6-K 1 EDGAR_1T21_IFRS.htm EDGAR_1T21_IFRS

 

 

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 March, 2021


 

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.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

TABLE OF CONTENTS

 

 

 

Page

 

Consolidated Balance Sheet 5

Consolidated Statement of Income. 7

Consolidated Statement of Comprehensive Income. 7

Consolidated Statement of Changes in Stockholders' Equity. 9

Consolidated Statement of Cash Flows. 10

1.Introduction, presentation of condensed consolidated financial statements and other information. 11

2.Basis of consolidation. 13

3.Financial assets. 17

4.Non-current assets held for sale. 20

5.Investments in associates and joint ventures. 20

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. 29

12.Income Tax. 30

13.Detailing of income accounts. 31

14.Employee Benefit Plan. 32

15.Operating segments. 33

16.Related party transactions. 34

17.Fair value of financial assets and liabilities. 40

18.Other disclosures. 43

19.Subsequent Event 51

APPENDIX I – Consolidated Statement of Value Added. 52

Performance Report 53

Composition of Management Bodies. 65

Declaration of directors on the financial statements. 67

Directors' Statement on Independent Auditors. 67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Consolidated Balance Sheet

Bank

Note

03/31/2021

12/31/2020

Cash

30,868,413 

20,148,725 

Financial Assets Measured at Fair Value Through Profit or Loss

3.a

56,440,381 

60,900,466 

Debt instruments

3,273,898 

3,545,660 

Balances with The Brazilian Central Bank

53,166,483 

57,354,806 

Financial Assets Measured at Fair Value Through Profit or Loss Held for Trading

3.a

103,294,220 

98,466,232 

Debt instruments

68,256,331 

68,520,799 

Equity instruments

1,841,009 

1,818,276 

Trading derivatives

18.a

33,196,880 

28,127,157 

Non-Trading Financial Assets Mandatorily Measured at Fair Value Through Profit or Loss

3.a

517,507 

499,720 

Loans and advances to customers

120,991 

60,808 

Equity instruments

396,516 

438,912 

Financial Assets Measured at Fair Value Through Other Comprehensive Income

3.a

104,522,534 

109,740,387 

Debt instruments

104,475,957 

109,668,214 

Equity instruments

46,577 

72,173 

Financial Assets Measured at Amortized Cost

3.a

561,872,993 

554,924,796 

Loans and amounts due from credit institutions

85,416,750 

112,849,776 

Loans and advances to customers

422,181,194 

393,707,229 

Debt instruments

54,275,049 

48,367,791 

Hedging Derivatives

18.a

976,093 

743,463 

Non-Current Assets Held for Sale

960,943 

1,092,909 

Investments in Associates and Joint Ventures

1,147,491 

1,094,985 

Tax Assets

41,019,803 

41,063,782 

Current

3,150,328 

3,082,084 

Deferred

37,869,475 

37,981,698 

Other Assets

4,960,535 

7,222,411 

Tangible Assets

8,694,315 

9,537,111 

Intangible Assets

29,525,601 

30,766,498 

Goodwill

27,332,159 

28,360,137 

Other intangible assets

2,193,442 

2,406,361 

Total Assets

944,800,829 

936,201,485 

 


 

Liabilities and Stockholders’ Equity

 

 

 

 Bank

Notes

03/31/2021

12/31/2020

Financial Liabilities Measured at Fair Value Through Profit or Loss Held For Trading

9.a

77,378,700 

77,643,290 

Trading derivatives

18.a

37,438,039 

31,835,344 

Short positions

18.a.7

39,940,661 

45,807,946 

Financial Liabilities Measured at Fair Value Through Profit or Loss

9.a

7,217,801 

7,038,467 

Other financial liabilities

7,217,801 

7,038,467 

Financial Liabilities Measured at Amortized Cost

9.a

723,848,807 

707,288,791 

Deposits from Brazilian Central Bank and deposits from credit institutions

162,213,018 

131,656,962 

Customer deposits

441,536,293 

445,813,972 

Marketable debt securities

55,806,147 

56,875,514 

Debt Instruments Eligible to Compose Capital

14,621,611 

13,119,660 

Other financial liabilities

49,680,687 

59,822,683 

Hedging Derivatives

18.a

3,049 

144,594 

Provisions

10 

13,149,656 

13,814,978 

 Provisions for pension funds and similar obligations

3,978,455 

3,929,265 

 Provisions for judicial and administrative proceedings, commitments and other provisions

9,171,201 

9,885,713 

Tax Liabilities

8,177,368 

10,130,248 

Current

5,037,315 

5,583,653 

Deferred

3,140,053 

4,546,595 

Other Liabilities

9,718,281 

14,051,245 

Total Liabilities

839,502,611 

830,111,613 

Stockholders' Equity

106,831,535 

106,205,067 

Share Capital

11 

55,000,000 

57,000,000 

Reserves

48,487,789 

40,414,981 

Treasury shares

(709,770) 

(791,358) 

Profit for the period attributable to the Parent

4,053,516 

13,418,529 

Less: Dividends and remuneration

(3,837,085) 

Other Comprehensive Income

 

 

(1,850,732) 

 

(428,080) 

Stockholders' Equity Attributable to the Parent

104,980,803 

105,776,987 

Non - Controlling Interests

317,415 

312,885 

Total Stockholders' Equity

105,298,218 

106,089,872 

Total Liabilities and Stockholders' Equity

944,800,829 

936,201,485 

 


 

Consolidated Statement of Income

Notes

01/01 to 03/31/2021

01/01 to 03/31/2020

Interest and similar income

16,300,789 

18,617,110 

Interest expense and similar charges

(4,426,949) 

(7,180,327) 

Net Interest Income

11,873,840 

11,436,783 

Income from equity instruments

1,516 

2,396 

Income from companies accounted by the equity method

5.a

30,568 

30,125 

Fee and commission income

5,171,911 

5,510,997 

Fee and commission expense

(1,115,547) 

(1,266,046) 

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

7,286,616 

9,331,725 

Financial Assets Measured At Fair Value Through Profit Or Loss

1,010,732 

391,833 

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

6,483,275 

8,177,286 

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

63,611 

6,541 

   Financial instruments not measured at fair value through profit or loss

(148,078) 

(6,412) 

Other

(122,924) 

762,477 

Exchange differences (net)

(8,799,755) 

(22,421,929) 

Other operating expense

(233,316) 

(253,700) 

Total Income

14,215,833 

2,370,351 

Administrative expenses

(4,195,078) 

(4,188,444) 

Personnel expenses

13.a

(2,204,550) 

(2,300,596) 

Other administrative expenses

13.b

(1,990,528) 

(1,887,848) 

Depreciation and amortization

(673,352) 

(618,769) 

Tangible assets

6.a

(528,318) 

(493,419) 

Intangible assets

(145,034) 

(125,350) 

Provisions (net)

10 

(571,367) 

(629,806) 

Impairment losses on financial assets (net)

(3,573,215) 

(3,474,160) 

    Financial Instruments Measured At Amortized Cost

 3.b.2

(3,573,215) 

(3,474,160) 

Impairment losses on other assets (net)

(9,191) 

(2,377) 

Other intangible assets

(1,561) 

(4,951) 

Other assets

(7,630) 

2,574 

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

30,198 

204,414 

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

17,713 

13,021 

Operating Income Before Tax

5,241,541 

(6,325,770)

Income taxes

12 

(1,178,574) 

10,192,038 

Consolidated Net income for the period

4,062,967 

3,866,268 

Profit attributable to the Parent

4,053,516 

3,857,825 

Profit attributable to non-controlling interests

9,451

8,443 


Earnings Per Share (Brazilian Real)

Basic earnings per 1,000 shares (Brazilian Real)

Common shares

517.47 

492.73 

Preferred shares

569.22 

542.00 

Diluted earnings per 1,000 shares (Brazilian Real)

Common shares

517.47 

492.73 

Preferred shares

569.22 

542.00 

Net Profit attributable - Basic (Brazilian Real)

Common shares

1,967,891 

1,872,898 

Preferred shares

2,085,625 

1,984,927 

Net Profit attributable - Diluted (Brazilian Real)

Common shares

1,967,891 

1,872,898 

Preferred shares

2,085,625 

1,984,927 

Weighted average shares outstanding (in thousands) - basic

Common shares

3,802,874 

3,801,088 

Preferred shares

3,663,992 

3,662,229 

Weighted average shares outstanding (in thousands) - diluted

Common shares

3,802,874 

3,801,088 

Preferred shares

3,663,992 

3,662,229 

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

 

Consolidated Statement of Comprehensive Income

01/01 to 03/31/2021

01/01 to 03/31/2020

Consolidated Profit for the Period

4,062,967 

3,866,268 


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

(1,407,559)

(1,352,080)

Financial Assets Measured at Fair Value Through Other Comprehensive Income

(1,181,493)

(1,316,090)

Financial Assets Measured at Fair Value Through Other Comprehensive Income

(2,175,307) 

(2,406,869) 

Income taxes

993,814 

1,090,779 

Cash flow hedges

(226,066)

(35,990)

Valuation adjustments

(433,885) 

(89,973) 

Income taxes

207,819 

53,983 

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

(15,094)

528,078 

Defined Benefits plan

(15,094)

528,078 

Defined Benefits plan

977,213 

Income taxes

(15,094) 

(449,135) 

Total Comprehensive Income

2,640,314 

3,042,266 

Attributable to the parent

2,630,863 

3,033,823 

Attributable to non-controlling interests

9,451 

8,443 

Total

2,640,314 

3,042,266 


Consolidated Statement 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, 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

13,418,529 

13,418,529 

(1,003,154)

555,624 

105,159 

13,076,159 

32,224 

13,108,383 

Net profit

13,418,529 

13,418,529 

13,418,529 

32,224 

13,450,753 

Other comprehensive income

(1,003,154) 

555,624 

105,159 

(342,371)

(342,371)

Financial Assets Measured At Fair Value Through Other Comprehensive Income

(1,003,154) 

(1,003,154)

(1,003,154)

Pension plans

555,624 

555,624 

555,624 

Gain and loss - Cash flow and investment hedge

105,159 

105,159 

105,159 

Appropriation of net income from prior years

16,406,932 

(16,406,932) 

Option for Acquisition of Equity Instrument

(67,000) 

67,000 

Dividends and interest on capital from prior years

(10,800,000) 

10,800,000 

Dividends and interest on capital

11.b

(3,837,085) 

(3,837,085)

(3,837,085)

(3,837,085)

Share based compensation

Treasury shares

(110,223) 

(110,223)

(110,223)

(110,223)

Treasury shares income

Other

(2,443) 

(2,443)

(2,443)

(277,920) 

(280,363)

Balances at December 31, 2020

57,000,000 

40,414,981 

(791,358)

13,418,529 

(3,837,085)

106,205,067 

2,342,129 

(3,190,913)

859,370 

(438,666)

105,776,987 

312,885 

106,089,872 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2020

 

57,000,000 

 

40,414,981 

 

(791,358)

 

 

13,418,529 

 

(3,837,085)

 

106,205,067 

 

2,342,129 

 

(3,190,913)

 

859,370 

 

(438,666)

 

105,776,987 

 

312,885 

 

106,089,872 

Total comprehensive income

4,053,516 

4,053,516 

(1,181,493)

(15,094)

(226,065)

2,630,864 

9,451 

2,640,315 

Net profit

4,053,516 

4,053,516 

4,053,516 

9,451 

4,062,967 

Other comprehensive income

(1,181,493) 

(15,094) 

(226,065) 

(1,422,652)

(1,422,652)

Financial Assets Measured At Fair Value Through Other Comprehensive Income

(1,181,493) 

(1,181,493)

(1,181,493)

Pension plans

(15,094) 

(15,094)

(15,094)

Gain and loss - Cash flow and investment hedge

(226,065) 

(226,065)

(226,065)

Appropriation of net income from prior years

13,418,529 

(13,418,529) 

Spin-Off

11.a

(2,000,000) 

(1,167,674) 

(3,167,674)

(3,167,674)

(3,167,674)

Dividends and interest on capital

11.b

(3,837,085) 

3,837,085 

Treasury shares

81,588 

81,588 

81,588 

81,588 

Other

(340,962) 

(340,962)

(340,962)

(4,921) 

(345,883)

Balances as of March 31, 2021

55,000,000 

48,487,789 

(709,770)

4,053,516 

106,831,535 

1,160,636 

(3,206,007)

859,370 

(664,731)

104,980,803 

317,415 

105,298,218 

 

 

 


Consolidated Statement of Cash Flows

Note

01/01 to 03/31/2021

01/01 to 03/31/2020

1. Cash Flows From Operating Activities

Consolidated Net income for the period

4,062,967 

3,866,268 

Adjustments to profit

34,364,973 

(39,920,537)

Depreciation of tangible assets

 6-a

528,318 

493,419 

Amortization of intangible assets

145,034 

125,350 

Impairment losses on other assets (net)

9,191 

2,377 

Provisions and Impairment losses on financial assets (net)

4,144,582 

4,103,966 

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

(47.911) 

(217,435) 

Income from companies accounted by the equity method

 5-a

(30,568) 

(30,125) 

Deferred tax assets and liabilities

11 

306,791 

(4,339,480) 

Monetary Adjustment of Escrow Deposits

(235,800) 

(120,174) 

Recoverable Taxes

(166,091) 

(94,253) 

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

6,590 

(7,516) 

Effects of Changes in Foreign Exchange Rates on Assets and Liabilities

30,477,797 

(39,824,555) 

Other

(772,960) 

(12,111) 

Net (increase) decrease in operating assets

(16,418,583)

(19,185,513)

Balance with the Brazilian Central Bank

(10,719,688) 

(5) 

Financial Assets Measured At Fair Value Through Profit Or Loss

(22,044,046) 

(7,677,284) 

Other financial assets measured at fair value through profit or loss

(4,827,988) 

(18,833,268) 

Financial Assets Measured at Fair Value in Results Retained for Trading

(17,787) 

15,456 

Financial Assets Measured at Fair Value through Other Comprehensive Income

3,390,827 

(8,637,997) 

Financial Assets Measured At Amortized Cost

9,842,013 

11,157,163 

Other assets

7,958,086 

4,790,422 

Net increase (decrease) in operating liabilities

(4,711,615)

74,720,362 

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

(264.590) 

7,357,697 

Financial Liabilities Measured At Fair Value Through Profit Or Loss

(23,195) 

(1,070,427) 

Financial liabilities at amortized cost

4,651,227 

68,637,359 

Other liabilities

(9,075,057) 

(204,267) 

Tax paid

(956,576)

(1,016,605)

Total net cash flows from operating activities (1)

16,341,166 

18,463,975 

2. Cash Flows From Investing Activities

Investments

(281,087)

(536,076)

Acquisition of Minority Residual Interest in Subsidiary

Tangible assets

(281,306) 

(407,102) 

Intangible assets

62,363 

(128,974) 

Corporate Restructuring

(62,145) 

Disposal

818,841 

250,501 

Tangible assets

619,122 

103,835 

Non-Current Assets Held For Sale

181,070 

144,041 

Dividends and interest on capital received

18,649 

2,625 

Total net cash flows from investing activities (2)

537,754 

(285,575)

3. Cash Flows From Financing Activities

Acquisition of own shares

81,588 

(113,444) 

Issuance of other long-term liabilities

24,043,469 

21,315,694 

Dividends and interest on capital paid

(902,256) 

(6,829,903) 

Payments of other long-term liabilities

(26,614,051) 

(22,955,878) 

Net increase in non-controlling interests

(266,089) 

Total net cash flows from financing activities (3)

(3,132,229)

(8,849,620)

Exchange variation on Cash and Cash Equivalents (4)

(6,590) 

7,516 

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

13,740,101 

9,336,296 

Cash and cash equivalents at the beginning of the period

28,446,808 

21,443,663 

Cash and cash equivalents at the end of the period

42,186,909 

30,779,959 

 

 

 

 

 

 

 

 


1.             Introduction, presentation of condensed consolidated 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, CJ 281, Building A,  Wtorre JK - Vila Nova Conceição, 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 integrated 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 March 31, 2021 at the meeting held on April 27, 2021.

These 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 condensed consolidated financial statements

The consolidated financial statements have been prepared in accordance with the standards of the International Financial Reporting Standards (IFRS) issued by the International Accounting 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

The following changes to standards were adopted for the first time for the year beginning January 1, 2021:

• Amendments to IFRS 9, IAS 39, IFRS 7 "Financial Instruments", IFRS 4 "Insurance Contracts" and IFRS 16 "Leasing": the changes provided for in Phase 2 of the IBOR reform address issues that may affect the financial statements during the reform a reference interest rate, including the effects of changes in contractual cash flows or hedging relationships arising from the replacement of a rate with an alternative reference rate (substitution issues). The effective date of application of this amendment is January 1, 2021. The Group's contracts linked to LIBOR are being reviewed between the parties and will be updated by the respective alternative rates disclosed, plus a spread. Management estimates that the updated cash flows will be economically equivalent to the original, and does not expect material impacts related to this replacement.

The above implementations have had no significant impact on these Financial Statements.

Rules and interpretations that will come into force after March 31, 2021

As of the date of preparation of these condensed individual and consolidated financial statements, the following rules that have an effective adoption date after March 31, 2021 and have not yet been adopted by the Bank are:

· Amendment to IAS 37 “Provision, Contingent Liabilities and Contingent Assets”: in May 2020, the IASB issued this amendment to clarify that, for the purpose of assessing whether a contract is onerous, the cost of complying with the contract includes the incremental costs of fulfillment of this contract and an allocation of other costs that directly relate to the fulfillment of it. The effective date of application of this amendment is 1st. January 2022.

• IFRS 17 - In May 2017, the IASB issued the IFRS for insurance contracts that aims to replace IFRS 4. IFRS 17 is scheduled for implementation on January 1, 2023. This standard is intended to demonstrate greater transparency and information useful in the financial statements, one of the main changes being the recognition of profits as the insurance services are delivered, in order to assess the performance of insurers over time. Banco Santander is evaluating the possible impacts when adopting the standard.

· Amendment to IFRS 3 “Business Combination”: issued in May 2020, with the aim of replacing the references from the old version of the conceptual framework to the most recent one. The amendment to IFRS 3 is effective from January 1, 2022.

· Annual improvements - 2018-2020 cycle: in May 2020, the IASB issued the following changes as part of the annual improvement process, applicable from January 1, 2022:

(i) IFRS 9 - "Financial Instruments" - clarifies which rates should be included in the 10% test for the write-off of financial liabilities.

(ii) IFRS 16 - "Leasing" - amendment to example 13 in order to exclude the example of lessor payments related to improvements in the leased property.

(iii) IFRS 1 "Initial Adoption of International Financial Reporting Standards" - simplifies the application of said standard by a subsidiary that adopts IFRS for the first time after its parent company, in relation to the measurement of the accumulated amount of exchange variations.

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           

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:

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.aa to the Consolidated Financial Statements of December 31, 2020.

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 consider 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 46.c8 of the Consolidated Financial Statements of December 31, 2020, 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, 2020.

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, 2020, 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, 2020 and March 31, 2021, 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 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

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

Recovery of Defaulted Credits

1,464,627 

100.00% 

100.00% 

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

Financial

2,877 

100.00% 

100.00% 

Banco Bandepe S.A.

 

Bank

3,589 

100.00% 

100.00% 

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% 

GIRA - Gestão Integrada de Recebíveis do Agronegócio S.A.

Tecnology

380 

80.00% 

80.00% 

Rojo Entretenimento S.A.

 

Other Activities

7,417 

94.60% 

94.60% 

Sanb Promotora de Vendas e Cobrança Ltda.

 

Other Activities

6,950 

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

238,886 

100.00% 

100.00% 

Santander Brasil Tecnologia S.A.

 

Tecnology

45,371 

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% 

Santander Holding Imobiliária S.A.

 

Holding

481,196 

100.00% 

100.00% 

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

Leasing

85 

78.58% 

100.00% 

Santander Tecnologia e Inovação Ltda.

 

Other Activities

5,045 

100.00% 

100.00% 

Paytec Tecnologia em Pagamentos Ltda.

 

Other Activities

9,100 

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. (Note 2.c.j.1)

 

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

17,083 

100.00% 

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

Return Capital Serviços de Recuperação de Créditos S.A. (Note 2.c.d)

Collection and Recover of Credit Management

200

100.00% 

Paytec Logística e Armazém Ltda.

Other Activities

100 

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. (Note 2.c.g)

 

Other Activities

22,452 

50.00% 


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);                                                                                                                                           

·         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)

·         Verbena FCVS - Fundo de Investimento em Direitos Creditórios.

 

(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 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) Partial spin-off of Getnet Adquirência e Serviços para Meios de Pagamentos S.A.

After the approval of the studies and a favorable proposal from the Board of Directors of Banco Santander, on March 31, 2021, the shareholders of Banco Santander approved the partial spin-off of the Company, which will result in the segregation of the shares of its ownership issued by Getnet Adquirência e Serviços for Means of Payment SA (“Getnet”), with version of the spun-off portion for Getnet (“Partial Spin-off”). Upon the completion of the spin-off, Banco Santander shareholders will become direct shareholders in Getnet in proportion to their interest in Banco Santander share capital and Banco Santander shares and Units will now be traded with the right to receive the shares and Units issued by Banco Santander. Getnet until the cut-off date to be determined and disclosed to the market by means of a Notice to Shareholders. The cut-off date will be determined by Banco Santander in conjunction with B3 after (a) obtaining by Getnet (i) the registration as a publicly-held company; (ii) approval of its listing and admission to trading of Getnet and Units Getnet shares at B3; (iii) the registration of the Getnet Units and the Getnet shares with the Securities and Exchange Commission of the United States and (iv) the listing of Getnet's American Depositary Shares (“ADSs”) on the NASDAQ; and (b) the approval of the Partial Spin-Off by the Central Bank of Brazil.

As a result of the Spin-off, Banco Santander has its share capital reduced by a total amount of two billion reais, without the cancellation of shares, changing its share capital from fifty-seven billion reais to fifty-five billion reais.

b) Execution of a contract for the Acquisition of Paytec Tecnologia em Pagamentos Ltda. and Paytec Logística e Armazém EIRELI

On December 8, 2020, Banco Santander celebrated, with the partners and owners of Paytec Tecnologia em Payments Ltda. and Paytec Logística e Armazém Eireli (jointly "Paytec"), purchase and sale of quotas, transfer of ownership and other covenants, whereby, once the operation is completed, it will hold 100% of Paytec's share capital. Paytec acts as a logistics operator with national coverage and focused on the payments market. After the operation was approved by the Central Bank of Brazil, the operation was carried out on March 12, 2020, with Banco Santander now holding 100% of the share capital of Paytec companies.

c) Dissolution and liquidation of Santander Brasil, Establecimiento Financiero de Credito, S.A.

On November 12, 2020, by the decision of its sole partner, the dissolution and liquidation of Santander Brasil, Establecimiento Financiero de Credito, SA (whose name was changed to Santander Brasil, SAU), an offshore entity with headquarters in Spain, was approved, wholly owned by Banco Santander Brasil, which acted to complement the foreign trade strategy for corporate clients (large Brazilian companies and their operations abroad) and to offer financial products and services. The capital invested abroad was repatriated in November 2020. The deed for dissolution and liquidation of the company was registered with the Mercantile Registry of Madrid with effect on December 15, 2020. These activities are now carried out by the Bank's branch in Luxembourg.

d) Disposal of Norchem Holding e Negócios S.A. and Norchem Participações e Consultoria S.A. Investments

On October 8, 2020, Banco Santander (Brasil) SA withdrew from the board of shareholders of Norchem Participações e Consultoria SA (NPC) and Norchem Holding e Negócios SA (NHN), by means of a capital reduction in the amount of R$ 19,950 and R$ 14,770, respectively, and consequent cancellation of the shares held by Banco Santander (Brasil) S.A.

e) Signing of the Agreement for the Acquisition of Equity Interest in Toro Controle

On September 29, 2020, Pi Distribuidora de Titulos e Investimentos SA, which is indirectly controlled by Banco Santander, entered into an investment agreement and other covenants with the shareholders of Toro Controle e Participações SA (“Toro Controle”) which, once the operation is completed, will hold 60% of Toro Controle's share capital. Toro Controle is a holding company that ultimately controls Toro Corretora de Titulos e Valores Mobiliários Ltda. and Toro Investimentos S.A. (together “Toro”). Toro is an investment platform founded in Belo Horizonte in 2010. In 2018, it received the necessary authorizations and started its operation as a securities broker focused on the retail public. The completion of the transaction is subject to the signing of the definitive instruments and the implementation of certain usual conditions in this type of transaction, including the applicable regulatory approvals.

f) Signing of the Agreement for the Acquisition of Equity Interest in Gira - Gestão Integrada de Recebíveis do Agronegócio S.A.

On August 11, 2020, Banco Santander entered into a share purchase agreement and other covenants with Gira - Gestão Integrada de Recebíveis do Agronegócio S.A. Gira is a technology company that operates in the management of agribusiness receivables and has a robust technological platform, capable of adding greater security to agricultural credit operations. Upon compliance with the conditions established in the contract, in particular the applicable regulatory approvals, the parties formalized the definitive instruments on January 8, 2020. With the completion of the transaction, Banco Santander now holds 80% of Gira's share capital.

g) 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, corresponding to the equity value of the quotas on February 29, 2020, previously held by Getnet Adquirência e Serviços para Meios de Pagamento 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.

h) Disposal of the equity interest held in Super Pagamentos e Administração de Meios Eletrônicos S.A.

On February 28, 2020, the sale of the equity interest held in Super Payments and Administração de Meios Eletrônico SA was made to Superdigital Holding Company, SL a company indirectly controlled by Banco Santander, SA, of the shares representing the entire 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 a shareholder of Superdigital.

i) 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 the totality of Summer's 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 short 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.

j) Option to sell interest in Banco Olé Consignado S.A. and merger of Banco Olé Consignado S.A. and Bosan Participações S.A.

On March 14, 2019, the minority shareholder of Banco Olé Consignado SA (“Banco Olé”) formalized its interest in exercising the put option provided for in the Investment Agreement, entered into on July 30, 2014, for the sale of its interest in 40% in the share capital of Olé Consignado to Banco Santander (Brasil) SA (“Banco Santander”).

On December 20, 2019, the parties entered into a binding agreement for the acquisition, by Banco Santander, of all the shares issued by Bosan Participações S.A. (holding company whose only asset is shares representing 40% of Banco Olé's share capital).

On January 31, 2020, the Bank and the shareholders of Bosan Participações SA (“Bosan”) concluded the definitive agreement and signed the purchase and sale agreement for 100% of the shares issued by Bosan, through the transfer of Bosan's shares to the Bank and payment to sellers in the total amount of R$ 1,608,772. As a result, Banco Santander became, directly and indirectly, the holder of 100% of Banco Olé's shares.

On August 31, 2020, Banco Santander shareholders approved the merger, by the Bank, of Banco Olé Consignado SA and Bosan Participações SA The mergers did not result in an increase in the capital of Santander Brasil and are pending 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 March 31, 2021 and December 31, 2020 is shown below:

03/31/2021

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

53,166,483 

53,166,483 

Loans and amounts due from credit institutions (2)

120,991 

85,416,750 

85,537,741 

 Of which:

   Loans and amounts due from credit institutions, gross

120,991 

85,425,636 

85,546,627 

   Impairment losses (note 3-b.2)

(8,886) 

(8,886) 

Loans and advances to customers

422,181,194 

422,181,194 

 Of which:

   Loans and advances to customers, gross (1)

446,799,808 

446,799,808 

   Impairment losses (note 3-b.2)

(24,618,614) 

(24,618,614) 

Debt instruments

68,256,331 

104,475,957 

54,275,049 

227,007,337 

 Of which:

    Debt instruments, gross

68,256,331 

104,475,957 

55,947,533 

160,423,490 

   Impairment losses (note 3-b.2)

(1,672,484) 

(1,672,484) 

Equity instruments

3,273,898 

1,841,009 

396,516 

46,577 

5,558,000 

Trading derivatives

33,196,880 

33,196,880 

Total

56,440,381 

103,294,220 

517,507 

104,522,534 

561,872,993 

826,647,635 


 

 

 

 

 

 

 

 

 

 

12/31/2020

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

57,354,806 

57,354,806 

Loans and amounts due from credit institutions (2)

112,849,776 

112,849,776 

 Of which:

   Loans and amounts due from credit institutions, gross

112,858,840 

112,858,840 

   Impairment losses (note 3-b.2)

(9,064) 

(9,064) 

Loans and advances to customers

60,808 

393,707,229 

393,768,037 

 Of which:

   Loans and advances to customers, gross (1)

60,808 

417,761,218 

417,822,026 

   Impairment losses (note 3-b.2)

(24,053,989) 

(24,053,989) 

Debt instruments

3,545,660 

68,520,799 

109,668,214 

48,367,791 

230,102,464 

 Of which:

    Debt instruments

3,545,660 

68,520,799 

109,668,214 

50,422,818 

232,157,491 

   Impairment losses (note 3-b.2)

(2,055,027) 

(2,055,027) 

Equity instruments

1,818,276 

438,912 

72,173 

2,329,361 

Trading derivatives

28,127,157 

28,127,157 

Total

60,900,466 

98,466,232 

499,720 

109,740,387 

554,924,796 

824,531,601 

(1)   As of March 31, 2021, the balance recorded under “Loans and advances to customers” referring to loan portfolio operations assigned is R$51,710 (12/31/2020 - R$59,820) and R$51,509 (12/31/2020 - R$59,713) 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, 2020, 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 March 31, 2021, 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 March 31, 2021 and 2020 were the following:

01/01 a
03/31/2021

01/01 a
03/31/2020

Balance at beginning of the period

26,365,268 

 . 

22,625,750 


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

3,802,081 

3,629,873 

Write-off of impaired balances against recorded impairment allowance

(3,867,365) 

(3,432,986) 

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

26,299,984 

 . 

22,822,636 

Provision for contingent liabilities (note 9.a)

774,871 

698,706 

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

27,074,855 

 . 

23,521,342 

Loans written-off recovery

228,866 

 . 

154,988 

 

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$3,573,215 and R$3,474,885 in the period ended on March 31, 2021 and 2020, 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 March 31, 2021 and 2020 are as follows:

01/01 a 03/31/2021

01/01 a
03/31/2020

Balance at beginning of the period

22,985,983 

23,426,076 

Net additions

3,338,275 

3,574,090 

Write-off of impaired balances against recorded impairment allowance