recoverability test is performed annually. At the end of each financial year, an analysis is carried out regarding the existence of accusations of impairment. In the period ended September 30, 2023 and fiscal year 2022 there was no evidence of impairment. In the goodwill recoverability test, discount and growth rates in perpetuity are the most sensitive bets for calculating the present value (value in use) of discounted future cash flows. With a variation of +0.25% or -0.25% in these rates, the value of future cash flows discounted to present value continues to indicate the non-existence of impairment.

 

8.       Intangible assets - Other intangible assets

The movement of other intangible assets in the period ended September 30, 2023 and 2022, was as follows:

		Movement of:
		12/31/2022 to 09/30/2023						12/31/2021 to 09/30/2022
		IT developments		Other assets		Total		IT developments		Other assets		Total
Opening Balance		3,457,640		255,767		3,713,407		2,723,667		147,652		2,871,319
Addition		1,222,899		95,094		1,317,993		937,691		9,365		947,056
Write-off		(86,711)		(22,004)		(108,715)		(195,451)		(1,064)		(196,515)
Transfers		(4,806)		-		(4,806)		319,311		(24,817)		294,494
Amortization		(446,333)		(211,211)		(657,544)		(513,827)		(6,276)		(520,103)
Impairment		(7,157)		(959)		(8,116)		-		(20,001)		(20,001)
Final balance		4,135,532		116,687		4,252,219		3,271,391		104,859		3,376,250
Estimated Useful Life		5 years		Until 5 years				5 years		Until 5 years

 

Amortization expenses were included in the item "Depreciation and amortization" in the income statement.

9.       Financial liabilities

a)   Classification by nature and category

The classification, by nature and category for the purposes of valuation, of the Bank's financial liabilities other than those included in “Derivatives used as hedges”, on September 30, 2023 and December 31, 2022:

						09/30/2023
		Financial Liabilities Measured at Fair Value in Income		Financial Liabilities Measured at Amortized Cost		Total
Deposits from Brazilian Central Bank and deposits from credit institutions		-		138,098,763		138,098,763
Customer deposits		-		567,010,042		567,010,042
Marketable debt securities		6,065,021		126,565,000		132,630,021
Trading derivatives		26,590,993		-		26,590,993
Short positions		24,309,096		-		24,309,096
Debt Instruments Eligible to Compose Capital		-		19,949,728		19,949,728
Other financial liabilities		-		70,783,413		70,783,413
Total		56,965,110		922,406,946		979,372,056
						12/31/2022
		Financial Liabilities Measured at Fair Value in Income		Financial Liabilities Measured at Amortized Cost		Total
Deposits from Brazilian Central Bank and deposits from credit institutions		-		116,079,014		116,079,014
Customer deposits		-		489,953,489		489,953,489
Marketable debt securities		8,921,518		107,120,875		116,042,393
Trading derivatives		18,699,325		-		18,699,325
Short positions		22,047,423		-		22,047,423
Debt Instruments Eligible to Compose Capital		-		19,537,618		19,537,618
Other financial liabilities		-		62,593,104		62,593,104
Total		49,668,266		795,284,100		844,952,366

 

 

b)   Breakdown and details

b.1) Deposits from the Brazilian Central Bank and Deposits from credit institutions     

		09/30/2023		12/31/2022
Demand deposits (1)		4,332,620		3,520,842
Time deposits (2)		115,064,431		87,824,144
Repurchase agreements		18,701,712		24,734,028
Of which:
Backed operations with Private Securities (3)		67,728		70,188
Backed operations with Government Securities		18,633,984		24,663,840
Total		138,098,763		116,079,014

(1) Non-interest bearing accounts.                                                                                                                                                                        

(2) Includes operations with credit institutions resulting from export and import financing lines, transfers from the country (BNDES and Finame) and abroad, and other credit lines abroad.

(3) Refers primarily to repurchase agreements backed by own-issued debentures.

b.2) Client deposits

		09/30/2023		12/31/2022
Demand deposits		97,682,818		86,777,993
Current accounts (1)		40,435,603		26,607,407
Savings accounts		57,247,215		60,170,586
Time deposits		375,618,370		339,943,008
Repurchase agreements		93,708,854		63,232,488
Of which:
Backed operations with Private Securities (2)		18,943,358		17,309,369
Backed operations with Government Securities		74,765,496		45,923,119
Total		567,010,042		489,953,489

(1) Non-interest bearing accounts.                                                                                                                                                                        

(2) Refers primarily to repurchase agreements backed by own-issued debentures.

 

b.3) Bonds and securities

		09/30/2023		12/31/2022
Real Estate Credit Notes - LCI (1)		38,312,244		34,997,824
Eurobonds		16,906,998		14,508,126
Treasury Bills (2)		29,076,078		33,713,048
Agribusiness Credit Notes - LCA		33,181,315		24,045,319
Guaranteed Real Estate Bill - LIG (3)		15,153,386		8,778,076
Total		132,630,021		116,042,393

(1) Real estate credit notes are fixed income securities backed by real estate credits and secured by mortgage or fiduciary alienation of real estate. On September 30, 2023, they mature between 2023 and 2030 (12/31/2022 – with maturity between 2023 and 2028).

(2) The main characteristics of financial bills are a minimum term of two years, a minimum face value of R$ 50 and permission for early redemption of only 5% of the amount issued. On September 30, 2023, they mature between 2023 and 2033 (12/31/2022 - with maturity between 2023 and 2032).

(3) Guaranteed Real Estate Bills are fixed income securities backed by Real Estate credits guaranteed by the issuer and by a pool of real estate credits separate from the issuer's other assets. On September 30, 2023, they mature between 2024 and 2035 (12/31/2022 - with maturity between 2023 and 2035).

The changes in the balance of "Bonds and securities" in the period ended September 30, 2023 and 2022 were as follows:

		01/01 to		01/01 to
		09/30/2023		09/30/2022
Balance at beginning of the semester		116,042,393		79,036,792
Issues		54,420,276		46,802,503
Payments		(41,591,776)		(26,360,906)
Interest		5,153,018		609,150
Exchange differences and other		(1,393,890)		151,948
Balance at end of the semester		132,630,021		100,239,487

 

The composition of Eurobonds and other securities is as follows:

 

Issuance	Maturity Until	Interest Rate (a.a.)	2023	2022
2019	2027	Until 6.4% + CDI	-	32,204
2020	2027	Until 6.4% + CDI	27,910	90,069
2021	2031	Until 9% + CDI	3,429,973	6,306,335
2022	2035	Until 9% + CDI	2,298,625	8,079,519
2023	2035	Until 9% + CDI	11,150,490	-
Total			16,906,998	14,508,127

 

 

 

 

b.4) Debt Instruments Eligible to Capital

 

The details of the balance of the item "Debt Instruments Eligible to Capital" referring to the issuance of equity instruments to compose the level I and level II of the reference equity due to the Reference Equity Optimization Plan, are as follows:

	Issuance		Maturity		Issuance Value		Interest Rate (p.a.)		09/30/2023		12/31/2022
Tier I (1)	nov-18		No Maturity (Perpetual)		$1.250		7.3%		6,438,504		6,591,740
Tier II (1)	nov-18		nov-28		$1.250		6.1%		6,410,728		6,580,937
Financial Bills - Tier II (2)	Nov-21		Nov-31		$5,300		CDI+2%		6,842,506		6,133,677
Financial Bills - Tier II (2)	dec-21		dec-31		$200		CDI+2%		257,990		231,264
Total									19,949,728		19,537,618

(1) Issues were carried out through the Cayman Branch and there is no withholding income tax, and interest is paid

semi-annually, starting May 8, 2019.

(2) Financial Bills issued in November 2021 have a redemption and repurchase option.

 

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 5th (fifth) anniversary of the issue date of the Notes, at the sole discretion of the Bank or due to changes in the tax legislation applicable to the Notes; or at any time, in reason for the occurrence of certain regulatory events.

 

Changes in the balance of "Debt Instruments Eligible for Capital" in the periods ended September 30, 2023 and 2022 were

the following:

									01/01 to		01/01 to
									09/30/2023		09/30/2022
Balance at beginning of the period									19,537,618		19,641,408
Interest payment Tier I (1)									382,930		356,049
Interest payment Tier II (1)									156,015		285,247
Foreign exchange variation									498,944		178,432
Payments of interest - Tier I									(347,685)		(244,987)
Payments of interest - Tier II									(278,094)		(206,971)
Balance at end of the period									19,949,728		20,009,178

(1)   Interest remuneration related to the Level I and II Eligible Debt Instrument was recorded against the income for the period as "Interest and Similar Expenses".

 

10.   Provision for legal and administrative proceedings, commitments and other provisions

a)   Breakdown

The breakdown of the balance of “Provisions” is as follows:

		09/30/2023		12/31/2022
Pension fund provisions and similar requirements		2,342,596		1,775,202
Provisions for judicial and administrative proceedings, commitments and other provisions		8,734,488		7,339,941
Judicial and administrative proceedings under the responsibility of former controlling stockholders		496		496
Judicial and administrative proceedings		8,138,645		6,754,262
Of which:
Civil		3,051,838		2,875,936
Labor		2,827,706		1,700,752
Tax and Social Security		2,259,101		2,177,574
Provision for contingent liabilities (Note 3 b.2)		487,021		430,484
Other provisions		108,326		154,700
Total		11,077,084		9,115,143

 

b)    Tax, Social Security, Labor and Civil Provisions

Banco Santander and its subsidiaries are an integral part of legal and administrative proceedings of a tax, social security, labor and civil nature, arising in the normal course of their activities.

The provisions were constituted based on the nature, complexity and history of the actions and the loss assessment of the companies' actions based on the opinions of internal and external legal advisors. Banco Santander's policy is to fully provision the value at risk of shares whose assessment is probable loss.

Management understands that the provisions set up are sufficient to cover possible losses arising from legal and administrative proceedings as follows:

b.1) Lawsuits and Administrative Proceedings – related to Tax and Social Security                                                      

Main judicial and administrative proceedings with probable risk of loss

Banco Santander and its subsidiaries are parties to judicial and administrative proceedings related to tax and social security disputes, which are classified, based on the opinion of legal advisors, as a probable risk of loss.

Provisional Contribution on Financial Transactions (CPMF) in Customer Operations: R$1,079,014 (12/31/2022 - R$1,016,253) in the Bank and Consolidated: in may 2003, the Federal Revenue Service of Brazil issued a notice of infraction on Santander Distribuidora de Títulos e Valores Mobiliários Ltda. (Santander DTVM) and another notice at Banco Santander (Brasil) S.A. The object of the case was the collection of CPMF on operations carried out by Santander DTVM in the management of its customers' funds and clearing services provided by the Bank to Santander DTVM, which occurred during the years 2000, 2001 and 2002. The administrative process ended unfavorable for both Companies. On July 3, 2015, Banco and Santander Brasil Tecnologia S.A. (current name of Produban Serviços de Informática S.A. and Santander DTVM) filed a lawsuit seeking to annul both tax debts. Said action had an unfounded sentence and judgment, which gave rise to the filing of a Special Appeal with the STJ and an Extraordinary Appeal with the STF, which is awaiting judgment. Based on the assessment of the legal advisors, a provision was set up to cover the loss considered probable in the lawsuit.

National Social Security Institute (INSS) - R$137,082 in the Consolidated (12/31/2022 - R$133,593 in the Consolidated): Banco Santander and the subsidiaries are discussing administratively and judicially the collection of the social security contribution and the education allowance on various sums that, according to the assessment of the legal advisors, are not have salary nature

Tax on Services (ISS) - Financial Institutions R$380,106 in the Consolidated (12/31/2022 - R$319,020 in the Consolidated): Banco Santander and its subsidiaries are administratively and judicially discussing the requirement, by several municipalities, of the payment of ISS on various revenues arising from operations that are usually not classified as provision of services. In addition, other lawsuits involving ISS, classified as a possible risk of loss, are described in note 10.b.4.

b.2) Judicial and Administrative Proceedings of a Labor Nature

These are lawsuits filed by Trade Unions, Associations, the Public Ministry of Labor and former employees claiming labor rights

they understand due, in particular the payment of "overtime" and other labor rights, including processes related to retirement benefits.

 

For lawsuits considered common and similar in nature, provisions are recorded based on the historical average of lawsuits closed. Shares that do not fit the previous criteria are provisioned according to the individual assessment carried out, provisions being constituted based on the probable risk of loss, in law and case law in accordance with the assessment of loss carried out by legal advisors.

 

Former Employees of Banespa. Action distributed in 1998 by the Association of Retirees of Banespa (AFABESP) requesting the payment of half-yearly bonus provided for in Banco Banespa's regulations for approximately 8,400 former employees (retirees), according to which the payment will be made in the event that the Bank makes a profit and the distribution of this profit is approved by the board of directors. The bonus was not paid in 1994 and 1995 because the Banespa bank did not make a profit during these years. Partial payments were made between 1996 and 2000 as approved by the board of directors. The mentioned clause was excluded from the regulation in 2001. The Regional Labor Court and the Superior Labor Court condemned Santander Brazil, as the successor of Banespa, to pay the half-yearly bonus for the periods relating to the second half of 1996 and semesters of 1997. On March 20, 2019, a decision by the Federal Supreme Court (Supremo Tribunal Federal, or “STF”) rejected the extraordinary appeal filed by Banco Santander, which did not resolve the merits of the case. We filed a rescission action to annul the sentence due to AFABESP's lack of legitimacy (according to precedent No. 573,232 of the STF) or to recognize the nullity of the TRT judgment that did not summon Banco Santander About the modifying effects of the decision, as well as to suspend execution in the main process. The rescission action was dismissed, and this decision was opposed by Embargoes de Clarification, due to the absence of an explicit manifestation About the arguments brought by the Bank. About the Embargoes de Clarification the omission points were not answered as required by law, which is why it was filed Extraordinary Appeal that was denied by the TST. The Bank filed an appeal against this decision, which is pending admissibility, bearing in mind that the decisions handed down by the Superior Labor Court are contrary to an already peaceful position in the STF (precedent No. 573.232), according to which the Association needs a specific power of attorney to sue in court, and also the decision affronts constitutional precepts regarding access to justice (item XXXV of article 5 of CF) by determining payment excessive costs. Regarding the main action, in August 2021, a decision was handed down that determined that the execution be carried out individually in the corresponding forum of each defendant and AFABESP filed an appeal that was dismissed, reason why the decision became final.

 

Our legal advisors classified the risk of loss as probable. The current decisions of the court, and neither of the main proceedings, do not define a specific amount to be paid by those replaced, and the amounts must be determined on a regular basis sentence liquidation, which is why approximately 7.2 thousand individual compliance actions have already been distributed collectively.

 

On September 30, 2023, the provision is constituted based on the estimated probable loss of the individual lawsuits against the Bank

 

b.3) Judicial and Administrative Proceedings of a Civil Nature

These provisions are in general arising from: (1) lawsuits requesting revision of contractual terms and conditions or requests for monetary adjustments, including alleged effects of the implementation of various government economic plans, (2) lawsuits arising from financing agreements, (3) enforcement actions; and (4) claims for damages. For civil claims considered common and similar in nature, provisions are recorded based on the historical average of closed cases. Claims that do not meet the above criteria are provisioned according to an individual assessment carried out, and provisions are set up based on the probable risk of loss, in law and case law, in accordance with the assessment of loss made by the legal advisors.

The main proceedings classified as a probable risk of loss are described below:

Actions of an Indemnity Nature - Refers to compensation for material and/or moral damages, related to the consumer relationship, dealing mainly with issues relating to credit cards, direct consumer credit, current accounts, collection and loans and other matters. In lawsuits related to causes considered similar and usual for the business, in the normal course of the Bank's activities, the provision is set up based on the historical average of closed lawsuits. Claims that do not meet the above criteria are provisioned according to an individual assessment carried out, and provisions are set up based on the probable risk of loss, in law and case law, in accordance with the assessment of loss made by the legal advisors.

Economic Plans - They refer to judicial discussions, which claim alleged inflationary purges arising from Economic Plans (Bresser, Verão, Collor I and II), as they understand that such plans violate acquired rights related to the application of inflationary indices supposedly due to Savings Accounts, Judicial Deposits and Time Deposits (CDBs). The lawsuits are accrued based on the individual assessment of loss made by the legal advisors.

Banco Santander is also a party to public civil actions on the same matter, filed by consumer protection entities, the Public Prosecutor's Office or the Public Defender's Office. The constitution of a provision is made only for cases with probable risk, based on the requests for individual executions. The matter is still under analysis by the STF. There is jurisprudence in the STF favorable to the Banks in relation to an economic phenomenon similar to that of savings, as in the case of correction of time deposits (CDBs) and corrections applied to contracts (tablita).

However, the jurisprudence of the STF has not yet been consolidated on the constitutionality of the norms that modified the monetary standard in Brazil. On April 14, 2010, the Supreme Court of Justice (STJ) decided that the deadline for filing public civil actions that discuss the purges is 5 years from the date of the plans, but this decision has not yet become final. Thus, with this decision, a large part of the actions, as they were proposed after the 5-year period, will probably be dismissed, reducing the amounts involved. The STJ also decided that the deadline for individual savers to qualify in Public Civil Actions is also 5 years, counted from the final and unappealable decision of the respective sentence. Banco Santander believes in the success of the theses defended before these courts due to their content and foundation.

At the end of 2017, the Attorney General's Office (AGU), Bacen, the Consumer Protection Institute (Idec), the Brazilian Savings Front (Febrapo) and the Brazilian Federation of Banks (Febraban) signed an agreement that seeks to end the legal disputes over the Economic Plans.

Discussions focused on defining the amount that would be paid to each author, according to the balance in the booklet on the date of the plan. The total amount of payments will depend on the number of subscriptions, and also on the number of savers who have proven in court the existence of the account and the balance on the anniversary date of the index change. The term of agreement negotiated between the parties was ratified by the STF.

In a decision handed down by the STF, there was a national suspension of all processes that deal with the issue for the duration of the agreement, with the exception of cases in final compliance with the sentence.

On march 11, 2020, the agreement was extended by means of an amendment, with the inclusion of actions that only involve the discussion of Plano Collor I. Such extension has a period of 5 years and the ratification of the terms of the amendment took place on the 3rd of june 2020.

b.4) Contingent Tax and Social Security, Labor and Civil Liabilities Classified as Risk of Possible Loss

These are judicial and administrative proceedings of a tax and social security, labor and civil nature classified, based on the opinion of the legal advisors, as a possible risk of loss, therefore not being provisioned.

Tax lawsuits classified as a possible loss totaled R$33,631 million in Consolidated (12/31/2022 - R$31,522 million), the main processes being the following:

PIS and COFINS - Legal actions brought by Banco Santander (Brasil) S.A. and other entities of the Group to rule out the application of Law No. 9,718/98, which changes the calculation basis of the Social Integration Program (PIS) and the Contribution for Social Security Financing (COFINS), extending it to all entities' revenues, and not just revenues arising from the provision of services. In relation to the Banco Santander (Brasil) S.A. case, in 2015 the Federal Supreme Court (STF) admitted the extraordinary appeal filed by the Federal Union in relation to PIS, and dismissed the extraordinary appeal filed by the Federal Public Ministry in relation to the contribution to COFINS, confirming the decision of the Federal Regional Court in favor of Banco Santander (Brasil) S.A. in August 2007. The STF decided, through General Repercussion, Topic 372 and partially accepted the Federal Union's appeal, establishing the thesis that it applies PIS/COFINS on operating revenues arising from typical activities of financial institutions. With the publication of the ruling, the Bank presented a new appeal in relation to PIS, and is awaiting analysis. Based on the assessment of the legal advisors, the risk prognosis was classified as possible loss, with an outflow of appeal not being likely. On September 30, 2023, the amount involved is R$2,080 million. For other legal actions, the respective PIS and COFINS obligations are established.

INSS on Profit Sharing (PLR)- the Bank and its subsidiaries have legal and administrative proceedings resulting from questioning by the tax authorities, regarding the collection of social security contributions on payments made as profit sharing. As of September 30, 2023, amounts related to these proceedings totaled approximately R$8,797 millions.

Tax on Services (ISS) - Financial Institutions- Banco Santander and its subsidiaries are challenging administratively and judicially the requirement, by several municipalities, to pay ISS on various revenues arising from operations that are not usually classified as services rendered. As of September 30, 2023, the amount was approximately R$5,120 million.

Unapproved Compensation – the Bank and its affiliates are discussing administratively and judicially with the Federal Revenue Service the non-approval of tax offsets with credits resulting from overpayment or undue payment. As of September30, 2023, the amount was approximately R$4,634 million.

Amortization of Banco Real Goodwill – the Federal Revenue of Brazil issued a notice of infraction against the Bank to demand the payments of IRPJ and CSLL, including arrears charges, referring to the base period of 2009. The Tax Authorities considered that the goodwill related to the acquisition of Banco Real, amortized in the accounting before its incorporation, could not be deducted by Banco Santander for tax purposes. The notice of infraction was duly contested and we are currently awaiting judgment before the CARF. On September 30, 2023, the amount was approximately R$1,617 million.

Losses on Credit Operations - the Bank and its subsidiaries contested the tax assessments issued by the Federal Revenue Service of Brazil alleging the undue deduction of losses on credit operations from the IRPJ and CSLL calculation bases for allegedly not meeting the requirements of applicable laws. As of September 30, 2023, the amount related to this dispute is approximately R$1,864 million.

Use of CSLL Tax Losses and Negative Base – Infraction notices drawn up by the Federal Revenue Service of Brazil in 2009 for alleged undue compensation of tax losses and CSLL negative base, as a result of tax assessments drawn up in previous periods. Judgment at the administrative level is awaited. On September 30, 2023, the amount was R$1,211 million.

Amortization of Banco Sudameris Goodwill – the tax authorities issued tax assessment notices to demand payment of IRPJ and CSLL, including arrears charges, referring to the tax deduction of the amortization of the goodwill paid in the acquisition of Banco Sudameris, referring to the base period from 2007 to 2012. Banco Santander presented the respective administrative defenses, which were judged unfavorably. Currently, the lawsuits are awaiting judgment at the CARF. On September 30, 2023, the amount was approximately R$734 million.

IRPJ and CSLL - Capital Gain - the Federal Revenue Service of Brazil issued a notice of infraction against Santander Seguros (legal successor of ABN AMRO Brasil Dois Participações S.A. (AAB Dois Par) charging income tax and social contribution related to the 2005 fiscal year. Brasil alleges that the capital gain on the sale of the shares of Real Seguros S.A. and Real Vida e Previdência S.A by AAB Dois Par should be taxed at a rate of 34.0% instead of 15.0%. based on the understanding that the tax treatment adopted in the transaction was in compliance with current tax legislation and the capital gain was duly taxed. The administrative process ended unfavorably for the Company. In July 2020, the Company filed a lawsuit seeking to cancel the debt. The lawsuit awaits judgment. Banco Santander is liable for any adverse outcome in this lawsuit as the former controlling shareholder of Zurich Santander Brasil Seguros e Previdência S.A. As of September 30, 2023, the amount was approximately R$543 million.

IRRF - Foreign Remittance – The Company filed a court order seeking to avoid taxation of the Withholding Income Tax - IRRF on income derived from the provision of services performed by a company abroad, as they do not involve transfer of technology, due to the existence of International Treaties signed between Brazil- Chile; Brazil-Mexico and Brazil-Spain, avoiding double taxation – DTTs. In July 2013, in junective relief was granted to suspend the enforceability of the amounts, and therefore, the judgment prevailed. Currently, the lawsuit awaits judgment at the Federal Regional Court of the 3rd Region. As of September 30, 2023, the amount was approximately R$885 million.

Labor claims classified as a possible loss totaled R$209 million in the Consolidated, including the process below:

Readjustment of Banesprev's Retirement Supplements by the IGPDI – action filed in 2002 in the Federal Court by the Association of Retired Employees of Banco do Estado de São Paulo requesting the readjustment of the supplementary retirement by the IGPDI for Banespa retirees who were hired until May 22, 1975. The sentence granted the correction, but only in periods in which no other form of adjustment was applied. The Bank and Banesprev appealed this decision and the appeals were dismissed, which is why a Special and Extraordinary Appeal were filed, both pending judgment. In Provisional Execution, calculations were presented by the Bank and Banesprev due to the exclusion of participants who, among other reasons, are listed as plaintiffs in other actions or have already had some type of adjustment. The amount involved is not provisioned considering that there is no list of represented parties duly approved in the records, and the execution remains suspended.

 

Liabilities related to civil lawsuits with a possible risk of loss totaled R$2,830 million in Consolidated, with the following main lawsuits:

 

Indemnification Action Regarding Custody Services -provided by Banco Santander in the expert phase and still without a sentence issued

b.5) Other Lawsuits for the Liability of Former Controllers

They refer to civil actions, in the amount of R$496 (12/31/2022 – R$496) in the Bank and Consolidated, without tax and labor actions, recorded in other liabilities under the responsibility of the former controllers of Banks and acquired companies. Based on the signed contracts, these shares have guarantees of full reimbursement from the former controlling shareholders, whose respective rights were recorded in other assets.

11.   Stockholders’ equity

a)   Capital

According to the Bylaws, the share capital of Banco Santander may be increased up to the authorized capital limit, regardless of statutory amendment, upon 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, observing the legal limits established regarding the number of preferred shares. Any capital increase that exceeds this limit will require shareholder approval.

The capital stock, fully subscribed and paid, is divided into registered book-entry shares with no par value.

 

												Thousands of Shares
						09/30/2023						12/31/2022
		Common		Preferred		Total		Common		Preferred		Total
Brazilian Residents		126,075		151,612		277,687		120,850		146,392		267,242
Foreign Residents		3,692,620		3,528,224		7,220,844		3,697,845		3,533,444		7,231,289
Total		3,818,695		3,679,836		7,498,531		3,818,695		3,679,836		7,498,531
(-) Treasury Shares		(27,240)		(27,240)		(54,480)		(31,162)		(31,162)		(62,324)
Total Outstanding		3,791,455		3,652,596		7,444,051		3,787,533		3,648,674		7,436,207

 

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.

Dividends were calculated and paid in accordance with Brazilian Corporate Law.

Prior to the Annual Shareholders' Meeting, the Board of Directors may resolve on the declaration and payment of dividends on earned profits, based on: (i) balance sheets or profit reserves existing in the last balance sheet or (ii) balance sheets issued in periods of less than six months, provided that the total dividends paid in each semester of the fiscal year does not exceed the amount of capital reserves. These dividends are fully charged to the mandatory dividend.

The following distribution of dividends and interest on capital made on September 30, 2023, and December 31, 2022.

														09/30/2023
		In Thousands		Brazilian Real per Thousand Shares/Units
		of Brazilian Real		Gross						Net
				Common		Preferred		Unit		Common		Preferred		Unit
Interest on Capital (1)(4)		1,700,000		217.92		239.71		457.63		185.23		203.75		388.98
Interest on Capital (2)(4)		1,500,000		192.03		211.23		403.26		163.22		179.55		342.77
Interest on Capital (3)(4)		1,500,000		192.07		211.28		403.35		163.26		179.58		342.84
Total		4,700,000

(1) Deliberated by the Board of Directors on January 19, 2023, paid on March 6, 2023, without any remuneration as currency update.

(2) Deliberated by the Board of Directors on April 13, 2023, paid on May 15, 2023, without any remuneration as restatement.

(3) Deliberated by the Board of Directors on July 13, 2023, paid on August 16, 2023, without any payment as monetary adjustment.

(4) They were fully allocated to the minimum mandatory dividends distributed by the Bank for the 2023 financial year.

 

 

														12/31/2022
		In Thousands		Brazilian Real per Thousand Shares/Units
		of Brazilian Real		Gross						Net
				Common		Preferred		Unit		Common		Preferred		Unit
Dividends  (1)(5)		1,300,000		165.95		182.55		348.50		165.95		182.55		348.50
Interest on Capital (1)(6)		1,700,000		217.02		238.72		455.73		184.46		202.91		387.37
Dividends  (2)(6)		700,000		89.45		98.40		187.85		89.45		98.40		187.85
Interest on Capital (2)(6)		1,000,000		127.79		140.57		268.36		108.62		119.48		228.10
Interest on Capital (3)(6)		1,700,000		217.75		239.52		457.27		185.09		203.59		388.68
Dividends  (4)(6)		820,000		105.02		115.53		220.55		105.02		115.53		220.55
Interest on Capital (4)(6)		880,000		112.71		123.98		236.69		95.80		105.38		201.19
Total		8,100,000

(1) Deliberated by the Board of Directors on February 1, 2022, paid on March 4, 2022, without any remuneration as monetary adjustment.

(2) Deliberated by the Board of Directors on April 14, 2022, paid on May 16, 2022, without any remuneration as monetary adjustment.

(3) Deliberated by the Board of Directors on August 5, 2022, paid on September 6, 2022, without any remuneration as monetary adjustment

(4) Deliberated by the Board of Directors on October 13, 2022, paid on November 22, 2022, without any remuneration as an update.

(5) They were fully allocated to the minimum mandatory dividends distributed by the Bank for the 2021 financial year.

(6) They were fully allocated to the minimum mandatory dividends to be distributed by the Bank for the 2022 financial year.

 

c)   Reserves

The reserves are allocated as follows after the deductions and statutory provisions, from the net income:

 

Legal reserve

In accordance with Brazilian Corporate Law, 5% is transferred to the legal reserve, until it reaches 20% of the share capital. This reserve is designed to ensure the integrity of the capital and can only be used to offset losses or increase capital.

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 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 capital. This reserve aims to ensure funds for the payment of dividends, including in the form of  interest on equity, or any interim payment to maintain the flow of shareholders remuneration.

d)   Actions in Treasury

In a meeting held on August 2, 2022, the Board of Directors approved, in continuation of the repurchase program that expired on the same date, a new program for the repurchase of Units and ADRs issued by Banco Santander, directly or through its branch in Cayman ,to be held in treasury or later sold.

The Buyback Program covers the acquisition of up to 36,986,424 Units, representing 36,986,424 common shares and 36,986,424 preferred shares, which corresponded, on September 30, 2023, to approximately 1% of the Bank's share capital. As of September 30, 2023, Banco Santander had 374,586,900 common shares and 348,782,487 preferred shares outstanding.

The purpose of the repurchase is (1) to maximize the generation of value for shareholders through an efficient management of the capital structure; and (2) enable the payment of administrators, management-level employees and other employees of the Bank and companies under its control, under the terms of the Long-Term Incentive Plans. The term of the Buyback Program is up to 18 months from August 3, 2022, ending on February 5, 2024.

				Bank/Consolidated
				Shares in Thousands
		09/30/2023		12/31/2022
		Quantity		Quantity
		Units		Units
Treasury Shares at Beginning of the Period		31,161		15,755
Shares Acquisitions		1,272		20,297
Payment - Share-Based Compensation		(5,194)		(4,891)
Treasury Shares at Beginning of the Period		27,239		31,161
Subtotal - Treasury Shares in Thousands of Reais		R$1,106,360		R$1,217,545
Issuance Cost in Thousands of Reais		R$1,771		R$1,771
Balance of Treasury Shares in Thousands of Reais		R$1,108,131		R$1,219,316
Cost/Share Price		Units		Units
Minimum Cost (*)		R$7.55		R$7.55
Weighted Average Cost (*)		R$27.63		R$27.73
Maximum Cost (*)		R$49.55		R$49.55
Share Price		R$30.63		R$28.19

(*) Considering since the beginning of operations on the stock exchange.

 

12.   Income Tax

The total income tax for the three-months period can be reconciled to the accounting profit as follows:

	01/01 to 09/30/2023	01/01 to 09/30/2022
Operating Income before Tax	9,302,002	15,949,813
Tax (25% of Income Tax and 20% of Social Contribution)	(4,185,901)	(7,226,827)
PIS and COFINS (net of income tax and social contribution) (1)	(2,737,701)	(1,030,458)
Non - Taxable/Indeductible :
Equity instruments	72,554	61,816
Net Indeductible Expenses of Non-Taxable Income (3)	1,013,544	1,333,419
Adjustments:
IR/CS Constitution on temporary differences	(52,900)	30,149
Interest on equity	2,014,379	1,746,134
CSLL Tax rate differential effect (4)	571,351	516,973
Others Adjustments	1,435,708	52,481
Income tax and Social contribution	(1,868,966)	(4,516,313)
Of which:
Current taxes	(5,827,843)	(4,290,521)
Deferred taxes	3,958,877	(225,792)
Taxes paid in the period	5,031,876	4,904,320

(1) PIS and COFINS are considered as components of the profit base (net of certain revenues and expenses); therefore, and in accordance with IAS 12, are accounted for as income taxes.

(2) Permanent differences related to the investment in subsidiaries abroad are considered as non-taxable / deductible (see details below).

(3) Includes, mainly, the tax effect on revenues with judicial deposit updates and other income and expenses that do not fall as temporary differences.

(4) Effect of the rate differential for other non-financial and financial corporations, which social contribution rates are 9% and 15%.

 

13.   Detailing of income accounts

a)   Personnel expenses

		01/07 to 09/30/2023	01/07 to 09/30/2022		01/01 to 09/30/2023		01/01 to 09/30/2022
Salary		1,735,584	1,591,125		4,889,407		4,626,503
Social security costs		434,977	360,431		1,219,408		1,035,416
Benefits		430,501	390,130		1,237,383		1,162,775
Defined benefit pension plans		1,394	1,212		3,180		3,217
Contributions to defined contribution pension funds		31,285	44,602		147,357		123,821
Share-based payment costs		40,303	13,187		110,891		40,711
Training		12,695	17,046		43,763		45,304
Other personnel expenses		(23,027)	77,323		322,207		244,108
Total		2,663,712	2,495,056		7,973,596		7,281,855

 

b)   Other Administrative Expenses

		01/07 to 09/30/2023	01/07 to 09/30/2022		01/01 to 09/30/2023		01/01 to 09/30/2022
Property, fixtures and supplies		193,390	203,140		631,715		680,321
Technology and systems		670,028	569,341		1,728,551		1,833,164
Advertising		44,978	116,859		356,432		379,149
Communications		223,247	126,436		377,192		297,254
Subsistence allowance and travel expenses		40,612	36,167		116,138		35,409
Taxes other than income tax		30,942	31,580		102,168		108,066
Surveillance and cash courier services		124,126	133,985		400,063		417,273
Insurance premiums		4,459	6,190		21,185		13,580
Specialized and technical services		449,323	560,041		1,668,858		1,683,830
Other administrative expenses		337,522	287,579		933,052		582,259
Total		2,118,627	2,071,318		6,335,354		6,030,305