6-K 1 EDGAR_3T20_IFRS2710.htm EDGAR_3T20_IFRS2710

 

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, 2020


 

Commission File Number: 001-34476

 

BANCO SANTANDER (BRASIL) S.A.

(Exact name of registrant as specified in its charter)

 

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

 

(Address of principal executive office)

 

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

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

Yes _______ No ___X____

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

Yes _______ No ___X____

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

Yes _______ No ___X____

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

 

 

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 Balance Sheet 5

Consolidated Income Statements. 7

Consolidated Statements of Comprehensive Income. 7

Consolidated Statements of Changes in Stockholders' Equity. 9

Cash Flows Statements. 10

1.Introduction, presentation of consolidated condensed interim financial statements and other information. 12

2.Basis of consolidation. 14

3.Financial assets. 16

4.Non-current assets held for sale. 19

5.Investments in associates and joint ventures. 19

6.Tangible assets. 21

7.Intangible assets - Goodwill 22

8.Intangible assets - Other intangible assets. 23

9.Financial liabilities. 23

10.Provision for legal and administrative proceedings, commitments and other provisions. 25

11.Stockholders’ equity. 28

12.Income Tax. 30

13.Detailing of income accounts. 31

14.Employee Benefit Plan. 31

15.Operating segments. 33

16.Related party transactions. 34

17.Fair value of financial assets and liabilities. 41

18.Other disclosures. 45

19.Subsequent Events. 54

Performance Review.. 55

Composition of Management Bodies. 63

Declaration of directors on the financial statements. 65

Directors' Statement on Independent Auditors. 66

 

 

 

 

 

 

 

 

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Consolidated Balance Sheet

Note

9/30/2020

12/31/2019

Cash

18,330,955 

20,127,364 

Financial Assets Measured At Fair Value Through Profit Or Loss

3.a

42,820,533 

32,342,306 

Debt instruments

3,583,521 

3,735,076 

Trading derivatives

287,360 

Balances With The Brazilian Central Bank

38,949,652 

28,607,230 

Financial Assets Measured At Fair Value Through Profit Or Loss  Held For Trading

3.a

81,480,147 

57,020,903 

Debt instruments

49,775,405 

34,885,631 

Equity instruments

1,429,119 

2,029,470 

Trading derivatives

18.a

30,275,623 

20,105,802 

Non-Trading Financial Assets Mandatorily Measured At Fair Value Through Profit Or Loss

3.a

368,036 

171,453 

Loans and advances to customers

26,479 

Equity instruments

341,557 

171,453 

Financial Assets Measured At Fair Value Through Other Comprehensive Income

3.a

107,073,876 

96,120,233 

Debt instruments

107,007,749 

95,962,927 

Equity instruments

66,127 

157,306 

Financial Assets Measured At Amortized Cost

3.a

542,310,043 

474,680,904 

Loans and amounts due from credit institutions

116,677,178 

109,233,128 

Loans and advances to customers

375,928,235 

326,699,480 

Debt instruments

49,704,630 

38,748,296 

Hedging Derivatives

18.a

1,321,114 

339,932 

Non-Current Assets Held For Sale

1,187,804 

1,325,335 

Investments in Associates and Joint Ventures

1,135,488 

1,070,762 

Tax Assets

46,955,864 

33,599,178 

Current

6,103,331 

3,304,116 

Deferred

40,852,533 

30,295,062 

Other Assets

8,732,479 

5,061,337 

Tangible Assets

9,515,905 

9,781,957 

Intangible Assets

30,678,292 

30,595,788 

Goodwill

28,361,953 

28,375,004 

Other intangible assets

2,316,339 

2,220,784 

Total Assets

891,910,536 

762,237,452 

 


 

LIABILITIES AND STOCKHOLDERS' EQUITY

 Bank

Notes

9/30/2020

12/31/2019

Financial Liabilities Measured At Fair Value Through Profit Or Loss  Held For Trading

9.a

68,458,455 

46,064,669 

Trading derivatives

9.a

35,744,711 

22,229,016 

Short positions

32,713,744 

23,835,653 

Financial Liabilities Measured At Fair Value Through Profit Or Loss

9.a

6,149,411 

5,319,416 

Other financial liabilities

6,149,411 

5,319,416 

Financial Liabilities Measured at Amortized Cost

9.a

675,137,211 

575,230,401 

Deposits from Brazilian Central Bank and deposits from credit institutions

87,015,664 

99,271,415 

Customer deposits

462,350,526 

336,514,597 

Marketable debt securities

60,227,261 

73,702,474 

Debt Instruments Eligible to Compose Capital

14,473,733 

10,175,961 

Other financial liabilities

51,070,027 

55,565,954 

Hedging Derivatives

18.a

232,285 

200,961 

Provisions

10 

14,510,605 

16,331,825 

 Provisions for pension funds and similar obligations

3,725,905 

4,960,620 

 Provisions for judicial and administrative proceedings, commitments and other provisions

10,784,700 

11,371,205 

Tax Liabilities

9,492,339 

10,960,075 

Current

5,020,528 

5,419,202 

Deferred

4,471,811 

5,540,873 

Other Liabilities

14,121,707 

10,920,944 

Total Liabilities

788,102,013 

665,028,291 

Stockholders' Equity

11 

104,407,684 

96,736,290 

Share Capital

57,000,000 

57,000,000 

Reserves

40,150,042 

34,877,493 

Treasury shares

(791,604) 

(681,135) 

Option for Acquisition of Equity Instrument

(67,000) 

Profit for the period attributable to the Parent

9,709,246 

16,406,932 

Less: Dividends and remuneration

(1,660,000) 

(10,800,000) 

Other Comprehensive Income

(912,321)

(85,710)

Stockholders' Equity Attributable to the Parent

103,495,363 

96,650,580 

Non - Controlling Interests

313,160 

558,581 

Total Stockholders' Equity

103,808,523 

97,209,161 

Total Liabilities and Stockholders' Equity

891,910,536 

762,237,452 

 


 

Consolidated Income Statements

Notes

7/01 to 9/30/2020

7/01 to 9/30/2019

01/01 to 09/30/2020

01/01 to 09/30/2019

Interest and similar income

14,732,550 

18,660,727 

47,995,173 

55,352,909 

Interest expense and similar charges

(3,615,934) 

(7,367,212) 

(14,749,195) 

(22,283,787) 

Net Interest Income

11,116,616 

11,293,515 

33,245,978 

33,069,122 

Income from equity instruments

5,473 

1,315 

24,075 

9,012 

Income from companies accounted by the equity method

5.a

30,964 

36,221 

80,383 

96,683 

Fee and commission income

5,080,146 

5,394,362 

15,010,993 

14,778,307 

Fee and commission expense

(1,053,579) 

(1,427,551) 

(3,215,606) 

(3,224,342) 

Gains (losses) on financial assets and liabilities (net)

711,685 

3,111,975 

14,178,134 

2,087,833 

Financial Assets Measured At Fair Value Through Profit Or Loss

135,335 

196,382 

938,618 

281,340 

Financial Assets Measured At Fair Value Through Profit Or Loss Held For Trading

(39,228) 

2,866,104 

12,790,436 

1,823,311 

Non-Trading Financial Assets Mandatorily Measured At Fair Value Through Profit Or Loss

16,381 

119,909 

119,909 

9,691 

   Financial instruments not measured at fair value through profit or loss

(25,425) 

(245,138) 

(245,138) 

(47,262) 

Other

624,622 

574,309 

574,309 

20,753 

Exchange differences (net)

(1,926,517) 

(5,779,981) 

(30,705,813) 

(3,960,374) 

Other operating expense

15,757 

(376,739) 

(422,747) 

(986,528) 

Total Income

13,980,545 

12,253,117 

28,195,397 

41,869,713 

Administrative expenses

(4,340,884) 

(4,212,194) 

(12,629,807) 

(12,433,254) 

Personnel expenses

13.a

(2,228,600) 

(2,339,695) 

(6,728,373) 

(6,929,684) 

Other administrative expenses

13.b

(2,112,284) 

(1,872,499) 

(5,901,434) 

(5,503,570) 

Depreciation and amortization

(665,287) 

(611,552) 

(1,912,200) 

(1,768,458) 

Tangible assets

6.a

(521,132) 

(477,795) 

(1,515,646) 

(1,376,681) 

Intangible assets

7.b

(144,155) 

(133,757) 

(396,554) 

(391,777) 

Provisions (net)

10 

(388,222) 

(632,120) 

(1,371,817) 

(1,904,111) 

Impairment losses on financial assets (net)

(3,835,808) 

(3,160,027) 

(13,912,998) 

(9,636,890) 

Financial Instruments Measured At Amortized Cost

 3.b.2

(3,835,808) 

(3,160,027) 

(13,912,998) 

(9,636,890) 

Gains (losses) due to derecognition of financial     assets measured at amortized cost

Impairment losses on other assets (net)

(4,737) 

4,407 

(17,006) 

(6,375) 

Other intangible assets

(677) 

(858) 

(20,477) 

(2,251) 

Other assets

(4,060) 

5,265 

3,471 

(4,124) 

Gains (losses) on disposal of assets not classified as non-current assets held for sale

706 

(8,447) 

219,622 

380 

Gains (losses) on non-current assets held for sale not classified as discontinued operations

8,768 

20,539 

36,559 

(111,091) 

Operating Income Before Tax

4,755,081 

3,653,723 

(1,392,250)

16,009,914 

Income taxes

12 

(951,086) 

308,415 

11,122,140 

(4,886,293) 

Consolidated Net income for the period

3,803,995 

3,962,138 

9,729,890 

11,123,621 

Profit attributable to the Parent

3,799,373 

3,908,035 

9,709,246 

10,953,661 

Profit attributable to non-controlling interests

4,622 

54,103 

20,644 

169,960 

Earnings Per Share (Brazilian Real)

Basic earnings per 1,000 shares (Brazilian Real)

Common shares

485.20 

498.86 

1,240.36 

1,397.86 

Preferred shares

533.72 

548.75 

1,364.40 

1,537.64 

Diluted earnings per 1,000 shares (Brazilian Real)

Common shares

485.20 

498.86 

1,240.36 

1,397.86 

Preferred shares

533.72 

548.75 

1,364.40 

1,537.64 

Net Profit attributable - Basic (Brazilian Real)

Common shares

1,843,683 

1,897,287 

4,713,669 

5,317,703 

Preferred shares

1,955,690 

2,010,748 

4,995,577 

5,635,958 

Net Profit attributable - Diluted (Brazilian Real)

Common shares

1,843,683 

1,897,287 

4,713,669 

5,317,703 

Preferred shares

1,955,690 

2,010,748 

4,995,577 

5,635,958 

Weighted average shares outstanding (in thousands) - basic

Common shares

3,799,830 

3,803,239 

3,800,235 

3,804,187 

Preferred shares

3,664,253 

3,664,253 

3,661,376 

3,665,328 

Weighted average shares outstanding (in thousands) - diluted

Common shares

3,799,830 

3,803,239 

3,800,235 

3,804,187 

Preferred shares

3,664,253 

3,664,253 

3,661,376 

3,665,328 

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

 

Consolidated Statements of Comprehensive Income

7/01 to
9/30/2020

7/01 to
9/30/2019

01/01 to 09/30/2020

01/01 to 09/30/2019

Consolidated Profit for the Period

3,803,995 

3,962,138 

9,729,890 

11,123,621 


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

(769,347)

727,261 

(1,491,586)

1,662,035 

Financial Assets Measured At Fair Value Through Other Comprehensive Income

(609,496)

628,426 

(1,621,635)

1,541,348 

Financial Assets Measured At Fair Value Through Other Comprehensive Income

(1,181,766) 

1,128,179 

(3,055,427) 

2,775,737 

Income taxes

572,270 

(499,753) 

1,433,792 

(1,234,389) 

Cash flow hedges

(159,851)

98,835 

130,049 

120,687 

Valuation adjustments

(314,188) 

181,327 

213,976 

237,686 

Amounts transferred to income statement

(6,625) 

6,767 

Income taxes

154,337 

(75,867) 

(83,927) 

(123,766) 

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

(13,275)

(9,166)

664,974 

(813,265)

Defined Benefits plan

(13,275)

(9,166)

664,974 

(813,265)

Defined Benefits plan

(132) 

437 

1,275,717 

(1,305,499) 

Income taxes

(13,143) 

(9,603) 

(610,743) 

492,234 

Total Comprehensive Income

4,330,844 

4,680,233 

8,903,278 

11,972,391 

Attributable to the parent

4,326,222 

4,626,130 

8,882,634 

11,802,431 

Attributable to non-controlling interests

4,622 

54,103 

20,644 

169,960 

Total

4,330,844 

4,680,233 

8,903,278 

11,972,391 


 

 

Consolidated Statements of Changes in Stockholders' Equity

Stockholders´ Equity Attributable to the Parent

Note

Share
Capital

Reserves

Treasury shares

Option for Acquisition of Equity Instrument

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, 2018

57,000,000 

30,377,693 

(461,432)

(1,017,000)

12,582,477 

(6,600,000)

91,881,738 

1,992,581 

(3,071,040)

859,370 

(659,774)

91,002,875 

592,585 

91,595,460 

Total comprehensive income

10,953,661 

10,953,661 

1,541,348 

(813,265)

120,687 

11,802,431 

169,960 

11,972,391 

Net profit

10,953,661 

10,953,661 

10,953,661 

169,960 

11,123,621 

Other comprehensive income

1,541,348 

(813,265) 

120,687 

848,770 

848,770 

Financial Assets Measured At Fair Value Through Other Comprehensive Income

1,541,348 

1,541,348 

1,541,348 

Pension plans

(813,265) 

(813,265)

(813,265)

Gain and loss - Cash flow and investment hedge

120,687 

120,687 

120,687 

Appropriation of net income from prior years

12,582,477 

(12,582,477) 

Option for Acquisition of Equity Instrument

(950,000) 

950,000 

Dividends and interest on capital

(6,600,000) 

3,600,000 

(3,000,000)

(3,000,000)

(3,000,000)

Share based compensation

(31,067) 

(31,067)

(31,067)

(31,067)

Treasury shares

(178,240) 

(178,240)

(178,240)

(178,240)

Treasury shares income

4,221 

(1,527) 

2,694 

2,694 

2,694 

Other

(32,733) 

(32,733)

(32,733)

(106,973) 

(139,706)

Balances at September 30, 2019

57,000,000 

35,350,591 

(641,199)

(67,000)

10,953,661 

(3,000,000)

99,596,053 

3,533,929 

(3,884,305)

859,370 

(539,087)

99,565,960 

655,572 

100,221,532 

Balances at December 31, 2019

57,000,000 

34,877,492 

(681,135)

(67,000)

16,406,932 

(10,800,000)

96,736,289 

3,345,283 

(3,746,537)

859,370 

(543,825)

96,650,580 

558,581 

97,209,161 

Total comprehensive income

9,709,246 

9,709,246 

(1,621,635)

664,974 

130,048 

8,882,633 

8,882,633 

Net profit

9,709,246 

9,709,246 

9,709,246 

9,709,246 

Other comprehensive income

(1,621,635) 

664,974 

130,048 

(826,613)

(826,613)

Financial Assets Measured At Fair Value Through Other Comprehensive Income

(1,621,635) 

(1,621,635)

(1,621,635)

Pension plans

664,974 

664,974 

664,974 

Gain and loss - Cash flow and investment hedge

130,048 

130,048 

130,048 

Appropriation of net income from prior years

16,406,932 

(16,406,932) 

Option for Acquisition of Equity Instrument

(625,690) 

67,000 

(558,690)

(558,690)

(558,690)

Dividends and interest on capital

Share based compensation

Treasury shares

(110,469) 

(110,469)

(110,469)

(110,469)

Other

291,308 

291,308 

291,308 

(245,421) 

45,887 

Balances as of September 30, 2020

57,000,000 

40,150,042 

(791,604)

9,709,246 

(1,660,000)

104,407,684 

1,723,648 

(3,081,563)

859,370 

(413,777)

103,495,362 

313,160 

103,808,522 

 

 

 


 

 

Cash Flows Statements

Note

01/01 to 09/30/2020

01/01 to 09/30/2019

1. Cash Flows From Operating Activities

Consolidated Net income for the period

9,729,890 

11,123,621 

Adjustments to profit

(3,653,404)

10,559,543 

Depreciation of tangible assets

 6-a

1,515,646 

1,376,681 

Amortization of intangible assets

396,555 

391,777 

Impairment losses on other assets (net)

17,006 

6,375 

Provisions and Impairment losses on financial assets (net)

15,284,815 

11,541,001 

Net Gains (losses) on disposal of tangible assets, investments and non-current assets held for sale

(256,181) 

110,711 

Income from companies accounted by the equity method

 5-a

(80,383) 

(96,683) 

Deferred tax assets and liabilities

12 

(14,321,510) 

(708,905) 

Monetary Adjustment of Escrow Deposits

(219,447) 

(443,041) 

Recoverable Taxes

(120,220) 

(74,437) 

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

2,295 

(507) 

Effects of Changes in Foreign Exchange Rates on Assets and Liabilities

(5,823,766) 

(1,622,643) 

Other

(48,214) 

79,214 

Net (increase) decrease in operating assets

(113,217,873)

(37,724,731)

Balance with the Brazilian Central Bank

(16,220,070) 

39,069 

Financial Assets Measured At Fair Value Through Profit Or Loss

(12,755,060) 

13,562,266 

Other financial assets measured at fair value through profit or loss

(24,459,244) 

5,100,476 

Financial Assets Measured at Fair Value in Results Retained for Trading

(196,583) 

630,866 

Financial Assets Measured at Fair Value through Other Comprehensive Income

(9,452,663) 

(4,295,618) 

Financial Assets Measured At Amortized Cost

(67,341,831) 

(52,313,508) 

Other assets

17,207,578 

(448,282) 

Net increase (decrease) in operating liabilities

146,340,483 

33,176,033 

Financial Liabilities Measured At Fair Value Through Profit Or Loss Held For Trading

22,393,786 

(6,132,848) 

Financial Liabilities Measured At Fair Value Through Profit Or Loss

627,466 

3,453,637 

Financial liabilities at amortized cost

123,203,540 

30,319,411 

Other liabilities

115,691 

5,535,833 

Tax paid

(784,097)

(4,733,342)

Total net cash flows from operating activities (1)

38,414,999 

12,401,124 

2. Cash Flows From Investing Activities

Investments

(1,889,434)

(3,299,922)

Acquisition of Minority Residual Interest in Subsidiary

(3,373) 

(1,298,630) 

Tangible assets

(1,414,874) 

(1,408,262) 

Intangible assets

(471,188) 

(547,805) 

Non-current assets held for sale

(45,245) 

Corporate Restructuring

20 

Disposal

774,333 

683,830 

Tangible assets

181,279 

80,801 

Non-Current Assets Held For Sale

447,036 

504,134 

Dividends and interest on capital received

146,018 

92,641 

Total net cash flows from investing activities (2)

(1,115,101)

(2,616,092)

3. Cash Flows From Financing Activities

Acquisition of own shares

(110,469) 

(178,240) 

Issuance of other long-term liabilities

47,640,769 

41,410,063 

Dividends and interest on capital paid

(8,429,908) 

(6,111,942) 

Payments of other long-term liabilities

(67,167,344) 

(43,268,103) 

Payments of Subordinated Debts

(9,924,747) 

Debt Instruments Eligible to Compose Capital - Payments

 

 

(458,645) 

 

(328,892) 

Net increase in non-controlling interests

(2,123) 

21,311 

Capital Increase in Subsidiaries, by Non-Controlling Interests

100,000 

Total net cash flows from financing activities (3)

(28,527,720)

(18,280,550)

Exchange variation on Cash and Cash Equivalents (4)

(2,295) 

507 

Net Increase in Cash and cash equivalents (1+2+3+4)

8,769,883 

(8,495,011)

Cash and cash equivalents at the beginning of the period

21,443,663 

25,285,160 

Cash and cash equivalents at the end of the period

30,213,546 

16,790,149 

 


 

 

 

 

Note

01/01 to 09/30/2020

01/01 to 09/30/2019

Cash and cash equivalents components

Cash

3,881,868 

14,968,079 

Loans and other

26,331,678 

1,822,070 

Total of cash and cash equivalents

30,213,546 

16,790,149 

Non-cash transactions

Foreclosure loans and other assets transferred to non-current assets held for sale

341,613 

600,251 

Dividends and interest on capital declared but not paid

1,000,000 

Supplemental information

Interest received

35,405,636 

54,637,661 

Interest paid

(13,973,268) 

(21,681,447) 

 


 


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

a)   Introduction

Banco Santander (Brasil) S.A. (Banco Santander or Bank), directly and indirectly controlled by Banco Santander, S.A., headquartered in Spain (Banco Santander Spain), is the lead institution of the Financial and Prudential Conglomerates (Conglomerate Santander) before the Central Bank of Brazil (Bacen), established as a joint-stock corporation, with head office at Avenida Presidente Juscelino Kubitschek, 2041 and 2235 – Building A - Vila Olímpia, in the City of São Paulo, State of São Paulo. Banco Santander operates as a multiple service bank, conducting its operations by means of its commercial, investment, loans, mortgage loans, leasing and foreign exchange portfolios. Through its subsidiaries, also operates in the segments of payments, management of shares’ club, securities and insurance brokerage operations, capitalization plans, consumer finance, payroll loans, digital platforms, management and recovery of non-performing loans and private pension products. The operations are conducted within the context of a group of institutions that operates in the financial market on an lintegrated basis. The corresponding benefits and costs of providing services are absorbed between them and are conducted in the normal course of business and under commutative conditions.  

The Board of Directors authorized the issue of the Condensed Consolidated Financial Statements for the period ended on September 30, 2020 at the meeting held on October 26, 2020.

These Consolidated Condensed Interim Financial Statements and the accompanying documents were the subject of a recommendation for approval issued by the Company's Audit Committee and a favorable opinion of the Company's Fiscal Council.

b)   Basis of presentation of the consolidated condensed interim financial statements

The consolidated condensed interim financial statements have been prepared in accordance with the standards of the International Financial Reporting Standards (IFRS) issued by the Accountant Standards Board (IASB), and interpretations issued by the IFRS Interpretations Committee (current name International Financial Reporting Interpretations Committee - IFRIC). All relevant information specifically related to the financial statements of Banco Santander, and only in relation to these, are being evidenced, and correspond to the information used by Banco Santander in its management.

c)   Other information       

c.1) Adoption of new standards and interpretations               

As of the date of preparation of these consolidated condensed interim financial statements, the following accounting rules  have effective adoption date after January 1, 2020 and have not yet been adopted by the Bank are

·       Changes to IFRS 9, IFRS 7 e IAS 39 - Since September 2019, the IASB has made some changes to IFRS 9 and IAS 39 as well as the related disclosure standard, IFRS 7, with respect to some specific requirements on hedge accounting. These changes are part of the phases of the IBOR project (reference rates in Europe) and aim to provide certainty about the potential effects and prepare the standard for when the new reference rates referred to in the project, which are underway by the IASB, are effective. Despite these changes having an effective date, January 2020, the agency expects the new reference rates to become effective in 2021.

Banco Santander is monitoring the phases of the IBOR project and evaluating the possible impacts that will be generated when the new rates are implemented through a Global project, so, so far, there is nothing to talk about impacts on the records made.

·       Changes to IFRS 16 - In May 2020, the IASB published an amendment to IFRS 16 that is valid for annual reports beginning on or after June 1, 2020, adding a practical file that determines that changes in the consideration paid for lease that come from any concession made due to the COVID-19 pandemic, lease modifications are not characterized.

 

It is determined that the characteristics for this modification to be characterized as a change due to COVID-19 are:

- The changes result in lower payments than those previously established;

- Payments originally due on or before June 30, 2021; and

- There are no substantial changes to the other lease terms and conditions.

If the practical expedient is adopted, there must be identification and description in the financial statements. Until the publication of this report, no situations were identified in which this practical expedient could be applied.

 

 

·       IFRS 17

In May 2017, the IASB issued the IFRS for insurance contracts that aims to replace IFRS 4. IFRS 17 is due to be implemented on January 1, 2022. This standard is intended to demonstrate greater transparency and useful information in the financial statements , one of the main changes being the recognition of profits as the delivery of insurance services is made, in order to assess the performance of insurers over time. Banco Santander is evaluating the possible impacts when adopting the standard.

c.2) Estimates used           

The consolidated results and the calculation of consolidated equity are impacted by the accounting policies, assumptions, estimates and measurement methods used by the Bank's directors in the preparation of consolidated financial statements. The Bank makes estimates and assumptions that affect the reported amounts of assets and liabilities of future periods. All estimates and assumptions required, in accordance with IFRS, are the best estimates in accordance with the applicable standard.

In consolidated financial statements, estimates are made by management of the Bank and consolidated entities in order to quantify certain assets, liabilities, revenues and expenses and disclosures of explanatory 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 disclosure of explanatory notes, are described below:

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

 

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

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

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

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

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

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

The amounts subject to the aforementioned prohibitions cannot be subject to a future disbursement obligation, and these prohibitions apply as of the publication date of Resolution No. 4,797 (on April 6, 2020) until December 31, 2020.

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

i. Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL), Social Integration Program (PIS) and Contribution for the Financing of Social Security

The income tax expense is obtained by adding the Income Tax, Social Contribution, PIS and Cofins. Current Income Tax and Social Contribution arise from the application of the respective tax rates on the real income, and the rates of PIS and Cofins applied on the respective calculation basis provided for in the specific legislation, together with the changes in deferred tax assets and liabilities recognized in the consolidated statement of income. The CSLL rate, for banks of any kind, was increased from 15% to 20% effective as of March 1, 2020, pursuant to article 32 of Constitutional Amendment 103, published on November 13, 2019.

Deferred tax assets and liabilities include temporary differences, identified as the amounts expected to be paid or recovered on the differences between the carrying amounts of the assets and liabilities and their respective bases of calculation, and accumulated tax credits and tax losses. These amounts are measured at the rates that are expected to be applied 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 deferred tax assets may be used and the deferred tax assets do not result from the initial recognition (except in one combination of business) of other assets and liabilities in an operation that does not affect either the taxable income or the taxable income. Other deferred tax assets (tax credits and accumulated tax losses) are only recognized if it is considered probable that the consolidated entities will have sufficient future taxable income for them to be used.

The deferred tax assets and liabilities recognized are revalued at the balance sheet date, and the appropriate adjustments are made 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 a technical study.

For further details in note 2.a to the Consolidated Financial Statements of December 31, 2019.

ii. 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 through 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 the Management's judgment based on information and market conditions existing at the balance sheet date.

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

The notes 2.e and 47.c8 of the Consolidated Financial Statements of December 31, 2019, present the accounting practice and sensitivity analysis for the Financial Instruments, respectively.

iii. Provisions for pension funds

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

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

Additional details are in note 2.x of the Consolidated Financial Statements of December 31, 2019.

iv. Provisions, assets and contingent liabilities

Provisions for judicial and administrative proceedings are constituted when the risk of loss of the judicial or administrative action is assessed as probable and the amounts involved are measurable with sufficient security, based on the nature, complexity and history of the actions and the opinion of the legal advisors internal and external.

The note 2.r to the Bank's consolidated financial statements for the year ended December 31, 2019, features information on provisions and contingent assets and liabilities. There were no significant changes in provisions and contingent assets and liabilities of the Bank between December 31, 2019 and March 31, 2020, the date of preparation of these consolidated financial statements.

v. Goodwill

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

The basis used for the recoverability test is the value in use and, for this purpose, the cash flow is estimated for a period of 5 years. Cash flow was prepared considering several factors, such as: (i) macroeconomic projections of interest rates, inflation, exchange rate and others; (ii) behavior and growth estimates of the national financial system; (iii) increased costs, returns, synergies and investment plan; (iv) customer behavior; and (v) growth rate and adjustments applied to flows in perpetuity. The adoption of these estimates involves the probability of future events occurring and the alteration of any of these factors could have a different result. The cash flow estimate is based on a valuation prepared by an independent expert annually or whenever there is evidence of a reduction in its recoverable amount, which is reviewed and approved by Management.

Further details are in note 7.

2.     Basis of consolidation

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

Quantity of Shares or Quotas Owned (in Thousands)

Investments

Activity

Common Shares and Quotas

Preferred Shares

Direct Participation

Participation

Controlled by Banco Santander

Santander Leasing S.A. Arrendamento Mercantil (Santander Leasing)

Leasing

85 

78.58% 

100.00% 

Santander Brasil Administradora de Consórcio Ltda. (Santander Brasil Consórcio)

Buying Club

238,886 

100.00% 

100.00% 

Banco Bandepe S.A.

Bank

3,589 

100.00% 

100.00% 

Aymoré Crédito, Financiamento e Investimento S.A. (Aymoré CFI)

Financial

2,877 

100.00% 

100.00% 

Santander CCVM

Broker

14,067,673 

14,067,673 

99.99% 

100.00% 

Santander Corretora de Seguros, Investimentos e Serviços S.A. (Santander Corretora de Seguros)

Other Activities

7,184 

100.00% 

100.00% 

Getnet S.A.

Payment Institution

69,565 

100.00% 

100.00% 

Sancap Investimentos e Participações S.A. (Sancap)

Holding

23,538,159 

100.00% 

100.00% 

Santander Brasil EFC

Financial

75 

100.00% 

100.00% 

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

Recovery of Defaulted Credits

1,464,627 

100.00% 

100.00% 

Santander Holding Imobiliária S.A.

Holding

481,196 

100.00% 

100.00% 

Santander Brasil Tecnologia S.A.

Tecnology

45,371 

100.00% 

100.00% 

Rojo Entretenimento S.A.

Other Activities

7,417 

94.60% 

94.60% 

BEN Benefícios e Serviços S.A.  (BEN Benefícios)

Other Activities

90,000 

100.00% 

100.00% 

Esfera Fidelidade S.A.

Other Activities

10,001 

100.00% 

100.00% 

Sanb Promotora de Vendas e Cobrança Ltda.

Other Activities

6,950 

100.00% 

100.00% 

Santander Tecnologia e Inovação Ltda.

Other Activities

5,045 

100.00% 

100.00% 

Toque Fale Serviços de Telemarketing Ltda. (Toque Fale)

Other Activities

75,050 

100.00% 

100.00% 

Controlled by Aymoré CFI

Banco PSA 

Bank

105 

50.00% 

Banco Hyundai Capital Brasil S.A.

Bank

150,000 

50.00% 

Controlled by Santander Leasing

PI Distribuidora de Títulos e Valores Mobiliários S.A.

Leasing

182 

100.00% 

Controlled by Sancap

Santander Capitalização S.A. (Santander Capitalização)

Capitalization

64,615 

100.00% 

Evidence Previdência S.A.

Private Pension

42,819,564 

100.00% 

Controlled by Santander Holding Imobiliária S.A.

Summer Empreendimentos Ltda.

Other Activities

17,084 

100,00% 

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

Return Capital Serviços de Recuperação de Créditos S.A.

Collection and Recover of Credit Management

200 

100.00% 

Controlled by Return Capital Serviços de Recuperação de Créditos S.A. (current name of Ipanema Empreendimentos e Participações S.A.)

Return Gestão de Recursos S.A. (atual denominação social da Gestora de Investimentos Ipanema S.A.)

Resources Management

11 

100.00% 

Jointly Controlled Companies by Sancap

Santander Auto S.A.

Other Activities

22,452 

50.00% 

Controlled by Getnet S.A

Auttar HUT Processamento de Dados Ltda. (Auttar HUT)

Other Activities

3,865 

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) (2);                                          

·         Prime 16 – Fundo de Investimento Imobiliário (atual denominação do BRL V - Fundo de Investimento Imobiliário - FII) (1);

·         Santander FI Hedge Strategies Fund (Santander FI Hedge Strategies) (2);                                                                

·         Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema VI - Não Padronizado (Fundo Investimento Ipanema NPL VI) (3);                                                                                                                                           

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

·         Santander Hermes Multimercado Crédito Privado Infraestrutura Fundo de Investimentos (5); and Fundo de Investimentos em Direitos Creditórios Atacado – Não Padronizado (6).

·         Atual - Multimarket Investment Fund Private Credit Investment Abroad (7)            

(1) Banco Santander was a creditor of certain overdue credit operations that had real estate as collateral. The operation for the recovery of these credits consists of the contribution of properties as collateral to the capital of the Real Estate Investment Fund and the consequent transfer of the Fund's quotas to Banco Santander, by means of a payment in payment of the aforementioned credit operations. At the Extraordinary General Meeting (AGE) held on October 30, 2018, the change of name from BRL V - Fundo de Investimento Imobiliário - FII to Prime 16 - Fundo de Investimento Imobiliário was approved.

(2) Banco Santander, through its subsidiaries, holds the risks and benefits of Santander Paraty and the Santander FI Hedge Strategies Sub-Fund, residing in Ireland, and both are fully consolidated in their Consolidated Condensed Financial Statements. In the Irish market, an investment fund cannot act directly and, for this reason, it was necessary to create another structure (a sub-fund), Santander FI Hedge Strategies. Santander Paraty does not have an equity position, and all records come from the financial position of Santander FI Hedge Strategies.

(3) This fund was created and started to be consolidated in September 2017. It refers to a structure in which Banco Santander sold certain credit operations, which had already been transferred to losses (operations overdue for more than 360 days) to this fund. Atual Serviços de Recuperação de Creditos e Meios Digitais S.A. (current corporate name of Atual Companhia Securitizadora de Creditos Financeiros) (Note 2.b.1), a company controlled by Banco Santander, holds 100% of the shares in this fund.

(4) This fund started to be consolidated in October 2017 and is indirectly controlled by Atual Serviços de Recuperação de Creditos e Meios Digitais S.A.

(5) This fund was consolidated in November 2018 and is controlled through Banco Bandepe S.A.

(6) This fund started to be consolidated in June 2019 and is controlled through Atual Serviços de Recuperação de Creditos e Meios Digitais S.A.

(7) This fund started to be consolidated in August 2020 and is controlled through Atual Serviços de Recuperação de Creditos e Meios Digitais S.A.

 

Corporate movements were implemented in order to reorganize the entities' operations and activities in accordance with the Santander Conglomerate business plan.

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

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

b) Put option of equity interest in Banco Olé Consignado S.A.

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

On December 20, 2019, the parties entered into a binding agreement for the acquisition, by Banco Santander, of the all the shares issued by Bosan Participações S.A. (holding company whose only asset are shares representing 40% of the capital of Banco Olé), for the total amount of R$ 1.6 billion (“Operation”), to be paid on the closing date of the Operation.

On January 31, 2020, Santander Brasil and the shareholders of Bosan Participações S.A.  (holding company whose single asset are the shares representing 40% of the corporate capital of Banco Olé) have entered into the definitive agreements and performed the closing acts related to the purchase and sale of all shares issued by Bosan, upon transferring Bosan’s shares to Santander Brasil and the payment to the sellers of the total price of R$ 1,608,772,783.47. As a result, Santander Brasil became, directly and indirectly, the holder of all shares issued by Banco Olé.

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

On March 24, 2020, the Company acquired shares representing the total share capital of Toque Fale Serviços de Telemarketing LTDA (“Toque Fale”) for the amount of R$ 1,099,854.72, corresponding to the equity value of the quotas on February 29, 2020, previously held by Getnet Adquirência e Serviços para Means of Payment SA and Auttar HUT Processamento de Dados LTDA. As a result, the Company became a direct shareholder of Toque Fale and holder of 100% of its capital.

d) Acquisition of Summer Empreendimentos Ltda.

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

e) Incorporations of Banco Olé Consignado and Bosan Participações S.A.

On August 31, 2020, the shareholders of Banco Santander (Brasil) SA (“Santander Brasil”) approved the merger, by Santander Brasil, of Banco Olé Consignado SA and Bosan Participações SA The mergers (i) did not result in an increase in the Santander Brasil's share capital; and (ii) are subject to approval by the Central Bank of Brazil.

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, 2020 and December 31 2019 is shown below:

09/30/2020

Financial Assets Measured At Fair Value Through Profit Or Loss

Financial Assets Measured At Fair Value Through Profit Or Loss  Held For Trading

Non-Trading Financial Assets Mandatorily 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

38,949,652 

38,949,652 

 

Loans and amounts due from credit institutions (2)

116,677,178 

116,677,178 

 

 Of which:

   Loans and amounts due from credit institutions, gross

116,687,004 

116,687,004 

 

   Impairment losses (note 3-b.2)

(9,826) 

(9,826) 

Loans and advances to customers

26,479 

375,928,235 

375,954,714 

 Of which:

   Loans and advances to customers, gross (1)

26,479 

399,863,458 

399,889,937 

 

   Impairment losses (note 3-b.2)

(23,935,223) 

(23,935,223) 

Debt instruments

3,583,521 

49,775,405 

107,007,749 

49,704,630 

210,071,305 

 Of which:

    Debt instruments

3,583,521 

49,775,405 

107,007,749 

51,383,998 

211,750,673 

   Impairment losses (note 3-b.2)

(1,679,368) 

(1,679,368) 

Equity instruments

1,429,119 

341,557 

66,127 

1,836,803 

Trading derivatives

287,360 

30,275,623 

30,562,983 

Total

42,820,533 

81,480,147 

368,036 

107,073,876 

542,310,043 

774,052,635 


 

12/31/2019

Financial Assets Measured At Fair Value Through Profit Or Loss

Financial Assets Measured At Fair Value Through Profit Or Loss  Held For Trading

Non-Trading Financial Assets Mandatorily 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

28,607,230 

28,607,230 

Loans and amounts due from credit institutions (2)

109,233,128 

109,233,128 

 Of which:

   Loans and amounts due from credit institutions, gross

109,246,671 

109,246,671 

   Impairment losses (note 3-b.2)

(13,543) 

(13,543) 

Loans and advances to customers

326,699,480 

326,699,480 

 Of which:

   Loans and advances to customers, gross (1)

347,256,660 

347,256,660 

   Impairment losses (note 3-b.2)

(20,557,180) 

(20,557,180) 

Debt instruments

3,735,076 

34,885,631 

95,962,927 

38,748,296 

173,331,930 

 Of which:

    Debt instruments

3,735,076 

34,885,631 

95,962,927 

40,803,323 

175,386,957 

   Impairment losses (note 3-b.2)

(2,055,027) 

(2,055,027) 

Equity instruments

2,029,470 

171,453 

157,306 

2,358,229 

Trading derivatives

20,105,802 

20,105,802 

Total

32,342,306 

57,020,903 

171,453 

96,120,233 

474,680,904 

660,335,799 

(1)   As of September 30, 2020, the balance recorded under “Loans and advances to customers” referring to loan portfolio operations assigned is R$ 59,820 (12/31/2019 - R$ 76,028) and R$ 59,713 (12/31/2019 - R$ 75,500) of “Other financial liabilities - Financial liabilities associated with the 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 note 2 to the Bank's consolidated financial statements for the year ended December 31, 2019, changes in the carrying amount of financial assets and liabilities are recognized in the consolidated statement of income and except in the case of financial assets measured at value through other comprehensive income, in which changes in fair value are temporarily recognized in consolidated shareholders' equity, under “Other comprehensive income”.

The debits or credits in "Other comprehensive income" arising from changes in fair value, remain in the Bank's consolidated shareholders' equity until the respective assets are written off, when they are then recognized in the consolidated income statement. As part of the fair value measurement process, when there is evidence of impairment losses on these instruments, the amounts are no longer recognized in equity under the item "Financial assets measured at fair value through other comprehensive income" and are reclassified to the Consolidated Income Statement by the cumulative amount on that date.

On September 30, 2020, the Bank analyzed changes 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. Consequently, the total variations in the fair value of these assets are shown in "Other comprehensive income." Changes in the balance of other comprehensive income in the interim period are recognized in the consolidated statement of Other comprehensive income.

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, 2020 and 2019 were the following:

01/01 a
09/30/2020

01/01 a
09/30/2019

Balance at beginning of the period

22,625,750 

 . 

22,969,315 

Provision for losses on financial assets and recovery of loans written off for loss – Loans and receivables

14,400,650 

10,467,110 

Write-off of impaired balances against recorded impairment allowance

(11,401,982) 

(10,918,207) 

Balance at end of the period  (Note 3.a)

25,624,417 

 . 

22,518,218 

Provision for contingent liabilities (note 9.a)

705,235 

548,664 

Total balance of allowance for impairment losses, including provisions for contingent liabilities

26,329,651 

 . 

23,066,882 

Loans written-off recovery

540,455 

 . 

830,220 

Considering the amounts recognized in “Losses due to non-recovery against income” and “Recoveries of loans written off to loss”, “Losses on financial assets - Financial assets measured at amortized cost” (previously classified as Losses on loans and receivables) totaled R$ 13,912,998 and R$ 9,636,890 in the period ended on September 30, 2020 and 2019, 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 and advances to customers” considered as non-recoverable due to credit risk in the period ended on September 30, 2020 and 2019 are as follows:

01/01 a
09/30/2020

01/01 a
09/30/2019

Balance at beginning of the period

23,426,076 

22,425,801 

Net additions

10,725,560 

11,009,495 

Write-off of impaired balances against recorded impairment allowance

(11,374,434) 

(10,918,207) 

Balance at end of the period

22,777,202 

22,517,089 

 

d) Provisions for contingent commitments

IFRS 9 requires that the provision for expected credit losses be recorded for financial guarantee contracts provided, which have not yet been honored. The provision expense that reflects the credit risk should be measured and accounted for when these guarantees are honored and the guaranteed client does not comply with its contractual obligations. Below is the movement of these provisions for the period ended on September 30, 2020 and 2019.

01/01 a
09/30/2020

01/01 a
09/30/2019

Balances at the beginning of the period

683,917 

626,267 

Constitution of provisions for contingent liabilities

21,318 

(77,603) 

Balances at the end of period (Note 3.b.2)

705,235 

548,664 

 

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 requires 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

09/30/2020

12/31/2019

Jointly Controlled by Banco Santander

Banco RCI Brasil S.A.

Bank

Brazil

39.89% 

39.89% 

Norchem Participações e Consultoria S.A. (1)

Other Activities

Brazil

50.00% 

50.00% 

Cibrasec - Companhia Brasileira de Securitização(1)(2)(6)

Securitization

Brazil

0.00% 

0.00% 

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

20.00% 

20.00% 

Campo Grande Empreendimentos (5)

Other Activities

Brazil

25.32% 

25.32% 

Santander Auto S.A.

Other Activities

Brazil

50.00% 

50.00% 

Jointly Controlled by Santander Corretora de Seguros

Webmotors S.A. (3)

Other Activities

Brazil

70.00% 

70.00% 

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

50.00% 

50.00% 

Significant Influence of Banco Santander

Norchem Holding e Negócios S.A. (1)

Other Activities

Brazil

21.75% 

21.75% 

 

09/30/2020

12/31/2019

Assets

Liabilities

Profit (Loss)

Assets

Liabilities

Profit (Loss)

Jointly Controlled by Banco Santander

12,710,797 

11,057,987 

51,847 

14,121,618 

12,502,780 

206,482 

Banco RCI Brasil S.A.

11,430,530 

10,058,586 

99,951 

13,452,716 

12,174,504 

263,851 

Norchem Participações e Consultoria S.A.

70,475 

27,781 

534 

69,865 

27,709 

1,949 

Estruturadora Brasileira de Projetos S.A. - EBP

11,562 

39 

148 

35,314 

311 

1,790 

Gestora de Inteligência de Crédito

1,126,424 

933,115 

(45,410) 

527,362 

288,643 

(56,769) 

Santander Auto S.A.

71,807 

38,466 

(3,376) 

36,361 

11,613 

(4,339) 

Jointly Controlled by Santander Corretora de Seguros

2,975,525 

1,692,770 

68,469 

2,873,140 

1,628,364 

125,439 

Webmotors S.A.

512,687 

78,856 

21,529 

484,454 

60,734 

61,212 

Tecnologia Bancária S.A. - TECBAN

2,458,594 

1,612,822 

46,735 

2,382,907 

1,564,801 

63,046 

Hyundai Corretora de Seguros

2,076 

251 

(43) 

1,909 

41 

(132) 

PSA Corretora de Seguros e Serviços Ltda.

2,168 

841 

247 

3,870 

2,788 

1,313 

Significant Influence of Banco Santander

126,877 

29,391 

(225)

126,937 

29,226 

2,650 

Norchem Holding e Negócios S.A.

126,877 

29,391 

(225) 

126,937 

29,226 

2,650 

Total

15,813,199 

12,780,148 

120,091 

17,121,695 

14,160,370 

334,571 

Investments

Results

09/30/2020

12/31/2019

01/01 a 09/30/2020

01/01 a 09/30/2019

Jointly Controlled by Banco Santander

619,667 

595,230 

39,852 

54,626 

Banco RCI Brasil S.A.

547,281 

509,890 

55,441 

61,700 

Norchem Participações e Consultoria S.A.

20,872 

21,078 

333 

796 

Cibrasec - Companhia Brasileira de Securitização

75 

Estruturadora Brasileira de Projetos S.A. - EBP

1,280 

3,889