Financial Statements of Banco Santander S.A. for 2007

FINANCIAL STATEMENTS
BANCO SANTANDER S.A.

DECEMBER 31, 2007
Banco Santander S.A. - Consolidated
Management Report
Dear Shareholders, The combination of the good performance of the

external accounts, the favorable evolution of fiscal
We present the Management Report and the Individual
accounts and the economic growth have contributed
and Consolidated Financial Statements of Banco
to the country to keep moving towards to obtain the
Santander S.A. for the year ended December 31, 2007,
Investment Grade.
prepared in accordance with Brazilian accounting
practices, established by Corporate Law, associated with
This positive environment was favorable to the
the standards of the National Monetary Council (CMN),
continuity of credit expansion, which grew 27.3% in
Central Bank of Brazil (Bacen), Brazilian Securities
2007, reaching 34.7% of GDP. In the same period,
Commission (CVM).
the unrestricted volume of corporate loans registered
a 31.4% variation and individual loans accumulated
Economic Scenario
an increase of 33.1%.
The year of 2007 was a very positive year for the
Individual loans, under payroll loans, vehicle financing
Brazilian economy, despite the turbulence in the
and credit cards rose by 33.8%, 28.6% and 27.3%,
international market, stirred by the fears of recession in
respectively, in 12 months. Savings also kept a good
the North-American economy and by the crisis in the
rhythm of growth in the year with 21.9% increase. The
credit market.
main highlights were in investment funds, demand
The gradual reduction in the interest rate process, the and savings deposits.
facility to obtain credit and the actual increase in salaries
were some of the factors led an upswing in the domestic
Corporate Restructuring
demand, boosting both retail sales, which grew by 9.6%
in 2007 (significantly higher than the 6.2% increase in
On August 31, 2006, Extraordinary Stockholders’
2006) and industry, which recorded an annual evolution
Meetings of Banco Santander Banespa S.A.
of approximately 6% (against 2.8% in 2006). The
(successor of Banco Santander Meridional S.A.),
increase in demand also contributed to raise the
Banco Santander Brasil S.A. (BSB), Banco Santander
expectations of businessmen, who expanded their
S.A. (BSSA) and Banco do Estado de São Paulo S.A.
investments. As a final result, the Gross Domestic
- Banespa (Banespa) approved the proposed
Product (GDP) is expected to grow 5.1% in 2007,
corporate restructuring with the merger of the
surpassing the 3.8% in 2006.
aforementioned banks into Banco Santander
The 4.5% inflation rate in 2007 was within the target. The Banespa S.A. As a consequence, the stockholders of
increase in relation to 2006 can be explained, mainly by BSB, BSSA and Banespa (Merged Entities) received
the increase in food prices. The basic interest rate ended shares issued by Banco Santander Banespa S.A.
2007 on 11.25%, a decrease of 200 bps in relation to (Merging Entity) and the Merged Entities were wound
December 2006. up, with Banco Santander Banespa becoming the
universal successor of the Merged Entities to all their
The increase in commodities prices and the growth in
assets, rights and obligations, and becoming the lead
Asia played an important role to keep a positive trade
institution of the financial and non-financial group with
balance. In 2007, exports grew 16% and the trade
Bacen. The Extraordinary Stockholders’ Meeting held
balance recorded a surplus of US$40 billion. International
on April 30, 2007, approved the change of the entity’s
reserves more than doubled, reaching the volume of
name from Banco Santander Banespa S.A. to Banco
US$178.4 billion and direct investments increased from
Santander S.A.
US$18.8 billion to US$33.0 billion.
The Extraordinary Stockholders Meeting held on
November 30, 2006, approved the merger of
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Management Report
Santander Banespa Companhia de Arrendamento 2. Assets and Liabilities

Mercantil into Santander Brasil Arrendamento Mercantil
S.A., which became the successor to all its assets, rights Total consolidated assets grew 13.7% in relation to
and obligation. 2006, reaching R$116,037 million. Of this amount,

R$43,725 million are represented by the credit
On March 30, 2007, the Extraordinary Stockholders
portfolio, R$20,464 million by securities and
Meetings of Santander Brasil Participações e
derivatives, mainly federal government securities, and
Empreendimentos S.A. and Santander Companhia
R$25,397 million by interbank investments.
Securitizadora de Créditos Financeiros approved the
merger of Santander Brasil Participações e Santander had R$767 million in securities classified
Empreendimentos S.A. into Santander Companhia as “held-to-maturity securities” and has the financial
Securitizadora de Créditos Financeiros. On the same capacity and intention to hold them to maturity.
date, the change of its name from Santander
Securitizadora de Créditos Financeiros to Santander The credit portfolio increased 16.6% as compared to
Participações e Serviços S.A was also approved. At the 2006, reaching R$43,725 million, with a 32.0%
Extraordinary Stockholders Meeting held on October 10, increase in individual loans, especially credit card,
2007, the name change to Santander Investimentos em payroll loan, vehicle financing and mortgage loan
Participações S.A. was approved. portfolios. The corporate loans portfolio grew only
7.7% in 2007, due to the weight in large companies
The corporate restructuring implementation streamlined
portfolio, which had a lower growth over the period in
the corporate structure and improved operational
view of the greater access to the capital market that
efficiency on administrative and operational levels.
allowed companies to diversify their sources of
financing; and appreciation of the Brazilian Real that
2007 Performance have impacted the indexed and denominated credit
portfolio in foreign currency. This was offset by the
1. Results
loan growth of small and medium companies over the
period.
As a consequence of the corporate restructuring
mentioned on Note 2 to the Financial Statements, the
The allowance for loan losses represented 4.1% of
statement of income for the year ended December 31,
the credit portfolio, against 4.3% in 2006. The credits
2007 of Banco Santander Consolidated is not
classified as AA to C represented 91.4% of the total
comparable to the income for the year ended December
credit portfolio in 2007, compared to 94.0% in 2006.
31, 2006, therefore, the analysis of income evolution is
inadequate. The total funding, including managed funds, reached
R$136,336 million, an 18.8% growth compared to
Santander ended 2007 with a net income of R$1,845 2006. Deposits increased 22.3% against 2006,
million. The results for the year showed a favorable totaling R$38,867 million. The highlight was the
evolution in business-related revenues. The business 28.1% growth of core deposits (demand and savings).
volume (deposits, managed funds and credit) rose by Managed funds increased by 35.5% compared to
25.3% in the last 12 months. 2006, reaching R$55,911 million.
In 2007, the returns on the average stockholders’ equity

and on average assets represented 21.4% and 1.7%,
respectively.
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Management Report
Stockholders’ Equity payroll and suppliers, specialized sales force and

service channels for non-customers.
Stockholders’ equity reached, on December 31, 2007,
2.2 Linkage: Santander considers as linked,
R$9,265 million, showing a 16.2% increase in relation to
customers who have at least four of the products from
December 2006, mainly as a consequence of the capital
the basic offer. Thus, the linkage strategy is based on
increase of R$1,500 million in April, 2007 and the
the offering of basic products, complementary
R$1,845 million net income over the period, partially
products (installments loans, investment funds,
offset by the distribution of dividends and interests on
insurance and pension plans) and distribution
own capital of R$2,265 million during year 2007. The
businesses (credit cards, payroll loans and vehicle
Basel Agreement Ratio, which is calculated on a
financing).
consolidated basis and takes into account the perpetual
bonds and subordinated certificates of bank deposit,
reached 14,2%, higher than the 11% minimum required 2.3 Retention: Santander has been investing in the
by Bacen. improvement of service quality and customer
relationship. For this, it relies on a customer retention
centre, information systems (SuperBase) and its
The new rules to measure the regulatory capital under
commercial force. On top of that, it successfully
Basel II Standard Method will go into effect in July 2008.
added to its structure by launching, in October, the
For this reason, Santander has been structuring its
Ombudsman, a communication channel between
processes and internal controls in order to comply with
Santander and the customer, which aims at
the requirements of the New Basel Agreement, according
continuous search for enhancement and
to the schedule established by Bacen.
improvements products, services and customer
services, in accordance with CMN 3.477 Resolution of
July 26, 2007.
Strategy
3. Distribution and Mortgage Loan Businesses:
Santander added in 2007, more than 1 million new Santander is focused on distribution businesses,
customers, as a result of its business strategy which is represented by credit cards, payroll loans and vehicle
based on four majors’ levers: financing, considered the most dynamic products in
the market. In mortgages loans, Santander has used
1. Commercial Capacity: great commercial capacity its international know how to lever business in Brazil.
located in the most attractive markets of the country, the
4. Innovative Bank: Santander has been investing on
South and Southeast.
innovative products like credit cards Free and Light,
Mortgage Loan with a 30-year line of credit, Prev 13
2. Customer Focus: the increase on number of customers
Rendas, Família Recompensa and the most recent
is based on a clear strategy of segmentation, allowing to
one, Cheque Essencial.
successfully develop each step of the relationship with
the customer: acquisition, linkage and retention.
In Small and Medium Companies business, the aim is
2.1 Acquisiton: Santander has several resources to boost these segments, consolidating them as
dedicated to conquest new customers, among them is levers of sustainable growth.
organic growth through branch network, acquisition of

In Wholesale Banking, the strategy is to strengthen its
position as a Global Relationship Bank, in line with
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Management Report
the models adopted by the Group abroad, by offering to October, Cheque Essencial, a product which allows
customers, in addition to customized solutions, customer to pay the overdrafts account balance in
competitive products and services. installments at half the usual interest rate.
Santander is one of the leading financial institutions in In the insurance business, lenders insurance reached
São Paulo State and has been expanding its operations a 10.3% of market share in 2007, which represents an
in the South and Southeast regions. Besides the Rio’s increase of 370 bps compared to the previous year.
government payroll credit rights, obtained in 2006, it The total insurance business market share increased
acquired in 2007 the payroll credit rights of the Curitiba from 0.9% to 2.3%, according to data provided by
and Florianópolis Municipal Governments among others. FENASEG (National Federation of Private insurance
Santander has a portfolio of 8 million customers around and Capitalization Companies).
the country and a distribution network of 2,104 points of

sale (branches and banking service centers) and 7,639
Employees
ATM’s.
For Santander, its team of professionals is the most
valuable asset and its competitive differential. In
Commercial and Product Highlights
December 2007, the Bank had 22,843 professionals,
Santander ended 2007 with positive results and being committed to maintaining an efficient and
consolidated its image as an innovative and strong Bank dedicated team. For this purpose, the Bank has
in the acquisition and retention of customers, evidenced internal programs that offer opportunities for
by the increased market share in credit products. The professional growth, specific programs for interns and
highlights were the business of payroll loans, individual Schools that promote continued education,
loans and credit cards, which, up to November 2007 specifically focused on the need to qualify
showed an increase of 30 bps, 40 bps and 140 bps, professionals in the business.
respectively, in 12 months. The growth of market share

for unrestricted total credit and individuals was 10 bps. Santander offers to its employees the opportunity to
over a period of 12 months. obtain international experience through several

programs: Futuros Directivos (employees’ exchange
Santander has had an aggressive commercial strategy, for Latin American countries and Spain), MBA abroad
investing in innovative products. Santander Free is one of and others. This year, another Program was
the highlights (credit card, launched in June, 2007, free launched: “Embaixador Santander”. 40 professionals
from annual and other fees to the principal account from the group, including 4 from Brazil, were selected
holder and up to five additional account holders as long among the Group to spend a month in one of the
as the card is used at least once a month), Santander countries where Santander operates in order to
Light (credit card with half the interest rates and up to develop a professional project and exchange
double the credit limit), Santander Mortgage Loans - experiences. Santander currently has multicultural
Super Casa, which had its line of credit extended from 20 teams working in more than 40 countries.
to 30 years in the third quarter, making Santander a
This people management model is in line with the
pioneer among the private banks. In addition to these
global operations which, in 2007, through the
products, Santander launched, in the end of September,
campaign “Santander is You”, tried to reinforce the
Santander Família Recompensa (a package of products,
pride in being part of the Group and show recognition
the longer the money remains invested, the more
to the 135 thousand employees around the countries
advantages and benefits the customer will have) and, in
where it operate. The distribution of 100 shares from
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Management Report
Santander Group’s to all its employees, as a celebration

of its 150 anniversary, on August 6, 2007, associating
them to the Group’s future, was another proof of this Long Short
acknowledgement. term term
Support 3
National AAA
F1+(BRA)
Fitch Scale (BRA)
Subsidiaries Ratings Local
BBB F3
Currency
Santander Brasil Arrendamento Mercantil S.A. had, as of Foreign BBB- F3
December 31, 2007, total assets of R$4,152 million, Currency
leasing operations of R$392 million and stockholders’ National

brAA+ brA-1
Scale
equity of R$481 million. Its net income for 2007 was Standard
Local
& Poor’s BB+ B
R$44 million. Currency
Foreign
BB+ B
Currency
Santander Brasil S.A. Corretora de Títulos e Valores
Mobiliários had, as of December 31, 2007, total assets
R$449 million and stockholders’ equity of R$174 million. Social Responsibility
Its net income for 2007 was R$125 million.
The mainstay of Santander’s social responsibility
Santander S.A. Corretora de Câmbio e Títulos had, as of work is the investment in education, with emphasis on
December 31, 2007, total assets of R$383 and higher education and academic research, since it
stockholders’ equity of R$137 million. Its net income for believes that this is the most efficient and direct way
2007 was R$121 million. of promoting economic and social progress in the
countries where it operates. Investments in education
Santander Asset Management Distribuidora de Títulos e are concentrated on the solid relationship network
Valores Mobiliários Ltda. had, as of December 31, 2007, that Santander Universidades has with more than 260
total assets of R$111 million, stockholders’ equity of higher education institutions all over Brazil. By means
R$71 million and investment funds managed of R$52,673 of agreements, Santander establishes a unique
million. Its net income for 2007 was R$19 million. alliance between the corporate world and the
academic world, involving more than 1,550,000
Santander S.A. Serviços Técnicos, Administrativos e de teachers and students. In Latin America and Europe,
Corretagem de Seguros had in 2007 net income of R$37 Santander has entered into over 550 academic
million, total assets and stockholders’ equity of R$200 cooperation agreements.
million and R$48 million, respectively.
To fulfill its global mission, Santander has also the
Universia Network, which gathers 1,056 partnering
Rating Agencies universities in the 11 Iberian-American countries
where it is present. The unifying element of this
Santander is rated by international rating agencies and
Network is the portal Universia, which develops and
the rating received reflects the operating performance
integrates contents and free services for the
and the high quality of its management.
academic community, in Portuguese and Spanish.
Launched in Brazil in March 2002, the portal
Universia (www.universia.com.br) has achieved, in
approximately five years, partnerships with 249
universities, with 1.9 million registered users and a
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Management Report
monthly average of 900,000 individual users (different objectives and goals and provide security and quality
people), according to data from Nielsen/NetRatings. to Santander’s customers, stockholders and related
parties .
Another successful initiative developed by Santander is
the Program Parceiros em Ação, which semiannually This structure, with its methodologies and views, and
selects education projects benefiting children, teenagers, the mains results obtained are described in our
and college students, always in partnership with annual and social reports for 2005 and 2006,
nongovernmental organizations in the South and available on the website www.santander.com.br.
Southeast regions of the country. Santander also
sponsors culture, health, community development, sports In 2007, the Operational Risks Committee was
and other projects. created to ensure the implementation of rules and
policies established by the Executive Committee for
Operational Risks, and on February 28, 2007,
Operational Risks, Internal Controls and Sarbanes-
Santander obtained the full certification of its internal
Oxley Act
control model, in compliance with Section 404 of
Santander considers operational risk management and SOX, for the year ended December 31, 2006, where
control system a strategic and competitive factor., whose no material weakness was identified. This certification
purpose is to position itself among leading institutions in complements the certification of Santander Group in
term of the best practices and procedures in operational Spain, formalized in the 20-F form filed with the SEC -
risk management, as well as for the effective Securities and Exchange Commission, on June 29,
management of the economic and regulatory capital. 2007.
Therefore, since 2001 it maintains a structure run by the
For the year ended on December 31, 2007,
Vice-presidency of Operational Risks, a specific and
Santander plans to complete in February 2008 the
independent corporate area focused on the management
second annual full certification of internal controls
and control of operational risk and on the efficiency of the
models for Spain, in compliance with Section 404 of
internal controls system.
SOX. By the time this reported was concluded, no
This Vice-presidency contributes and is responsible for material weakness had been identified that should be
the preparation and release of policies, implementation of disclosed.
tools and procedures, training and methodologies that
are part of this system and culture, allowing its
professionals to effectively identify, evaluate, monitor, Market Risks
manage, control and mitigate the identified operational
Market risk is the exposure to interest rates, foreign
risks, in their routines and business processes and daily
exchange rates, commodities prices , stock prices
support, and ensure compliance with the requirements of
and other values, according to the type of product,
CMN Resolutions 2554/1998 and 3380/2006, Susep
volume of operations, terms and conditions of the
Circular 249/2004 and Sarbanes-Oxley – SOX Act
agreement and underlying volatility.
requirements, among others.
Santander operates in accordance with global

Management, in line with its Corporate Governance
policies, within the Group’s risk tolerance level,
policy, recognizes, participates in and shares the
aligned with the objectives in Brazil and in the world.
responsibility for the continued improvement of this
With this purpose, it has developed its own Risk
structure in order to ensure the fulfillment of defined
Management model, according to the following
principles:
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Management Report
non-audit services from Deloitte Touche Tohmatsu

- Functional independence;
Auditores Independentes.
- Executive capacity supported by knowledge of and
proximity to customers;
- Global reach of the functional (different types of risks) Acknowledgements
and unique treatment to the customer;

- Collective decisions, in order to evaluate all possible The Management of Banco Santander S.A. thanks its
scenarios and do not compromise the results with customers and stockholders for their trust and its
individual decisions, including the Executive Committee employees for their efforts and dedication that have
of Credit, Market and Counterpart Risks, which sets the made the results possible.
Bank’s policies of credit and determines its inherent risks,

and the Executive Committee of Assets and Liability, São Paulo, February 6, 2008.
which is responsible for the capital management and Board of Directors
structural risks, including country-risk, liquidity and Executive Board
interest and exchange rates risks;

- Management and optimizing of the risk/return equation; (Approved at the Board of Directors’ Meeting held on
and February 6, 2008).
- Advanced risk management methodologies, such as the

Value at Risk – VaR (historical 520–day simulation, with ***
a confidence level of 99% and timeframe of one day) and

the analysis of Liquidity (contractual and operational
liquidity gap), Scenarios, Net Interest Margin Sensitivity,
Market Value of Equity Sensitivity and Contingency Plan.
The Market Risks structure is part of the Vice-presidency

of Credit and Market Risks, an independent area that
aligns risk policies taking into account the instructions
from the Bord of Directors and the Risk Division of the
Santander Group in Spain.
Further details of the structure, methodologies and

control systems are described in the 2006 and 2005
annual reports, available on the website
www.santander.com.br.
Other Information
It is Santander’s policy to restrict the services provided by

its independent auditors, so as to preserve the auditor’s
independence and objectivity in accordance with
Brazilian and international standards. In compliance with
CVM Instruction 381/2003, the Bank informs that on the
year ended on December 31, 2007, it did not contract
7
Deloitte Touche Tohmatsu
(Convenience Translation into English from the Original Previously Issued in Portuguese)
INDEPENDENT AUDITORS’ REPORT
To the Management and Stockholders of

Banco Santander S.A. (formerly Banco Santander Banespa S.A.)
São Paulo - SP
1. We have audited the accompanying individual (Bank) and consolidated balance sheets of
Banco Santander S.A. (formerly Banco Santander Banespa S.A.) and subsidiaries as of
December 31, 2007 and 2006, and the related statements of income, changes in
stockholders’ equity, and changes in financial position for the years then ended and six-
month period ended December 31, 2007, all expressed in Brazilian reais and prepared under
the responsibility of the Bank’s management. Our responsibility is to express an opinion on
these financial statements.
2. Our audits were conducted in accordance with auditing standards in Brazil and comprised:
(a) planning of the work, taking into consideration the significance of the balances, volume
of transactions, and the accounting and internal control systems of the Bank and its
subsidiaries; (b) checking, on a test basis, the evidence and records that support the amounts
and accounting information disclosed; and (c) evaluating the significant accounting
practices and estimates adopted by Management, as well as the presentation of the financial
statements taken as a whole.
3. In our opinion, the financial statements referred to in paragraph 1 present fairly, in all
material respects, the individual and consolidated financial positions of Banco Santander
S.A. and subsidiaries as of December 31, 2007 and 2006, and the results of their operations,
the changes in stockholders’ equity, and the changes in their financial positions for the years
then ended and six-month period ended December 31, 2007 in conformity with Brazilian
accounting practices.
4. Our audits were conducted for the purpose of forming an opinion on the financial statements
referred to in paragraph 1 taken as a whole. The accompanying individual and consolidated
statements of cash flows and value added are presented for purposes of additional analysis
and are not a required part of the basic financial statements in conformity with Brazilian
accounting practices as of December 31, 2007. Such information has been subjected to the
auditing procedures described in paragraph 2 and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.
8
Deloitte Touche Tohmatsu
5. As mentioned in Note 2, Banco Santander S.A. was created from the merger of Banco
Santander Brasil S.A. (BSB), Banco Santander S.A. (BSSA) and Banco do Estado de São
Paulo S.A. - BANESPA (Banespa) and Banco Santander Meridional S.A., which occurred
based on the account balances as of June 30, 2006, and were approved by the Central Bank
of Brazil and the Brazilian Securities Commission (CVM).
6. The accompanying financial statements have been translated into English for the
convenience of readers outside Brazil.
São Paulo, February 1, 2008
DELOITTE TOUCHE TOHMATSU Francisco A.M. Sant’Anna

Auditores Independentes Engagement Partner
9
BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2006
(In thousands of Brazilian reais - R$, unless otherwise stated)
Bank Consolidated
2007 2006 2007 2006
CURRENT ASSETS 80,628,674 66,188,689 79,709,547 65,359,913

Cash 1,641,665 1,177,725 1,641,705 1,179,015
Interbank investments (Note 5) 24,757,573 4,742,810 24,749,457 4,727,095
Money market investments 21,929,663 3,268,810 21,929,663 3,268,810
Interbank deposits 1,053,306 617,509 1,045,190 601,794
Foreign currency investments 1,774,604 856,491 1,774,604 856,491
Securities and Derivatives (Note 6) 15,300,972 29,831,271 14,024,674 28,638,803
Own portfolio 6,707,436 10,215,330 6,821,238 10,265,574
Subject to resale commitments 1,588,580 8,325,658 113,871 7,054,335
Derivatives (Note 34) 2,616,361 651,419 2,614,123 649,977
Linked to trading portfolio operations - 6,764,674 - 6,764,674
Linked to Central Bank of Brazil 2,885,974 2,406,323 2,885,974 2,406,323
Privatization certificates 49,879 20,193 49,879 20,193
Linked to guarantees 1,452,742 1,447,674 1,539,589 1,477,727
Interbank accounts (Note 7) 6,089,045 4,746,885 6,089,045 4,746,885
Payments and receipts pending settlement 4,013 2,245 4,013 2,245
Restricted deposits:
Central Bank of Brazil 5,990,805 4,732,979 5,990,805 4,732,979
National Housing System 88,257 8,252 88,257 8,252
Correspondents 5,970 3,409 5,970 3,409
Interbranch accounts 984 2,009 984 2,009
Internal transfers of funds 984 2,009 984 2,009
Lending operations (Note 8) 20,259,501 17,526,528 20,251,589 17,516,283
Public sector 28,719 42,370 25,865 39,875
Private sector 20,448,734 17,722,071 20,443,442 17,712,609
Allowance for loan losses (217,952) (237,913) (217,718) (236,201)
Leasing operations (Note 8) 10,374 24,995 214,355 232,512
Private sector 10,374 24,995 217,342 237,847
Allowance for doubtful lease receivables - - (2,987) (5,335)
Other receivables 12,122,138 7,863,070 12,289,405 8,043,771
Receivables for guarantees honored 95 442 95 442
Foreign exchange portfolio (Note 9) 8,401,776 4,466,491 8,401,776 4,466,491
Income receivable 288,510 199,074 151,307 177,919
Trading account (Note 10) 310,460 259,970 582,551 423,797
Tax credits (Note 11) 1,045,318 1,231,019 1,064,481 1,246,830
Other (Note 12) 2,093,621 1,720,604 2,107,395 1,742,822
Allowance for losses on other receivables (Note 8) (17,642) (14,530) (18,200) (14,530)
Other assets 446,422 273,396 448,333 273,540
Other assets (Note 13) 187,438 213,768 192,835 220,376
Allowance for valuation (Note 13) (155,438) (168,334) (160,835) (174,942)
Prepaid expenses (Note 14) 414,422 227,962 416,333 228,106
(Continues)
10

(In thousands of Brazilian reais - R$, unless otherwise stated) (Continuation)
Bank Consolidated
2007 2006 2007 2006
LONG-TERM ASSETS 36,030,615 36,078,760 34,688,468 34,904,937

Interbank investments (Note 5) 647,501 582,246 647,501 582,246
Interbank deposits 647,701 582,446 647,701 582,446
Allowance for losses (200) (200) (200) (200)
Securities and derivatives (Note 6) 8,344,193 12,643,210 6,439,763 10,991,875
Own portfolio 1,496,746 1,766,991 1,474,696 1,803,615
Subject to resale commitments 2,110,168 8,555,474 204,554 6,842,448
Derivatives (Note 34) 803,951 525,501 802,850 523,441
Linked to Central Bank of Brazil 1,846,997 - 1,846,997 -
Privatization certificates 1,207 52,373 1,207 52,373
Linked to guarantees 2,085,124 1,742,871 2,109,459 1,769,998
Interbank accounts (Note 7) 64,236 60,365 64,236 60,365
Restricted deposits:
National Housing System 64,236 60,365 64,236 60,365
Lending operations (Note 8) 17,367,178 15,076,280 17,338,251 15,043,886
Public sector 149,126 138,484 143,415 130,997
Private sector 18,751,179 16,249,189 18,727,178 16,224,282
Allowance for loan losses (1,533,127) (1,311,393) (1,532,342) (1,311,393)
Leasing operations (Note 8) - 12,618 181,388 157,696
Private sector - 12,618 184,864 164,437
Allowance for doubtful lease receivables - - (3,476) (6,741)
Other receivables 8,435,606 7,218,219 8,842,785 7,582,922
Receivables for guarantees honored 463 3,199 463 3,199
Income receivable 20,026 20,016 20,026 20,016
Tax credits (Note 11) 2,585,700 2,259,932 2,691,920 2,344,545
Other (Note 12) 3,713,713 3,503,348 4,017,121 3,788,560
Allowance for losses on other receivables (Note 8) (28,701) (42,802) (31,150) (47,924)
Other assets 1,171,901 485,822 1,174,544 485,947
Temporary investments (Note 13) 10,067 12,076 10,075 12,085
Allowance for losses (Note 13) (647) (647) (655) (655)
Prepaid expenses (Note 14) 1,162,481 474,393 1,165,124 474,517
PERMANENT ASSETS 2,814,584 2,703,754 1,638,921 1,762,249

Investments 1,288,833 1,063,910 110,965 120,046
Investments in affiliates and subsidiaries (Note 16)
Domestic 1,268,418 1,036,149 19,287 16,336
Other investments 36,039 44,254 111,769 127,902
Allowance for losses (15,624) (16,493) (20,091) (24,192)
Property and equipment in use (Note 17) 704,050 680,553 706,148 682,766
Real estate 308,662 281,535 311,585 284,458
Other 1,475,349 1,399,348 1,476,499 1,400,499
Accumulated depreciation (1,079,961) (1,000,330) (1,081,936) (1,002,191)
Deferred charges (Note 18) 821,701 959,291 821,808 959,437
Organization and expansion costs 2,067,709 2,014,805 2,067,923 2,015,016
Accumulated amortization (1,246,008) (1,055,514) (1,246,115) (1,055,579)
TOTAL ASSETS 119,473,873 104,971,203 116,036,936 102,027,099
The accompanying notes are an integral part of these financial statements.
11

Bank Consolidated
2007 2006 2007 2006
CURRENT LIABILITIES 79,400,360 67,904,862 76,142,723 66,419,740

Deposits (Note 19.a) 31,960,657 24,618,596 28,461,371 23,053,269
Demand deposits 6,257,913 4,737,143 6,251,442 4,730,812
Savings deposits 6,288,137 5,061,171 6,288,137 5,061,171
Interbank deposits 3,791,673 1,794,901 306,957 239,555
Time deposits 15,225,667 12,708,776 15,217,568 12,705,126
Other deposits 397,267 316,605 397,267 316,605
Money market funding (Note 19.b) 20,706,678 23,093,563 20,652,082 22,958,026
Own portfolio 1,324,407 14,328,106 1,324,407 14,312,606
Third parties 19,382,271 1,761,327 19,327,675 1,641,290
Linked to trading portfolio operations - 7,004,130 - 7,004,130
Funds from acceptance and issuance of securities (Note 19.c) 1,143,288 257,400 1,143,288 257,400
Securities issued abroad 715,645 131,113 715,645 131,113
Real estate credit notes 427,643 126,287 427,643 126,287
Interbank accounts 656 2,105 656 2,105
Correspondents 656 2,105 656 2,105
Interbranch accounts 549,172 880,801 549,172 880,801
Third-party funds in transit 548,030 877,888 548,030 877,888
Internal transfers of funds 1,142 2,913 1,142 2,913
Borrowings (Note 19.d) 6,465,748 5,220,867 6,465,748 5,220,867
Foreign borrowings 6,465,748 5,220,867 6,465,748 5,220,867
Domestic onlendings - official institutions (Note 19.d) 1,914,972 1,484,559 1,914,972 1,484,559
National Economic and Social Development Bank (BNDES) 991,912 710,448 991,912 710,448
Federal Savings and Loan Bank (CEF) 12,679 15,562 12,679 15,562
National Equipment Financing Authority (FINAME) 707,854 550,832 707,854 550,832
Other institutions 202,527 207,717 202,527 207,717
Derivatives (Note 34) 3,226,639 1,361,055 3,226,346 1,360,938
Derivatives 3,226,639 1,361,055 3,226,346 1,360,938
Other payables 13,432,550 10,985,916 13,729,088 11,201,775
Collected taxes and other 23,912 36,479 23,912 36,479
Social and statutory 1,527,849 1,018,512 1,528,152 1,018,684
Tax and social security (Note 20) 156,927 121,612 191,726 144,565
Subordinated debts (Note 21) 2,140 2,584 2,140 2,584
Other (Note 22) 4,714,958 6,351,468 4,706,948 6,380,149
(Continues)
12

(In thousands of Brazilian reais - R$, unless otherwise stated) (Continuation)
Bank Consolidated
2007 2006 2007 2006
LONG-TERM LIABILITIES 30,693,189 29,004,921 30,550,671 27,590,169

Deposits (Note 19.a) 10,973,892 10,502,974 10,405,516 8,739,115
Interbank deposits 211,639 1,608,280 2,714 11,880
Time deposits 10,762,253 8,894,694 10,402,802 8,727,235
Money market funding (Note 19.b) 2,462,758 2,516,682 2,462,758 2,516,682
Own portfolio 2,462,758 2,516,682 2,462,758 2,516,682
Funds from acceptance and issuance of securities (Note 19.c) 773,114 1,177,933 773,114 1,177,933
Securities issued abroad 773,114 1,150,634 773,114 1,150,634
Real estate credit notes - 27,299 - 27,299
Borrowings (Note 19.d) 816,788 747,781 816,788 747,781
Foreign borrowings 816,788 747,781 816,788 747,781
Domestic onlendings - official institutions (Note 19.d) 2,465,420 2,507,434 2,465,420 2,507,434
National Economic and Social Development Bank (BNDES) 1,399,071 1,486,117 1,399,071 1,486,117
Federal Savings and Loan Bank (CEF) 14,979 26,052 14,979 26,052
National Equipment Financing Authority (FINAME) 1,016,137 966,296 1,016,137 966,296
Other institutions 35,233 28,969 35,233 28,969
Derivatives (Note 34) 1,340,916 650,230 1,337,785 650,140
Derivatives 1,340,916 650,230 1,337,785 650,140
Other payables 11,860,301 10,901,887 12,289,290 11,251,084
Tax and social security (Note 20) 3,402,599 2,804,741 3,746,898 3,100,811
Subordinated debts (Note 21) 4,217,485 4,033,455 4,217,485 4,033,455
Other (Note 22) 2,049,088 2,493,188 2,133,778 2,546,315
DEFERRED INCOME 78,892 41,522 78,892 41,522

Deferred income 78,892 41,522 78,892 41,522
MINORITY INTEREST - - 57 57
STOCKHOLDERS' EQUITY 9,301,432 8,019,898 9,264,593 7,975,611

Capital: (Note 24.a)
Brazilian residents 159,848 138,184 159,848 138,184
Foreign residents 8,171,600 6,693,264 8,171,600 6,693,264
Capital reserves 22,130 24,747 22,130 24,747
Profit reserves 605,416 886,419 605,416 886,419
Adjustment to fair value - securities and derivatives 342,438 131,467 342,438 131,467
Retained earnings/accumulated deficit (Note 24.e) - 145,817 (36,839) 101,530
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 119,473,873 104,971,203 116,036,936 102,027,099
13

STATEMENTS OF INCOME FOR THE YEARS ENDED
DECEMBER 31, 2007 AND 2006 AND SIX-MONTH PERIOD
ENDED DECEMBER 31, 2007
Bank Consolidated
2nd half Year Year
2007 2007 2006 2007 2006
FINANCIAL INCOME 7,321,375 14,600,226 7,415,307 14,424,304 7,307,110

Lending operations 4,152,044 7,834,678 3,827,317 7,935,791 3,869,479
Leasing operations 759 2,065 2,150 57,375 35,976
Securities transactions 2,795,817 6,087,091 3,058,617 5,753,307 2,880,645
Derivatives 180,323 299,913 327,270 301,352 321,057
Compulsory investments 192,432 376,479 199,953 376,479 199,953
FINANCIAL EXPENSES (4,875,064) (8,994,461) (4,566,219) (8,575,234) (4,356,119)

Funding operations (3,583,112) (6,559,456) (3,537,890) (6,145,942) (3,324,831)
Borrowings and onlendings (250,505) (297,504) (284,173) (297,504) (284,190)
Foreign exchange operations 122,597 (47,313) 55,801 (47,313) 55,801
Allowance for loan losses (Note 8.d) (1,164,044) (2,090,188) (799,957) (2,084,475) (802,899)
GROSS PROFIT FROM FINANCIAL OPERATIONS 2,446,311 5,605,765 2,849,088 5,849,070 2,950,991
OTHER OPERATING (EXPENSES) INCOME (1,578,890) (3,499,195) (1,854,385) (3,914,864) (1,919,434)

Income from services rendered (Note 27) 1,792,460 3,471,595 1,508,500 3,741,419 1,618,172
Personnel expenses (Note 28) (989,132) (1,893,425) (1,051,123) (1,913,672) (1,063,293)
Other administrative expenses (Note 29) (1,476,113) (2,828,378) (1,424,806) (2,871,100) (1,453,449)
Tax expenses (Note 30) (400,747) (803,920) (356,331) (845,569) (376,643)
Investments in affiliates and subsidiaries (Note 16) 403,251 514,107 105,828 2,950 15,290
Other operating income (Note 31) 246,381 418,417 452,340 456,148 479,818
Other operating expenses (Note 32) (1,154,990) (2,377,591) (1,088,793) (2,485,040) (1,139,329)
INCOME FROM OPERATIONS 867,421 2,106,570 994,703 1,934,206 1,031,557
NONOPERATING (EXPENSES) INCOME (Note 33) 196,697 188,756 (30,574) 495,128 (26,738)
INCOME BEFORE TAXES ON INCOME AND PROFIT SHARING 1,064,118 2,295,326 964,129 2,429,334 1,004,819
INCOME AND SOCIAL CONTRIBUTION TAXES (Note 36) 66,904 (57,202) (54,947) (170,780) (53,498)
Provision for income tax 18,098 (130,424) 18,317 (232,493) 19,671
Provision for social contribution tax (40,350) (100,782) 8,878 (137,614) 8,453
Deferred tax credits 89,156 174,004 (82,142) 199,327 (81,622)
PROFIT SHARING (251,021) (400,176) (141,871) (413,155) (147,702)
INCOME BEFORE MINORITY INTEREST 880,001 1,837,948 767,311 1,845,399 803,619
Minority Interest - - - (3) -
NET INCOME (Note 24.e) 880,001 1,837,948 767,311 1,845,396 803,619
Number of shares (thousands) 132,768,479 132,768,479 123,156,121

Earnings per thousand shares (R$) 6.63 13.84 6.23
The statement of income for 2006 shows the results of operations for the first half of Banco Santander Meridional S.A., prior to the merger, plus results of operations for
the second half (after the merger mentioned in Note 2).
14

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 AND SIX-MONTH PERIOD ENDED DECEMBER 31, 2007
Adjustment to fair value -

Capital reserves Profit reserves securities and
Stock Reserve for derivatives
Capital Tax exchange Legal dividend Affiliates and Retained
Capital increase incentives memberships reserve equalization Bank subsidiaries earnings Total
BALANCES AS OF DECEMBER 31, 2005 1,493,587 - 177 84 16,360 - 21,103 (7,717) 206,034 1,729,628
Merger balances 5,337,861 - 19,455 2,757 455,748 - (218,341) 13,654 145,816 5,756,950
Adjustment to fair value - securities and derivatives - - - - - - 322,860 (92) - 322,768
Stock exchange memberships - - - 545 - - - - - 545
Tax incentives - - 1,729 - - - - - - 1,729
Proposed supplementary dividends from retained earnings (Note 24.b) - - - - - - - - (206,033) (206,033)
Net income - - - - - - - - 767,311 767,311
Allocations:
Legal reserve - - - - 38,366 - - - (38,366) -
Reserve for dividend equalization (Note 24.d) - - - - - 375,945 - - (375,945) -
Proposed dividends (Note 24.b) - - - - - - - - (223,000) (223,000)
Proposed interest on capital (Note 24.c) - - - - - - - - (130,000) (130,000)
BALANCES AS OF DECEMBER 31, 2006 6,831,448 - 21,361 3,386 510,474 375,945 125,622 5,845 145,817 8,019,898
Capital increase (Note 24.a) 1,500,000 - - - - - - - - 1,500,000
Adjustment to fair value - securities and derivatives - - - - - - 216,818 (5,847) - 210,971
Stock exchange memberships - - - (2,617) - - - - - (2,617)
Reserve for equalization of dividends from retained earnings (Note 24.d) - - - - - 145,817 - - (145,817) -
Proposed dividends based on the reserve for dividend equalization (Note 24.b) - - - - - (521,762) - - - (521,762)
Net income - - - - - - - - 1,837,948 1,837,948
Allocations:
Legal reserve - - - - 91,897 - - - (91,897) -
Proposed dividends (Note 24.b) - - - - - - - - (1,215,406) (1,215,406)
Reserve for dividend equalization (Note 24.d) - - - - - 3,045 - - (3,045) -
Proposed interest on capital (Note 24.c) - - - - - - - - (527,600) (527,600)
BALANCES AS OF DECEMBER 31, 2007 8,331,448 - 21,361 769 602,371 3,045 342,440 (2) - 9,301,432
BALANCES AS OF JUNE 30, 2007 6,831,448 1,500,000 21,361 4,619 558,371 - 434,492 (10) 647,050 9,997,331
Capital increase (Note 24.a) 1,500,000 (1,500,000) - - - - - - - -
Adjustment to fair value - securities and derivatives - - - - - - (92,052) 8 - (92,044)
Stock exchange memberships - - - (3,850) - - - - - (3,850)
Proposed dividends (note 24.b) - - - - - - - - (647,050) (647,050)
Net income - - - - - - - - 880,001 880,001
Allocations:
Legal reserve - - - - 44,000 - - - (44,000) -
Proposed dividends (note 24.b) - - - - - - - - (568,356) (568,356)
Reserve for dividend equalization (Nota 24.d) - - - - - 3,045 - - (3,045) -
Proposed interest on capital (note 24.c) - - - - - - - - (264,600) (264,600)
BALANCES AS OF DECEMBER 31, 2007 8,331,448 - 21,361 769 602,371 3,045 342,440 (2) - 9,301,432
15

STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND SIX-MONTH PERIOD ENDED DECEMBER 31, 2007
Bank Consolidated
2nd half Year Year
2007 2007 2006 2007 2006
SOURCES OF FUNDS 14,061,135 39,004,227 21,063,589 38,997,018 19,864,817

Adjusted net income 822,257 2,021,539 948,175 2,535,856 1,073,069
Net income 880,001 1,837,948 767,311 1,845,396 803,619
Adjustment to net income:
Investments in affiliates and subsidiaries (Note 16) (403,251) (514,107) (105,828) (2,950) (15,290)
Depreciation and amortization (Note 29) 210,969 416,231 205,979 416,387 206,096
Goodwill amortization (Note 32) - - 79,565 - 79,565
Recognition (reversal) of allowance for losses on other assets (Note 33) (3,623) (12,258) 1,504 (13,470) (53)
Recognition of allowance for losses on other investments (859) (869) (368) (4,101) (880)
Provision for adjustment to residual cost of deferred charges (Note 18) 139,003 294,551 - 294,551 -
Exchange variation on foreign branches 17 43 12 43 12
Cash of acquired businesses - - 619,619 - 621,523
Change in deferred income 34,614 37,370 (1,878) 37,370 (1,878)
Funds from stockholders - 1,500,000 - 1,500,000 -
Capital increase (Note 24.a) - 1,500,000 - 1,500,000 -
Adjustment to fair value - securities and derivatives - 216,818 322,860 210,971 322,768
Funds from third parties: 13,204,264 35,228,500 19,174,813 34,712,821 17,849,335
Increase in liabilities 5,952,466 15,953,473 17,598,412 15,372,251 16,248,065
Deposits 5,029,022 7,812,979 2,485,631 7,074,503 1,265,226
Money market funding - - 9,661,958 - 9,643,325
Funds from acceptance and issuance of securities 285,022 481,069 - 481,069 -
Borrowings and onlendings - 1,702,287 2,833,350 1,702,287 2,833,350
Derivatives 638,422 2,556,270 441,005 2,553,053 441,693
Other payables - 3,400,868 2,176,468 3,561,339 2,064,471
Decrease in assets 7,022,440 18,856,555 1,431,028 19,166,241 1,501,823
Interbank investments 1,923,884 - 1,078,399 - 1,069,952
Securities and derivatives 748,624 18,829,316 - 19,166,241 -
Leasing operations 10,924 27,239 18,474 - 34,955
Other receivables 4,339,008 - 334,155 - 396,916
Disposal of permanent assets 74,701 154,338 80,509 174,329 84,763
Assets not in use 28,231 85,606 68,577 86,821 72,320
Property in use 11,918 44,413 11,661 44,413 11,661
Investments 34,552 24,319 271 43,095 782
Dividends received from subsidiaries 80,007 178,124 20,801 - 13,365
Interest on capital received from subsidiaries 74,650 86,010 44,063 - 1,319
USES OF FUNDS 13,341,319 38,540,287 19,962,060 38,534,328 18,761,998
Proposed dividends (Note 24.b) 1,215,406 1,737,168 429,033 1,737,168 429,033
Proposed interest on capital (Note 24.c) 264,600 527,600 130,000 527,600 130,000
Adjustment to fair value - securities and derivatives 92,052 - - - -
Additions 152,557 287,825 268,132 310,544 268,259
Assets not in use 22,022 69,656 68,853 69,659 69,241
Property and equipment in use 128,051 215,485 192,735 215,485 192,735
Investments 2,484 2,684 6,544 25,400 6,283
Deferred charges 366,864 429,352 307,667 429,354 307,667
Increase in assets 4,540,029 32,784,455 18,274,951 32,836,716 17,074,762
Interbank investments - 20,080,018 - 20,087,617 -
Securities and derivatives - - 11,510,360 - 10,307,419
Interbank and interbranch accounts 644,940 1,345,006 64,675 1,345,006 64,675
Lending operations 3,190,570 5,023,871 6,286,058 5,029,671 6,288,808
Leasing operations - - - 5,535 -
Other receivables - 5,476,455 - 5,505,497 -
Other assets 704,519 859,105 413,858 863,390 413,860
Decrease in liabilities 6,709,811 2,773,887 552,277 2,692,946 552,277
Money market funding 2,625,430 2,440,809 - 2,359,868 -
Funds from acceptance and issuance of securities - - 439,517 - 439,517
Interbank and interbranch accounts 652,296 333,078 112,760 333,078 112,760
Borrowings and onlendings 168,573 - - - -
Other payables 3,263,512 - - - -
INCREASE IN CASH 719,816 463,940 1,101,529 462,690 1,102,819
REPRESENTED BY:
Cash
Beginning of period 921,849 1,177,725 76,196 1,179,015 76,196
End of period 1,641,665 1,641,665 1,177,725 1,641,705 1,179,015
INCREASE IN CASH 719,816 463,940 1,101,529 462,690 1,102,819
16

SUPPLEMENTAL INFORMATION
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
Bank Consolidated
2007 2006 2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME 1,837,948 767,311 1,845,396 803,619
ADJUSTMENTS TO NET INCOME 1,982,146 1,033,021 2,151,823 1,122,027
Allowance for loan losses (Note 8.d) 2,090,188 799,957 2,084,475 802,899
Deferred income and social contribution taxes (Note 36) (7,247) 23,122 (33,508) 21,244
Investments in affiliates and subsidiaries (Note 16) (514,107) (105,828) (2,950) (15,290)
Depreciation and amortization (Note 29) 416,231 205,979 416,387 206,096
Goodwill amortization (Note 32) - 79,565 - 79,565
provision for residual costs of deferred charges (Note 18) 294,551 - 294,551 -
Amortization of expenses on banking service
exclusivity contracts (Note 32) 203,477 34,878 203,477 34,878
Allowance for losses on other assets (Note 33) (12,258) 1,504 (13,470) (53)
Gain/loss on disposal of other assets (Note 33) (13,116) (4,127) (19,361) (4,771)
Gain/loss on disposal of investments (Note 33) (474,747) (1,673) (773,720) (1,673)
Others (826) (356) (4,058) (868)
CHANGE IN ASSETS AND LIABILITIES (3,699,262) (2,325,969) (3,915,991) (2,406,876)
Decrease (increase) in interbank investments (20,137,031) 1,078,399 (20,144,630) 1,069,952
Decrease (increase) in securities and derivatives 21,726,261 (10,610,591) 22,051,104 (9,406,937)
Increase in lending operations and leasing operation (7,293,634) (7,175,968) (7,327,698) (7,164,046)
Increase in restricted deposits in Central Bank of Brazil (1,257,826) (437,642) (1,257,826) (437,642)
Decrease (increase) in other receivables (5,318,786) 112,652 (5,321,308) 174,413
Increase in other assets (1,062,582) (448,994) (1,066,867) (448,996)
Net change in other interbank and
interbranch accounts (420,258) 260,207 (420,258) 260,207
Increase in deposits 7,812,979 2,528,660 7,074,503 1,308,255
Increase (decrease) in money market funding (2,440,809) 9,661,958 (2,359,868) 9,643,325
Increase (decrease) in funds from acceptance and issuance of securities 481,069 (439,517) 481,069 (439,517)
Increase in borrowings and onlendings 1,702,287 2,833,350 1,702,287 2,833,350
Increase in other payables 2,471,698 313,395 2,636,131 202,638
Increase (decrease) in deferred income 37,370 (1,878) 37,370 (1,878)
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 120,832 (525,637) 81,228 (481,230)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of investments (2,684) (6,544) (25,400) (6,283)
Purchase of property and equipment in use (215,485) (192,735) (215,485) (192,735)
Addition to deferred charges (429,352) (307,671) (429,354) (307,671)
Cash of acquired businesses - 619,619 - 621,523
Net cash received from disposal of equity interests 692,741 12,927 1,010,490 13,438
Dividends and interest on capital received 264,134 64,864 - 14,684
Disposal of assets not in use 98,472 64,784 105,929 69,171
Disposal of property and equipment in use 44,663 19,716 44,663 19,716
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 452,489 274,960 490,843 231,843
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital increase 607,043 - 607,043 -
Increase in subordinated debts 183,586 1,445,095 183,586 1,445,095
Dividends and interest on capital paid (900,010) (92,889) (900,010) (92,889)
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (109,381) 1,352,206 (109,381) 1,352,206
NET INCREASE IN CASH 463,940 1,101,529 462,690 1,102,819
Cash at beginning of period/year 1,177,725 76,196 1,179,015 76,196
Cash at end of period/year 1,641,665 1,177,725 1,641,705 1,179,015
17

SUPPLEMENTAL INFORMATION
STATEMENTS OF VALUE ADDED FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
Bank Consolidated
2007 2006 2007 2006
Gross profit from financial operations 5,605,765 2,849,088 5,849,070 2,950,991

Income from services rendered (Note 27) 3,471,595 1,508,500 3,741,419 1,618,172
Other income and expenses (4,084,689) (1,986,005) (4,401,917) (2,124,408)
TOTAL 4,992,671 2,371,583 5,188,572 2,444,755
DISTRIBUTION OF VALUE ADDED
Employees 2,029,161 40.7% 1,049,215 44.2% 2,059,575 39.7% 1,065,089 43.6%
Compensation (Note 28) 1,114,920 601,442 1,125,880 606,502
Charges 161,907 128,758 163,398 132,270
Benefits and other 752,334 319,015 770,297 326,317
Government 1,125,562 22.5% 555,057 23.4% 1,283,601 24.7% 576,047 23.6%
Tax expenses (Note 30) 803,920 356,331 845,569 376,643
Income and social contribution taxes (Note 36) 57,202 54,947 170,780 53,498
INSS (social security contribution) 264,440 143,779 267,252 145,906
Stockholders 1,743,006 34.9% 353,000 14.9% 1,743,006 33.6% 353,000 14.4%
Dividends and interest on capital 1,743,006 353,000 1,743,006 353,000
Reinvestment of profits 94,942 1.9% 414,311 17.5% 102,390 2.0% 450,619 18.4%
TOTAL 4,992,671 100% 2,371,583 100% 5,188,572 100% 2,444,755 100%
18

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
(Amounts in thousands of Brazilian reais - R$, unless otherwise stated)
1. Operations
Banco Santander S.A. (formerly Banco Santander Banespa S.A.), controlled by Banco
Santander S.A. (formerly Banco Santander Central Hispano S.A.), with headquarters in
Spain, is the lead institution of the financial and non-financial group with the Central Bank
of Brazil, established as a corporation, with main offices at Rua Amador Bueno, 474, Santo
Amaro, São Paulo, and operates as a multiple service bank, conducting operations such as
commercial, foreign exchange, investment, credit and financing and mortgage loan
portfolios and, through related entities, insurance, pension plan, capitalization, leasing, asset
management, and securities and insurance brokerage operations. Transactions are conducted
within the context of a group of financial institutions that operate on an integrated basis in
the financial markets.
2. Corporate Restructuring
On August 31, 2006, the Extraordinary Stockholders’ Meetings of Banco Santander

Banespa S.A. (successor of Banco Santander Meridional S.A.), Banco Santander Brasil S.A.
(BSB), Banco Santander S.A. (BSSA) and Banco do Estado de São Paulo S.A. - Banespa
(Banespa) approved a corporate restructuring proposal with the merger of the
aforementioned banks into Banco Santander Banespa S.A. As a result, the stockholders of
BSB, BSSA and Banespa (Merged Entities) received shares of Banco Santander Banespa
S.A. (Merging Entity) and the Merged Entities ceased to exist, with Banco Santander
Banespa S.A. becoming the universal successor of the Merged Entities to all their assets,
rights and obligations, and becoming the lead institution of the financial and non-financial
group with the Central Bank of Brazil.
The Extraordinary Stockholders’ Meeting held on April 30, 2007 approved the change of
the entity’s name from Banco Santander Banespa S.A to Banco Santander S.A.
The Extraordinary Stockholders' Meting held on November 30, 2006 approved the merger
of Santander Banespa Companhia de Arrendamento Mercantil into Santander Brasil
Arrendamento Mercantil S.A. The Merged Entity ceased to exist and Santander Brasil
Arrendamento Mercantil S.A. became the successor to all its assets, rights and obligations.
On March 30, 2007, the Extraordinary Stockholders’ Meetings of Santander Brasil

Participações e Empreendimentos S.A. and Santander Companhia Securitizadora de
Créditos Financeiros approved the merger of Santander Brasil Participações e
Empreendimentos S.A. into Santander Companhia Securitizadora de Créditos Financeiros.
On the same date the change of the name Santander Securitizadora de Créditos Financeiros
to Santander Participações e Serviços S.A. was also approved. On October 10, 2007, the
Extraordinary Stockholders’ Meeting approved the change of the entity’s name to Santander
Investimentos em Participações S.A.
19

The corporate restructuring implemented has resulted in a simplified corporate structure and
improved administrative and operating efficiencies.
3. Presentation of Financial Statements
The financial statements of Banco Santander S.A., which include its foreign branches
(Bank) and the consolidated financial statements of the Bank and its subsidiaries
(Consolidated) indicated in Note 16 have been prepared in accordance with accounting
practices established by Brazilian Corporate Law and standards established by the National
Monetary Council (CMN) and the Brazilian Securities Commission (CVM).
In the preparation of the consolidated financial statements, equity in subsidiaries, significant

balances arising from transactions among domestic branches, foreign branches and
subsidiaries, and unrealized profits between these entities have been eliminated. Minority
interest is recorded in a separate caption in stockholders’ equity and in the statements of
income. The balances stated in the jointly-owned subsidiaries’ balance sheets and
statements of income were consolidated in proportion to the interest in the subsidiary.
The information of the leasing company has been reclassified, in order to reflect its financial
position in the consolidated financial statements in conformity with the financial method of
accounting for leasing operations.
The preparation of financial statements requires Management to make estimates and

assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses for the reporting periods. Since Management’s judgment
involves making estimates concerning the likelihood of future events, actual amounts could
differ from those estimates.
Presented herewith as supplemental information are the statement of cash flows under the
indirect method and the statement of value added, which are not required by Brazilian
accounting practices as of December 31, 2007. Those statements have been prepared in
accordance with the Standard Chart of Accounts for Financial Institutions (Cosif).
20

4. Significant Accounting Practices
a) Results of operations
Determined on the accrual basis of accounting and includes income, charges and
monetary or exchange variations earned or incurred through the balance sheet date, on a
daily pro rata basis.
b) Current and long-term assets and liabilities
Stated at their realizable or settlement amounts, respectively, and include income,

charges and monetary or exchange variations earned or incurred through the balance
sheet date, determined on a daily pro rata basis. When applicable, allowances for
valuation are recorded to reflect market or realizable values. The allowance for loan
losses is based on analyses of outstanding lending operations (past-due and current),
past experience, future expectations, and specific portfolio risks, as well as on the risk
assessment policy of the Bank’s management for recognition of allowances, including
requirements of the Central Bank of Brazil.
Receivables and payables due within 12 months are recorded in current assets and
liabilities, respectively, except for trading securities that, regardless of their maturity,
are classified in current assets, in conformity with Central Bank of Brazil Circular No.
3,068/01.
c) Securities
Securities are presented in accordance with the following recognition and accounting
valuation criteria:
I - Trading securities.
II - Available-for-sale securities.
III - Held-to-maturity securities.
“Trading securities” include securities acquired for the purpose of being actively and
frequently traded and “Held-to-maturity securities” include those which the Bank
intends to maintain in its portfolio to maturity. “Available-for-sale securities” include
those which cannot be classified in categories I and III. Securities classified in
categories I and II are stated at cost plus income earned through the balance sheet date,
calculated on a daily pro rata basis, and adjusted to fair value, reflecting the increase or
decrease arising from this adjustment in:
21

(1) The related income or expense account, in income for the period, when related to
securities classified as “Trading securities”, net of tax effects.
(2) Separate caption in stockholders’ equity, when related to securities classified as

“Available-for-sale securities”, net of tax effects. The adjustments to fair value on
sale of these securities are transferred to income for the period.
Securities classified as “Held-to-maturity securities” are stated at cost, plus income

earned through the balance sheet date, calculated on a daily pro rata basis, and recorded
in income for the period; provisions for losses are recognized whenever there are
permanent losses on the realizable value of these securities.
d) Derivatives
Derivatives designated as hedge may be classified as:
I - Market risk hedge.
II - Cash flow hedge.
Derivatives designated as hedge and the respective hedged items are adjusted to fair
value, considering the following:
(1) For those classified in category I, the increase or decrease is recorded in income or
expense for the period, net of tax effects.
(2) For those classified in category II, the increase or decrease is recorded in a separate
caption in stockholders’ equity, net of tax effects.
e) Prepaid expenses
Funds used in advance payments, whose benefits or provision of services will occur in
future years, are recorded as “prepaid expenses” and allocated to income over the term
of the respective agreements.
f) Permanent assets
Stated at acquisition cost and include:
f.1) Investments
Adjustments to investments in affiliates and subsidiaries are determined under the

equity method of accounting and recorded as investments in affiliates and
subsidiaries. Other investments are stated at cost, reduced to fair value, when
applicable.
22

f.2) Property and equipment
Depreciation of property and equipment is determined under the straight-line

method at the following annual rates: buildings - 4%, installations, furniture,
equipment in use, communication and security systems - 10%, and data processing
systems and vehicles - 20%.
f.3) Deferred charges
Costs classified under deferred charges are amortized over a maximum period of 5
years when related to the acquisition and development of software, and 10 years for
other costs, considering the benefit period of the expense and the terms of rental
contracts.
Goodwill on investment acquisition and its respective reduction account, reserve for
maintenance of integrity of the merging entity’s stockholders’ equity, are amortized
over a period of up to 10 years, based on expected future earnings.
g) Pension plan
The actuarial liabilities related to pension plans are recorded based on an actuarial study
made by independent actuaries in accordance with CVM Resolution No. 371/2000.
Expenses related to sponsors’ contributions to the plans are recognized on the accrual
basis.
h) Contingent assets and liabilities and legal obligations
h.1) Contingent assets
Contingent assets are not recorded, except when there are real guarantees or
unappealable court decisions, for which a favorable outcome is practically certain.
Contingent assets whose likelihood of favorable outcome is probable, if any, are
only disclosed in the financial statements.
h.2) Contingent liabilities
Contingent liabilities are recorded based on the nature, complexity and history of
lawsuits, and on the opinion of the in-house and outside legal counsel when the
risk of loss on the administrative or judicial proceeding is considered as probable
and the amounts can be reasonably determined.
23

h.3) Legal obligations - tax and social security
Refer to lawsuits challenging the legality or constitutionality of tax obligations

that, irrespective of the evaluation of their likelihood of favorable outcome, are
fully recognized in the financial statements, except for cases that Management
considers, based on experts’ evaluation and the status of the lawsuit, will not
produce effects on the balance sheet.
i) Deferred income
Refers to income received before the completion of the term of the obligation that gave
rise to it, including non-refundable income, mainly related to guarantees and collaterals
provided and credit card annual fees. Deferred income is recorded in income over the
term of the respective agreements.
j) Income and social contribution taxes
Income tax is calculated at the rate of 15% plus a 10% surtax; social contribution tax is
calculated at the rate of 9%, after adjustments determined by tax legislation. Deferred
tax assets and liabilities are computed basically on certain temporary differences
between the book and tax basis of assets and liabilities, tax losses, and adjustments to
fair value of securities and derivatives.
According to Central Bank of Brazil Circular No. 3,171/2002, CVM Resolution No.
273/1998, and CVM Instruction No. 371/2002, the expected realization of the Bank’s
tax credits, as shown in Note 11, is based on the projection of future income and a
technical study.
24

5. Interbank Investments
Bank
Up to From 3 to Over
3 months 12 months 12 months 12/31/2007 12/31/2006
Money market investments 21,929,663 - - 21,929,663 3,268,810

Own portfolio 2,484,862 - - 2,484,862 1,242,134
Treasury bills 417,315 - - 417,315 83
National Treasury bills 1,005,216 - - 1,005,216 1,167,955
National Treasury notes 966,696 - - 966,696 387
Securities issued abroad by the
Brazilian government 95,635 - - 95,635 73,709
Third-party portfolio 19,444,801 - - 19,444,801 2,026,676
Treasury bills 11,654,363 - - 11,654,363 1,922
Interbank deposits 303,000 750,306 647,701 1,701,007 1,199,955
Foreign currency investments 1,774,604 - - 1,774,604 856,491
Provision for losses - - (200) (200) (200)
Total 24,007,267 750,306 647,501 25,405,074 5,325,056
Current 24,757,573 4,742,810
Long-term 647,501 582,246
Consolidated
Up to From 3 to Over
3 months 12 months 12 months 12/31/2007 12/31/2006
Money market investments 21,929,663 - - 21,929,663 3,268,810

Own portfolio 2,539,458 - - 2,539,458 1,362,171
Treasury bills 417,315 - - 417,315 83
National Treasury notes 966,696 - - 966,696 387
Securities issued abroad by the
95,635 - - 95,635 73,709
Brazilian government
Third-party portfolio 19,390,205 - - 19,390,205 1,906,639
Treasury bills 11,654,363 - - 11,654,363 1,922
Interbank deposits 303,000 742,190 647,701 1,692,891 1,184,240
Foreign currency investments 1,774,604 - - 1,774,604 856,491
Provision for losses - - (200) (200) (200)
Total 24,007,267 742,190 647,501 25,396,958 5,309,341
Current 24,749,457 4,727,095
Long-term 647,501 582,246
25

6. Securities
Bank
12/31/2007 12/31/2006
Effect of adjustment to
fair value on Carrying Carrying
Categories Cost Income Equity amount Amount
Trading securities 10,614,717 (18,804) - 10,595,913 23,383,675

Government Securities 8,410,829 (107,984) - 8,302,845 20,646,343
Private Securities 2,203,888 89,180 - 2,293,068 2,737,332
Available-for-sale securities 8,361,418 - 500,957 8,862,375 12,940,556
Government Securities 4,589,303 - 161,361 4,750,664 9,119,927
Private Securities 3,772,115 - 339,596 4,111,711 3,820,629
Held-to-maturity securities 766,565 - - 766,565 4,973,330
Government Securities 766,565 - - 766,565 4,973,330
Subtotal 19,742,700 (18,804) 500,957 20,224,853 41,297,561
Derivatives (Assets) (Note 34) 3,094,393 325,919 - 3,420,312 1,176,920
Total 22,837,093 307,115 500,957 23,645,165 42,474,481
Current 15,300,972 29,831,271
Long-term 8,344,193 12,643,210
Derivatives (Liabilities) (Note 34) (4,340,216) (227,339) - (4,567,555) (2,011,285)
Current (3,226,639) (1,361,055)
Long-term (1,340,916) (650,230)
Bank
12/31/2007 12/31/2006
Adjustment to
fair value - Carrying Carrying
Trading securities Cost income amount amount
Government Securities 8,410,829 (107,984) 8,302,845 20,646,343

Brady bonds 16,371 (2) 16,369 48,963
Treasury certificates 42,858 (1,982) 40,876 6,224
Securitized credit - - - 1,196
National Treasury bills 3,177,833 (17,751) 3,160,082 16,122,470
Treasury bills 637,606 93 637,699 404,699
National Treasury notes - NTN B 2,824,070 (46,961) 2,777,109 2,364,309
National Treasury notes - NTN C 679,340 600 679,940 226,119
National Treasury notes - NTN D 17,255 23 17,278 21,884
National Treasury notes - NTN F 708,847 (29,929) 678,918 761,210
Agricultural debt securities 204,365 (12,921) 191,444 347,771
Global 40 102,284 846 103,130 341,498
Private Securities 2,203,888 89,180 2,293,068 2,737,332
Shares 219,603 81,553 301,156 740,769
Receivables Investment Fund (4) 280,812 - 280,812 550,586
Investment fund shares 10 - 10 -
Debentures 1,658,771 6,386 1,665,157 1,417,124
Eurobonds 22,645 1,260 23,905 28,853
Certificates of real estate receivables - CRI 22,047 (19) 22,028 -
Total 10,614,717 (18,804) 10,595,913 23,383,675
26

Bank
12/31/2007
Trading securities Without Up to 3 From 3 to 12 From 1 to 3
by maturity maturity months months years
Government Securities - 831,621 1,912,496 2,781,924

Brady bonds - 350 - -
Treasury certificates - - - -
National Treasury bills - 681,235 1,068,376 1,410,471
Treasury bills - 35,972 116,900 330,596
National Treasury notes - NTN B - 25,289 8,779 974,988
National Treasury notes - NTN C - 362 658,787 -
National Treasury notes - NTN D - 883 16,395 -
National Treasury notes - NTN F - 35,655 - 7,194
Agricultural debt securities - 47,977 43,076 58,658
Global 40 - 3,898 183 17
Private Securities 301,166 114 81,865 227,949
Shares 301,156 - - -
Receivables Investment Fund (4) - - 49,680 187,430
Investment fund shares 10 - - -
Debentures - - 2,999 40,519
Eurobonds - 114 23,791 -
Certificates of real estate
- - 5,395 -
receivables - CRI
Total 301,166 831,735 1,994,361 3,009,873
Bank
12/31/2007
Trading securities From 3 to From 5 to Over
by maturity 5 years 15 years 15 years
Government Securities 1,758,938 899,958 117,908

Brady bonds - 16,019 -
Treasury certificates 40,876 - -
National Treasury bills - - -
Treasury bills 142,694 11,537 -
National Treasury notes - NTN B 1,316,120 402,433 49,500
National Treasury notes - NTN C - - 20,791
National Treasury notes - NTN D - - -
National Treasury notes - NTN F 221,474 414,595 -
Agricultural debt securities 37,774 3,959 -
Global 40 - 51,415 47,617
Private Securities 122,178 1,548,163 11,633
Shares - - -
Receivables Investment Fund (4) - 32,069 11,633
Investment fund shares - - -
Debentures 122,178 1,499,461 -
Eurobonds - - -
Certificates of real estate receivables - CRI - 16,633 -
Total 1,881,116 2,448,121 129,541
27

Bank
12/31/2007 12/31/2006
Adjustment
to fair value - Carrying Carrying
Available-for-sale securities Cost equity amount amount
Government Securities 4,589,303 161,361 4,750,664 9,119,927

National Treasury bonds 1,945 (125) 1,820 4,318
Treasury certificates (1) 58,392 4,609 63,001 74,433
Securitized credit 50,916 170 51,086 71,370
National Treasury bills 284,303 (1,162) 283,141 780,981
Treasury bills 1,217 2 1,219 22,954
National Treasury notes - NTN A 116,581 (2,612) 113,969 121,323
National Treasury notes - NTN C (2) 511,904 235,651 747,555 581,411
National Treasury notes - NTN F 2,314,446 (28,283) 2,286,163 4,281,867
National Treasury notes - NTN P 91 (19) 72 67
Agricultural debt securities 4,107 (108) 3,999 110,493
Global 40 - - - 205,406
Shares (3) 784,274 311,063 1,095,337 746,326
Debentures 2,537,116 18,333 2,555,449 2,546,386
Eurobonds 2,032 - 2,032 -
Promissory notes 221,129 - 221,129 257,062
Certificates of real estate receivables - CRI 227,564 10,200 237,764 270,855
Total 8,361,418 500,957 8,862,375 12,940,556
Bank
12/31/2007
Available-for-sale securities Without Up to 3 From 3 to From 1 to 3
by maturity maturity months 12 months years
Government Securities - 591,896 82,058 676,332

National Treasury bonds - 936 884 -
Treasury certificates (1) - - - -
Securitized credit - - 49,879 -
National Treasury bills - 200,000 19,482 63,659
Treasury bills - - 1,219 -
National Treasury notes - NTN A - - 875 -
National Treasury notes - NTN C (2) - 12,744 472 -
National Treasury notes - NTN P - - - -
Agricultural debt securities - 645 1,368 1,237
Private Securities 1,095,337 32,974 266,558 266,322
Shares (3) 1,095,337 - - -
Debentures - 7,958 27,075 266,322
Eurobonds - 1,066 966 -
Promissory notes - - 221,129 -
Certificates of real estate receivables - CRI - 23,950 17,388 -
Total 1,095,337 624,870 348,616 942,654
28

Bank
12/31/2007
Available-for-sale securities From 3 to From 5 to Over 15
by maturity 5 years 15 years years
Government Securities 891,616 1,593,872 914,890

National Treasury bonds - - -
Treasury certificates (1) 62,759 242 -
Securitized credit - 1,207 -
Treasury bills - - -
National Treasury notes -NTN A - - 113,094
National Treasury notes - NTN B 45,029 973,906 77,263
National Treasury notes - NTN C (2) - 9,806 724,533
National Treasury notes - NTN P 72 - -
Agricultural debt securities 582 167 -
Private Securities 275,675 2,174,845 -
Shares (3) - - -
Debentures 275,675 1,978,419 -
Eurobonds - - -
Promissory notes - - -
Total 1,167,291 3,768,717 914,890
Bank
12/31/2007
12/31/2007 12/31/2006 by maturity
Cost/ Cost/
carrying carrying Up to 3 Over 15
Held-to-maturity securities (5) amount amount months years
Government Securities 766,565 4,973,330 19,875 746,690

Treasury certificates - 443,916 - -
National Treasury notes - NTN B - 4,483 - -
National Treasury notes - NTN C (2) 766,565 4,524,931 19,875 746,690
Total 766,565 4,973,330 19,875 746,690
29

Consolidated
Effect of adjustment to fair
value on 12/31/2007 12/31/2006
Carrying Carrying
Categories Cost Income Equity amount amount
Trading securities 9,264,684 (18,816) - 9,245,868 22,119,535

Government Securities 8,476,812 (107,996) - 8,368,816 20,652,023
Private Securities 787,872 89,180 - 877,052 1,467,512
Available-for-sale securities 6,534,078 - 500,953 7,035,031 11,324,779
Government Securities 4,689,886 - 161,357 4,851,243 9,217,170
Private Securities 1,844,192 - 339,596 2,183,788 2,107,609
Held-to-maturity securities 766,565 - - 766,565 5,012,946
Government Securities 766,565 - - 766,565 4,973,330
Private Securities - - - - 39,616
Subtotal 16,565,327 (18,816) 500,953 17,047,464 38,457,260
Derivatives (Assets) (Note 34) 3,093,069 323,904 - 3,416,973 1,173,418
Total 19,658,396 305,088 500,953 20,464,437 39,630,678
Current 14,024,674 28,638,803
Long-term 6,439,763 10,991,875
Derivatives (Liabilities) (Note 34) (4,340,703) (223,428) - (4,564,131) (2,011,078)
Current (3,226,346) (1,360,938)
Long-term (1,337,785) (650,140)
Consolidated
12/31/2007 12/31/2006
Adjustment to
fair value - Carrying Carrying
Trading securities Cost income amount amount
Government Securities 8,476,812 (107,996) 8,368,816 20,652,023

Brady bonds 16,371 (2) 16,369 48,963
Treasury certificates 42,858 (1,982) 40,876 6,224
Securitized credit - - - 1,196
National Treasury bills 3,177,833 (17,751) 3,160,082 16,122,470
Treasury bills 703,589 81 703,670 410,379
National Treasury notes - NTN C 679,340 600 679,940 226,119
National Treasury notes - NTN D 17,255 23 17,278 21,884
National Treasury notes - NTN F 708,847 (29,929) 678,918 761,210
Agricultural debt securities 204,365 (12,921) 191,444 347,771
Global 40 102,284 846 103,130 341,498
Private Securities 787,872 89,180 877,052 1,467,512
Shares 219,603 81,553 301,156 740,769
Receivables Investment Fund (4) 280,812 - 280,812 550,586
Investment fund shares 83,455 - 83,455 71,422
Debentures 159,310 6,386 165,696 75,882
Eurobonds 22,645 1,260 23,905 28,853
Certificates of real estate receivables – CRI 22,047 (19) 22,028 -
Total 9,264,684 (18,816) 9,245,868 22,119,535
30

Consolidated
12/31/2007
Trading securities Without Up to 3 From 3 to 12 From 1 to 3
by maturity maturity months months years
Government Securities - 831,621 1,912,496 2,845,708

Brady bonds - 350 - -
Treasury certificates - - - -
National Treasury bills - 681,235 1,068,376 1,410,471
Treasury bills - 35,972 116,900 394,380
National Treasury notes - NTN C - 362 658,787 -
National Treasury notes - NTN D - 883 16,395 -
Agricultural debt securities - 47,977 43,076 58,658
Global 40 - 3,898 183 17
Private Securities 384,611 114 81,865 227,949
Shares 301,156 - - -
Receivables Investment Fund (4) - - 49,680 187,430
Investment fund shares 83,455 - - -
Debentures - - 2,999 40,519
Eurobonds - 114 23,791 -
Certificates of real estate receivables -
CRI - - 5,395 -
Total 384,611 831,735 1,994,361 3,073,657
Consolidated
12/31/2007
Trading securities From 3 to From 5 to Over
by maturity 5 years 15 years 15 years
Government Securities 1,761,006 900,077 117,908

Brady bonds - 16,019 -
Treasury certificates 40,876 - -
National Treasury notes - NTN B 1,316,120 402,433 49,500
National Treasury notes - NTN C - - 20,791
National Treasury notes - NTN D - - -
Agricultural debt securities 37,774 3,959 -
Global 40 - 51,415 47,617
Private Securities 122,178 48,702 11,633
Shares - - -
Receivables Investment Fund (4) - 32,069 11,633
Investment fund shares - - -
Debentures 122,178 - -
Eurobonds - - -
Total 1,883,184 948,779 129,541
31

Consolidated
12/31/2007 12/31/2006
Adjustment
to fair value - Carrying Carrying
Available-for-sale securities Cost equity amount amount
Government Securities 4,689,886 161,357 4,851,243 9,217,170

National Treasury bonds 1,945 (125) 1,820 4,318
Treasury certificates (1) 58,392 4,609 63,001 74,433
Securitized credit 50,916 170 51,086 71,370
National Treasury bills 284,303 (1,162) 283,141 780,981
Treasury bills 101,800 (2) 101,798 120,197
National Treasury notes - NTN A 116,581 (2,612) 113,969 121,323
National Treasury notes - NTN C (2) 511,904 235,651 747,555 581,411
National Treasury notes - NTN F 2,314,446 (28,283) 2,286,163 4,281,867
National Treasury notes - NTN P 91 (19) 72 67
Agricultural debt securities 4,107 (108) 3,999 110,493
Global 40 - - - 205,406
Shares (3) 784,274 311,063 1,095,337 756,337
Investment fund shares - - - 1,462
Debentures 609,193 18,333 627,526 821,893
Eurobonds 2,032 - 2,032 -
Promissory notes 221,129 - 221,129 257,062
Certificates of real estate receivables - CRI 227,564 10,200 237,764 270,855
Total 6,534,078 500,953 7,035,031 11,324,779
Consolidated
12/31/2007
Available-for-sale securities Without Up to 3 From 3 to From 1 to 3
by maturity maturity months 12 months years
Government Securities - 621,804 128,135 690,240

National Treasury bonds - 936 884 -
Treasury certificates (1) - - - -
Securitized credit - - 49,879 -
National Treasury bills - 200,000 19,482 63,659
Treasury bills - 29,908 47,296 13,908
National Treasury notes - NTN A - - 875 -
National Treasury notes - NTN C (2) - 12,744 472 -
National Treasury notes - NTN P - - - -
Agricultural debt securities - 645 1,368 1,237
Private Securities 1,095,337 32,974 266,558 266,322
Shares (3) 1,095,337 - - -
Debentures - 7,958 27,075 266,322
Eurobonds - 1,066 966 -
Promissory notes - - 221,129 -
Certificates of real estate receivables - CRI - 23,950 17,388 -
Total 1,095,337 654,778 394,693 956,562
32

Consolidated
12/31/2007
Available-for-sale securities From 3 to From 5 to Over 15
by maturity 5 years 15 years years
Government Securities 895,476 1,600,698 914,890

National Treasury bonds - - -
Treasury certificates (1) 62,759 242 -
Securitized credit - 1,207 -
National Treasury notes -NTN A - - 113,094
National Treasury notes - NTN B 45,029 973,906 77,263
National Treasury notes - NTN C (2) - 9,806 724,533
National Treasury notes - NTN P 72 - -
Agricultural debt securities 582 167 -
Private Securities 275,675 246,922 -
Shares (3) - - -
Debentures 275,675 50,496 -
Eurobonds - - -
Promissory notes - - -
Total 1,171,151 1,847,620 914,890
Consolidated
12/31/2007
12/31/2007 12/31/2006 by maturity
Cost/ Cost/
carrying carrying Up to 3 Over 15
Held-to-maturity securities (5) amount amount months years
Government Securities 766,565 4,973,330 19,875 746,690

Treasury certificates (1) - 443,916 - -
National Treasury notes - NTN B - 4,483 - -
National Treasury notes - NTN C (2) 766,565 4,524,931 19,875 746,690
Private Securities - 39,616 - -
Bank certificates of deposit - 39,616 - -
Total 766,565 5,012,946 19,875 746,690
(1) The treasury certificates are held in custody of the Clearinghouse for the Custody and Financial Settlement of
Securities (Cetip) and are monetarily adjusted based on the domestic general price index (IGP-DI) plus interest of
12% per year.
(2) Monetary adjusted based on the general market price index (IGP-M) plus interest of 12% per year, payable
semiannually through January 1, 2031.
(3) Refers principally to shares of CESP - Cia. Energética de São Paulo - R$1,070,309 (12/31/2006 - R$743,793).
(4) Receivables Investment Fund (FIDC) shares are calculated based on the value of the receivables and other financial
assets in the respective portfolios, less respective provisions that take into consideration aspects related to the debtors,
their guarantors and the corresponding transaction’s characteristics, according to accounting standards and practices
for evaluating credits, and are not adjusted to fair value.
(5) The fair value of Held-to-Maturity Securities, Bank and Consolidated, as of December 31, 2007 is R$1,163,274
(12/31/2006 - R$6,333,947).
33

In accordance with Central Bank of Brazil Circular No. 3068, article 8, of November 8,
2001, Santander has the positive intent and ability to hold to maturity the securities
classified as Held-to-Maturity Securities. In January 2007, due to the transfer of pension
benefit obligations, R$3,478,816 of securities classified as held-to maturity securities were
transferred to Banesprev - Fundo Banespa de Seguridade Social (Banesprev), and
R$573,191 was reclassified to available-for-sale securities (Note 35.a). The total amount of
held-to-maturity securities transferred to Banesprev was classified in current assets as of
December 31, 2006.
The fair value of securities is computed based on the average quotation on organized
markets and their estimated cash flows, discounted to present value using the applicable
interest rate, which are considered representative of the market conditions at the balance
sheet date.
The principal interest rates are obtained from futures and swap contracts traded on the
Commodities and Futures Exchange (BM&F). Adjustments to these curves are made
whenever certain points are considered illiquid or when, for unusual reasons, they do not
fairly represent market conditions.
7. Interbank Accounts
Composed of restricted deposits with the Central Bank of Brazil to meet compulsory
obligations for demand deposits, savings deposits and time deposits, and payments and
receipts pending settlement, represented by checks and other documents sent to
clearinghouses (assets and liabilities).
8. Credit Portfolio and Allowance for Losses
a) Credit portfolio
Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Lending operations 39,377,758 34,152,114 39,339,900 34,107,763

Loans and discounted receivables 19,206,584 16,917,802 19,168,726 16,873,451
Financing 15,294,808 13,322,894 15,294,808 13,322,894
Rural, agricultural and industrial financing 2,842,223 2,595,640 2,842,223 2,595,640
Real estate financing 1,996,278 1,232,424 1,996,278 1,232,424
Securities financing 23,145 60,694 23,145 60,694
Infrastructure and development financing 14,720 22,660 14,720 22,660
Leasing operations 10,374 37,613 402,206 402,284
Advances on foreign exchange contracts (1) 1,773,786 1,525,914 1,773,786 1,525,914
Other receivables (2) 2,204,239 1,465,891 2,208,745 1,472,855
Total 43,366,157 37,181,532 43,724,637 37,508,816
Current 24,268,561 20,574,909 24,468,279 20,778,126
Long-term 19,097,596 16,606,623 19,256,358 16,730,690
34

(1) Classified as a reduction of “Other payables”.
(2) Include receivables for guarantees honored, debtors for purchase of assets, notes and credits receivable
(basically credit cards and rural product notes - CPR), income receivable from advances on foreign exchange
contracts, and receivables from export contracts.
b) Credit portfolio by business sector

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Private sector 43,188,312 37,000,678 43,555,357 37,337,944

Industrial 10,843,805 10,328,396 10,949,547 10,424,303
Commercial 3,500,931 3,559,720 3,571,602 3,624,999
Financial institutions 86,409 115,708 86,409 115,708
Services and other 8,058,781 6,872,182 8,244,312 7,043,614
Individuals 15,862,826 12,298,307 15,867,927 12,302,955
Housing 1,993,337 1,230,725 1,993,337 1,230,725
Rural 2,842,223 2,595,640 2,842,223 2,595,640
Public sector 177,845 180,854 169,280 170,872
Federal 104,250 137,994 104,250 137,994
State 47,763 4,977 47,763 4,977
Municipal 25,832 37,883 17,267 27,901
Total 43,366,157 37,181,532 43,724,637 37,508,816
c) Classification of credit portfolio by risk level and respective allowance for loan
losses
Bank
Balance
Minimum Allowance
allowance 12/31/2007 12/31/2006 required
Risk required
level (%) Current Past due (1) Total Total 12/31/2007 12/31/2006
AA - 24,628,397 - 24,628,397 21,945,811 - -

A 0,5% 13,507,121 - 13,507,121 11,392,875 67,536 56,964
B 1% 218,687 310,532 529,219 703,271 5,292 7,033
C 3% 504,239 406,084 910,323 870,144 27,310 26,105
D 10% 1,228,280 642,285 1,870,565 494,121 187,056 49,412
E 30% 24,605 240,682 265,287 213,376 79,586 64,013
F 50% 22,859 300,427 323,286 205,888 161,643 102,944
G 70% 4,852 205,016 209,868 186,265 146,908 130,386
H 100% 32,213 1,089,878 1,122,091 1,169,781 1,122,091 1,169,781
Total 40,171,253 3,194,904 43,366,157 37,181,532 1,797,422 1,606,638
35

Consolidated
Balance
Minimum Allowance
allowance 12/31/2007 12/31/2006 required
Risk required
level (%) Current Past due (1) Total Total 12/31/2007 12/31/2006
AA - 24,954,190 - 24,954,190 22,209,452 - -

A 0,5% 13,543,167 - 13,543,167 11,454,383 67,716 57,272
B 1% 219,755 314,312 534,067 717,474 5,340 7,175
C 3% 505,366 409,398 914,764 877,240 27,443 26,317
D 10% 1,201,640 644,454 1,846,094 454,377 184,609 45,438
E 30% 24,711 241,655 266,366 214,048 79,910 64,214
F 50% 22,908 301,350 324,258 207,843 162,129 103,922
G 70% 4,852 205,165 210,017 187,376 147,012 131,163
H 100% 34,882 1,096,832 1,131,714 1,186,623 1,131,714 1,186,623
Total 40,511,471 3,213,166 43,724,637 37,508,816 1,805,873 1,622,124
(1) Includes current and past-due operations.
d) Changes in allowance for loan losses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Balances as of December 31 1,606,638 106,258 1,622,124 106,258

Balances absorbed - 1,294,762 - 1,309,556
Allowances recognized 2,090,188 799,957 2,084,475 802,899
Write-offs (1,899,005) (594,178) (1,900,327) (596,428)
Other changes (399) (161) (399) (161)
Balances as of December 31 1,797,422 1,606,638 1,805,873 1,622,124
Current 235,594 252,443 238,905 256,066
Long-term 1,561,828 1,354,195 1,566,968 1,366,058
Recoveries (1) 382,273 180,114 494,578 228,315
(1) Recoveries are recorded in Income from Lending and Leasing Operations. Recoveries (Bank and Consolidated)
include a credit assignment without co-obligation, related to operations previously written off to loss, in the
amount of R$ 100,320 (2006 - R$28,198 Bank and Consolidated)
36

9. Foreign Exchange Portfolio

Bank/Consolidated
12/31/2007 12/31/2006
Assets
Rights to foreign exchange sold 5,088,677 2,900,291
Exchange purchased pending settlement 5,487,310 3,214,229
Advances in local currency (73,296) (206,095)
Income receivable from advances 39,511 29,749
Term bills in foreign currency 3,979 2,843
Total 10,546,181 5,941,017
Current 8,401,776 4,466,491
Long-term 2,144,405 1,474,526
Liabilities
Exchange sold pending settlement 4,810,724 2,788,026
Foreign exchange purchased 5,907,613 3,344,623
Advances on foreign exchange contracts (1,773,786) (1,525,914)
Liabilities for sales made 33,555 2,027
Payables in foreign currencies 309 1,020
Total 8,978,415 4,609,782
Current 6,828,883 3,201,592
Long-term 2,149,532 1,408,190
Memorandum accounts
Open import credits 463,529 292,355
Confirmed export credits 103,269 163,208
10. Trading Account

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Assets
Stock exchanges - guarantee deposits 76,264 214,773 77,663 214,773
Debtors pending settlement 55,474 36,261 306,893 175,450
Clearinghouse transactions - - 7,045 19,047
Transactions pending settlement 178,639 8,525 190,867 14,116
Other 83 411 83 411
Total 310,460 259,970 582,551 423,797
Current 310,460 259,970 582,551 423,797
Liabilities
Creditors for loan of shares 97,303 306,587 97,303 306,587
Creditors pending settlement 9,201 70,461 128,592 190,358
Transactions pending settlement 112,288 38,135 117,637 42,862
Clearinghouse transactions - - 142,749 36,088
Commissions and brokerage fees payable 686 799 2,643 4,140
Total 219,478 415,982 488,924 580,035
Current 177,881 253,669 447,327 417,722
Long-term 41,597 162,313 41,597 162,313
37

11. Tax Credits
a) Nature and origin of recorded tax credits

Bank
12/31/2006 Recognition Realization 12/31/2007
Allowance for loan losses 684,131 275,345 (258,360) 701,116

Reserve for civil contingencies 67,644 39,373 (40,291) 66,726
Reserve for tax contingencies 422,665 102,605 (9,887) 515,383
Reserve for labor contingencies 295,513 342,008 (297,092) 340,429
Reserve for maintenance of stockholders’
equity integrity 667,456 - (300,407) 367,049
Adjustment to fair value of trading securities
and derivatives 136,893 266,569 - 403,462
Accrual for pension plan 887,141 22,047 (847,020) 62,168
Other temporary provisions 273,641 440,349 (74,277) 639,713
Total tax credits on temporary differences 3,435,084 1,488,296 (1,827,334) 3,096,046
Tax loss carryforwards 247,438 193,922 - 441,360
Social contribution tax - Executive Act
No. 2158/2001 703,478 - (17,106) 686,372
Total tax credits 4,386,000 1,682,218 (1,844,440) 4,223,778
Unrecorded tax credits (954,310) - 319,120 (635,190)
Subtotal - recorded tax credits 3,431,690 1,682,218 (1,525,320) 3,588,588
Adjustment to fair value of available-for-
sale securities 59,261 - (16,831) 42,430
Total recorded tax credits, net 3,490,951 1,682,218 (1,542,151) 3,631,018
Current 1,231,019 1,045,318
Long-term 2,259,932 2,585,700
Bank
Balances
12/31/2005 absorbed Recognition Realization 12/31/2006
Allowance for loan losses 181,458 456,436 93,070 (46,833) 684,131

Reserve for civil contingencies 25,837 46,362 - (4,555) 67,644
Reserve for tax contingencies 7,952 397,991 39,617 (22,895) 422,665
Reserve for labor contingencies 41,202 275,482 - (21,171) 295,513
Reserve for maintenance of
stockholders’ equity integrity 131,782 672,135 - (136,461) 667,456
Adjustment to fair value of trading
securities and derivatives 8,647 155,860 - (27,614) 136,893
Accrual for pension plan - 895,940 115,752 (124,551) 887,141
Other temporary provisions 50,088 189,939 89,318 (55,704) 273,641
Total tax credits on temporary
differences 446,966 3,090,145 337,757 (439,784) 3,435,084
Tax loss carryforwards 247,113 145,820 - (145,495) 247,438
No. 2158/2001 38,530 667,848 18 (2,918) 703,478
Total tax credits 732,609 3,903,813 337,775 (588,197) 4,386,000
Unrecorded tax credits (318,442) (802,465) - 166,597 (954,310)
Subtotal - recorded tax credits 414,167 3,101,348 337,775 (421,600) 3,431,690
Adjustment to fair value of available-
for-sale securities 1,362 195,916 - (138,017) 59,261
Deferred income from derivatives - 1,376 826 (2,202) -
Total recorded tax credits, net 415,529 3,298,640 338,601 (561,819) 3,490,951
38

Consolidated
Allowance for loan losses 739,091 278,337 (304,202) 713,226

Reserve for civil contingencies 71,118 39,783 (40,738) 70,163
Reserve for tax contingencies 489,444 112,095 (12,708) 588,831
Reserve for labor contingencies 310,946 342,052 (299,826) 353,172
Reserve for maintenance of stockholders’ equity
integrity 667,456 - (300,407) 367,049
Adjustment to fair value of trading securities and
derivatives 137,798 267,275 (1,154) 403,919
Accrual for pension plan 887,141 22,047 (847,020) 62,168
Other temporary provisions 294,142 449,611 (77,775) 665,978
Total tax credits on temporary differences 3,597,136 1,511,200 (1,883,830) 3,224,506
Tax loss carryforwards 255,179 202,925 (11,426) 446,678
No. 2158/2001 719,040 - (17,460) 701,580
Total tax credits 4,571,355 1,714,125 (1,912,716) 4,372,764
Unrecorded tax credits (1,039,293) (13,437) 393,916 (658,814)
Subtotal - recorded tax credits 3,532,062 1,700,688 (1,518,800) 3,713,950
Adjustment to fair value of available-for-sale
securities 59,270 - (16,837) 42,433
Deferred income from derivatives 43 - (25) 18
Total recorded tax credits, net 3,591,375 1,700,688 (1,535,662) 3,756,401
Current 1,246,830 1,064,481
Long-term 2,344,545 2,691,920
Consolidated
Balances
Allowance for loan losses 181,458 519,813 92,922 (55,102) 739,091

Reserve for civil contingencies 25,837 49,695 173 (4,587) 71,118
Reserve for tax contingencies 7,952 463,404 45,069 (26,981) 489,444
Reserve for labor contingencies 41,202 290,824 910 (21,990) 310,946
Reserve for maintenance of
stockholders’ equity integrity 131,782 672,135 - (136,461) 667,456
securities and derivatives 8,647 156,960 581 (28,390) 137,798
Accrual for pension plan - 895,940 115,752 (124,551) 887,141
Other temporary provisions 50,088 211,002 91,583 (58,531) 294,142
Total tax credits on temporary
differences 446,966 3,259,773 346,990 (456,593) 3,597,136
Tax loss carryforwards 247,113 159,921 1,955 (153,810) 255,179
Social contribution tax - Executive
Act No. 2158/2001 38,530 683,671 18 (3,179) 719,040
Total tax credits 732,609 4,103,365 348,963 (613,582) 4,571,355
Unrecorded tax credits (318,442) (904,470) (2,471) 186,090 (1,039,293)
Subtotal - recorded tax credits 414,167 3,198,895 346,492 (427,492) 3,532,062
Insufficient depreciation of leased
assets - 1,922 83 (2,005) -
for-sale securities 1,362 195,921 3 (138,016) 59,270
Deferred income from derivatives - 1,684 827 (2,468) 43
Total recorded tax credits, net 415,529 3,398,422 347,405 (569,981) 3,591,375
39

Tax credits are recorded in accordance with the rules of the Central Bank of Brazil and
adjusted according to their expected realization and present value, as shown below:
b) Expected realization of recorded tax credits

Bank
Temporary Temporary
differences differences Tax loss
Year IRPJ CSLL carryforwards CSLL 18% Total Recorded
2008 874,076 299,123 141,296 34,734 1,349,229 1,045,318

2009 473,188 154,803 300,064 120,959 1,049,014 1,001,348
2010 692,050 226,481 - 46,759 965,290 807,142
2011 121,866 36,309 - 94,816 252,991 250,006
2012 75,108 10,688 - 90,678 176,474 137,935
2013 to 2015 73,743 20,316 - 258,502 352,561 306,915
2016 to 2017 5,968 - - 39,924 45,892 39,924
2018 to 2020 8,952 - - - 8,952 -
2021 to 2022 5,968 - - - 5,968 -
After 2022 17,407 - - - 17,407 -
Total 2,348,326 747,720 441,360 686,372 4,223,778 3,588,588
Consolidated
Temporary Temporary
differences differences Tax loss
Year IRPJ CSLL carryforwards CSLL 18% Total Recorded
2008 888,566 307,632 142,325 35,886 1,374,409 1,064,481

2009 480,283 160,651 302,157 122,376 1,065,467 1,013,867
2010 752,603 251,608 1,184 47,540 1,052,935 881,251
2011 124,547 37,240 944 96,690 259,421 256,368
2012 77,480 11,542 68 92,785 181,875 143,267
2013 to 2015 73,743 20,316 - 264,878 358,937 313,291
2016 to 2017 5,968 - - 41,425 47,393 41,425
2018 to 2020 8,952 - - - 8,952 -
2021 to 2022 5,968 - - - 5,968 -
After 2022 17,407 - - - 17,407 -
Total 2,435,517 788,989 446,678 701,580 4,372,764 3,713,950
IRPJ - Corporate income tax

CSLL - Social contribution tax
Due to differences between accounting, tax and corporate criteria, expected realization of
tax credits should not be taken as indicative of future net income.
The expected realization does not consider the tax credit of the adjustment to fair value of
available-for-sale securities and deferred income from derivatives.
c) Present value of deferred tax credits
The total present value of tax credits is R$ 3,705,644 (12/31/2006 - R$3,641,571) -

Consolidated R$3,831,917 (12/31/2006 - R$3,792,938) and the present value of recorded
40

tax credits is R$3,116,568 (12/31/2006 - R$2,879,475) - Consolidated R$3,221,415

(12/31/2006 - R$2,960,384). The present value was calculated taking into account the
expected realization of temporary differences, tax loss carryforwards, and social
contribution tax at the rate of 18% (Executive Act No. 2158/2001) and the average
funding rate projected for the corresponding periods.
12. Other Receivables - Other

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Receivables from export contracts 156,820 88,865 156,820 88,865

Debtors for purchase of assets 49,504 88,845 51,353 92,038
Salary advances/other 33,921 23,318 34,219 23,624
Escrow deposits for:
Labor claims 1,043,559 1,127,153 1,077,531 1,158,374
Tax claims 1,093,003 979,653 1,244,299 1,105,033
Other 266,115 181,006 274,418 188,851
Recoverable taxes 90,383 353,388 201,330 478,963
Reimbursable payments 172,045 161,905 179,041 167,556
Tax incentive options 1,013 10,348 1,028 11,004
Credit cards 1,535,054 1,041,176 1,535,054 1,041,176
Rural product notes 191,749 195,083 191,749 195,083
Receivables 231,043 18,532 233,700 22,303
Contract guarantees - former controlling
880,238 892,536 880,238 892,536
stockholders (Note 23.h)
Receivables from affiliates 48,330 9,627 46,565 9,766
Other debtors 14,557 52,517 17,171 56,210
Total 5,807,334 5,223,952 6,124,516 5,531,382
Current 2,093,621 1,720,604 2,107,395 1,742,822
Long-term 3,713,713 3,503,348 4,017,121 3,788,560
13. Other Assets
This balance (Bank and Consolidated) refers principally to assets not in use, composed of
real estate and vehicles received in settlement of liabilities in the amount of R$32,000 (2006
- R$32,000 Bank and Consolidated), net of allowance for valuation, and temporary
investments in the amount of R$9,420 (2006 - R$11,429 Bank and R$11,430 Consolidated),
net of allowance for investment losses.
41

14. Prepaid Expenses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Exclusivity contracts for provision of banking

services (1) 1,407,604 578,686 1,407,604 578,686
Commissions 49,085 79,183 49,085 79,183
Other 120,214 44,486 124,768 44,754
Total 1,576,903 702,355 1,581,457 702,623
Current 414,422 227,962 416,333 228,106
Long-term 1,162,481 474,393 1,165,124 474,517
(1) Refers to commercial partnership contracts with the private and public sectors to assure exclusivity for banking
services of payroll credit processing and payroll loans, maintenance of collection portfolio, supplier payment services
and other banking services. These contracts are usually effective for 3 to 5 years.
15. Foreign Branches
The financial position of the Foreign Branches (Grand Cayman and Tokyo), converted at
the exchange rate prevailing at the balance sheet date and included in the individual (Bank)
and consolidated financial statements can be summarized as follows:
12/31/2007 12/31/2006
Assets 11,587,644 10,175,151

Current and long-term assets 11,587,462 10,174,889
Cash 74,698 43,516
Interbank investments 1,468,764 466,978
Securities and derivatives 5,052,120 3,972,755
Lending operations 3,020,976 4,419,545
Leasing operations 10,374 37,613
Other assets 1,960,530 1,234,482
Permanent assets 182 262
Liabilities and stockholders’ equity 11,587,644 10,175,151
Current and long-term liabilities 11,435,389 9,681,930
Money market funding 595,528 820,300
Funds from acceptance and issuance of securities 1,511,492 1,319,003
Borrowings 4,632,031 4,018,774
Subordinated debt 887,790 1,071,583
Other payables 3,808,548 2,452,270
Deferred income 128 63
Stockholders' equity 152,127 493,158
Net loss (44,712)
Net income for the second half of 2006 31,932
In November 2007, Banco Santander S.A. sold the Banespa Grand Cayman branch, with a
gain of R$59,052, net of taxes.
42

16. Investments in Affiliates and Subsidiaries

12/31/2007
Number of shares (in
thousands)
Ownershi Adjusted
p stockholder’ Net income
Common (*) Preferred (%) equity
Financial Sector
Santander Brasil Arrendamento
Mercantil S.A. (3) 86,984 - 99.99% 480,531 43,601
Santander S.A. Corretora de
Câmbio e Títulos (3 and 9) 6,718,398 6,718,398 99.99% 137,003 120,837
Santander Brasil S.A. Corretora de
Títulos e Valores Mobiliários (3) 9,201 4,400 99.99% 173,969 124,876
Santander Asset Management
Distribuidora de Títulos e Valores
Mobiliários Ltda. (3, 6 and 7) 64,000 (*) - 99.99% 71,295 19,200
Other Sectors
Produban Serviços de Informática
S.A. (3 e 11) 11,250 - 99.99% 11,460 46
Santander S.A. Serviços Técnicos,
Administrativos
e de Corretagem de Seguros (3 and
8) 50,425,310 - 99.99% 47,967 36,798
Norchem Participações e
Consultoria S.A. (3) 1,900 - 50.00% 49,149 7,830
Norchem Holding e Negócios S.A.
(3) 5,789 1,930 21.75% 88,677 13,567
Santander Investimentos em
Participações S.A. (3,4 and 5) 507,709 - 97.69% 300,392 162,869
Santander Administradora de
Consórcios Ltda. (3 and 10) 3,000 (*) - 99.99% 3,602 110
Agropecuária Tapirapé S.A. (3) 199,729 384,697 87.54% 6,015 219
Carrying amount of Equity in affiliates and

investments subsidiaries
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Financial Sector 862,798 770,743 308,514 77,061

Banco Santander S.A. (1) - - - 13,965
Banco Santander Brasil S.A. (1) - - - (752)
Santander Banespa Companhia de
- - - 12,410
Arrendamento Mercantil S.A. (2 and 3)
Santander Brasil Arrendamento Mercantil
480,531 498,595 43,601 19,489
S.A. (3)
Santander S.A. Corretora de Câmbio e
137,003 79,942 120,837 13,405
Títulos (3 and 9)
Santander Brasil S.A. Corretora de Títulos e
173,969 112,527 124,876 10,574
Valores Mobiliários (3)
Santander Asset Management Distribuidora
de Títulos e Valores Mobiliários Ltda. (3,6 71,295 79,679 19,200 7,970
and 7)
43

Carrying amount of Equity in affiliates and

investments subsidiaries
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Other Sectors 405,620 265,406 205,593 28,767

Produban Serviços de Informática S.A. (3
11,460 11,529 46 717
and 11)
Santander S.A. Serviços Técnicos,
Administrativos e de Corretagem de Seguros 47,967 68,407 36,798 10,802
(3 and 8)
Norchem Participações e Consultoria S.A.
24,574 20,660 3,915 1,227
(3)
Norchem Holding e Negócios S.A. (3) 19,287 16,336 2,950 2,077
Santander Investimentos em Participações
293,465 139,883 161,582 13,964
S.A. (3,4 and 5)
Santander Administradora de Consórcios
3,602 3,518 110 48
Ltda. (3 and 10)
Agropecuária Tapirapé S.A. (3) 5,265 5,073 192 (68)
Total 1,268,418 1,036,149 514,107 105,828
(1) Entities merged into Banco Santander S.A. (Note 2).
(2) Entity merged into Santander Brasil Arrendamento Mercantil S.A. (Note 2).
(3) Entities that started being controlled by Banco Santander S.A. on June 30, 2006, due to the merger mentioned in Note
2, except for Norchem Holding e Negócios S.A. that became an affiliate of the Bank on the same date.
(4) Formerly Santander Companhia Securitizadora de Créditos Financeiros, which merged Santander Brasil
Participações e Empreendimentos S.A. (Note 2).
(5) At the Extraordinary Stockholders’ Meeting held on October 30, 2007, the stockholders approved a capital increase
in the company, with the issue of 11,709 thousand shares and the entry of a new partner Santander S.A. Corretora de
Câmbio e Títulos, through which Banco Santander S.A. holds an indirect interest of 2.31%.
(6) On October 23, 2006, Santander Banespa Asset Management Ltda. was authorized by the Central Bank of Brazil to
operate as a securities dealer and its name was changed to Santander Banespa Asset Management Distribuidora de
Títulos e Valores Mobiliários Ltda.
(7) Formerly Santander Banespa Asset Management Distribuidora de Títulos e Valores Mobiliários Ltda.
(8) Formerly Banespa S.A. Serviços Técnicos, Administrativos e de Corretagem de Seguros.
(9) Formerly Banespa S.A. Corretora de Câmbio e Títulos.
(10) Formerly Santander Banespa Administradora de Consórcios Ltda.
(11) Formerly Santander Distribuidora de Títulos e Valores Mobiliários Ltda. The resolutions passed by the Stockholders’
Meeting on August 31, 2007 were the conversion from limited liability company to corporation and changes to main
activities and company’s name to Produban Serviços de Informática S.A.
17. Property and Equipment

Bank
12/31/2007 12/31/2006
Cost Depreciation Net Net
Real estate 308,662 (176,788) 131,874 108,862

Buildings 226,958 (176,788) 50,170 37,446
Land 81,704 - 81,704 71,416
Other 1,475,349 (903,173) 572,176 571,691
Installations, furniture and equipment 413,966 (199,405) 214,561 216,780
Security and communication equipment 159,719 (88,554) 71,165 72,588
Data processing equipment 881,677 (613,900) 267,777 279,012
Other 19,987 (1,314) 18,673 3,311
Total 1,784,011 (1,079,961) 704,050 680,553
44

Consolidated
12/31/2007 12/31/2006
Cost Depreciation Net Net
Real estate 311,585 (177,645) 133,940 111,008
Buildings 228,957 (177,645) 51,312 38,669
Land 82,628 - 82,628 72,339
Other 1,476,499 (904,291) 572,208 571,758
Installations, furniture and equipment 415,041 (200,480) 214,561 216,809
Security and communication equipment 159,767 (88,569) 71,198 72,625
Data processing equipment 881,677 (613,900) 267,777 279,012
Other 20,014 (1,342) 18,672 3,312
Total 1,788,084 (1,081,936) 706,148 682,766
18. Deferred Charges

Bank
12/31/2007 12/31/2006
Cost Amortization Net Net
Goodwill from merger 488,864 (488,864) - -

Leasehold improvements (1) 556,774 (219,785) 336,989 325,441
Acquisition and development of software (1) 884,561 (500,930) 383,631 552,045
Other 137,510 (36,429) 101,081 81,805
Total 2,067,709 (1,246,008) 821,701 959,291
Consolidated
12/31/2007 12/31/2006
Cost Amortization Net Net
Goodwill from merger 488,864 (488,864) - -

Leasehold improvements (1) 556,774 (219,785) 336,989 325,441
Acquisition and development of software (1) 884,775 (501,037) 383,738 552,191
Other 137,510 (36,429) 101,081 81,805
Total 2,067,923 (1,246,115) 821,808 959,437
(1) As a result of the conclusion of the legal merger process and the adoption of the global brand Santander,
Management recorded in 2007 a provision for residual costs of deferred charges in the amount of R$294,551,
recorded in Nonoperating (Expenses) Incone.
The goodwill resulting from mergers and other events was R$1,079,556 (12/31/2006 -
R$1,962,529), which was fully offset against the reserve for maintenance of integrity of the
merging entity’s stockholders’ equity, and R$882,973 (12/31/2006 - R$439,727) of
amortization expense and the same amount of revenue from reversal of reserve were
recorded in income.
45

19. Money Market Funding and Borrowings and Onlendings
Bank
Without Up to 3 From 3 to Over 12
maturity months 12 months months 12/31/2007 12/31/2006
Deposits 13,717,573 6,309,589 11,933,495 10,973,892 42,934,549 35,121,570

Money market funding - 19,754,986 951,692 2,462,758 23,169,436 25,610,245
Funds from acceptance and
issuance of securities - 537,806 605,482 773,114 1,916,402 1,435,333
Borrowings and onlendings - 3,847,347 4,533,373 3,282,208 11,662,928 9,960,641
Total 13,717,573 30,449,728 18,024,042 17,491,972 79,683,315 72,127,789
Current 62,191,343 54,674,985
Long-term 17,491,972 17,452,804
Consolidated
Deposits 13,711,102 6,267,751 8,482,518 10,405,516 38,866,887 31,792,384

Money market funding - 19,700,390 951,692 2,462,758 23,114,840 25,474,708
Funds from acceptance
- 537,806 605,482 773,114 1,916,402 1,435,333
and issuance of securities
Borrowings and
- 3,847,347 4,533,373 3,282,208 11,662,928 9,960,641
onlendings
Total 13,711,102 30,353,294 14,573,065 16,923,596 75,561,057 68,663,066
Current 58,637,461 52,974,121
Long-term 16,923,596 15,688,945
a) Deposits
Bank
Demand deposits 6,257,913 - - - 6,257,913 4,737,143

Savings deposits 6,288,137 - - - 6,288,137 5,061,171
Interbank deposits - 219,204 3,572,469 211,639 4,003,312 3,403,181
Time deposits 774,256 6,090,385 8,361,026 10,762,253 25,987,920 21,603,470
Other deposits 397,267 - - - 397,267 316,605
Total 13,717,573 6,309,589 11,933,495 10,973,892 42,934,549 35,121,570
Current 31,960,657 24,618,596
Long-term 10,973,892 10,502,974
46

Consolidated
Demand deposits 6,251,442 - - - 6,251,442 4,730,812

Savings deposits 6,288,137 - - - 6,288,137 5,061,171
Interbank deposits - 179,471 127,486 2,714 309,671 251,435
Time deposits 774,256 6,088,280 8,355,032 10,402,802 25,620,370 21,432,361
Other deposits 397,267 - - - 397,267 316,605
Total 13,711,102 6,267,751 8,482,518 10,405,516 38,866,887 31,792,384
Current 28,461,371 23,053,269
Long-term 10,405,516 8,739,115
b) Money market funding
Bank
Up to 3 From 3 to Over 12
months 12 months months 12/31/2007 12/31/2006
Own portfolio 372,715 951,692 2,462,758 3,787,165 16,844,788

Third parties 19,382,271 - - 19,382,271 1,761,327
Linked to trading portfolio
- - - - 7,004,130
operations
Total 19,754,986 951,692 2,462,758 23,169,436 25,610,245
Current 20,706,678 23,093,563
Long-term 2,462,758 2,516,682
Consolidated
Own portfolio 372,715 951,692 2,462,758 3,787,165 16,829,288

Third parties 19,327,675 - - 19,327,675 1,641,290
Linked to trading portfolio
- - - - 7,004,130
operations
Total 19,700,390 951,692 2,462,758 23,114,840 25,474,708
Current 20,652,082 22,958,026
Long-term 2,462,758 2,516,682
47

c) Funds from acceptance and issuance of securities
Bank/Consolidated
Issuance Maturity Currency Interest rate 12/31/2007 12/31/2006
Eurobonds July-05 July-08 US$ 5.00% 101,120 119,634

Eurobonds April-05 April-08 R$ 17.65% 168,456 164,378
Eurobonds November-07 March-08 US$ 4.95% 41,139 -
Eurobonds March-07 January-14 R$ 10.00% 112,919 -
Eurobonds (1) November-05 May-09 R$ IPCA+6.00% 189,423 174,199
Eurobonds (1) April-06 August-10 R$ IPCA+6.00% 136,369 126,362
Eurobonds (1) December-05 May-09 R$ IPCA+6.00% 80,699 74,287
Eurobonds (1) February-06 August-24 R$ IPCA+6.00% 73,404 68,982
Eurobonds (1) January-06 May-09 R$ IPCA+6.00% 56,734 52,350
Eurobonds (1) May-06 August-10 R$ IPCA+6.00% 47,460 43,962
Structured Notes December-07 January-08 R$ 71.00%CDI 57,096 -
Structured Notes December-06 January-07 R$ 90.50%CDI - 51,469
Others 241,592 406,124
Securities issued abroad 1,488,759 1,281,747
Real estate credit notes 427,643 153,586
Total 1,916,402 1,435,333
Current 1,143,288 257,400
Long-term 773,114 1,177,933
(1) Indexed Linked Sovereign Notes
d) Borrowings and onlendings
Bank/Consolidated
Foreign borrowings 3,176,339 3,289,409 816,788 7,282,536 5,968,648

Import and export financing lines 2,836,499 2,697,451 698,695 6,232,645 5,552,783
Other credit lines 339,840 591,958 118,093 1,049,891 415,865
Domestic onlendings 671,008 1,243,964 2,465,420 4,380,392 3,991,993
Total 3,847,347 4,533,373 3,282,208 11,662,928 9,960,641
Current 8,380,720 6,705,426
Long-term 3,282,208 3,255,215
Export and import financing lines are funds raised from foreign banks, for use in
commercial foreign exchange transactions, related to the discounting of export bills and
export and import pre-financing, falling due through 2014 and subject to financial charges
corresponding to exchange variation plus interest ranging from 0.25% to 7.40% p.a.
(12/31/2006 - from 0.15% to 10.95% p.a.).
Domestic onlendings - official institutions are subject to financial charges corresponding to

the Long-Term Interest Rate (TJLP), exchange variation of the BNDES basket of
currencies, or US dollar exchange variation, plus interest rate in accordance with the
operating policies of the BNDES System.
48

20. Tax and Social Security
Tax and social security payables comprise taxes payable and amounts being challenged in
the courts.
Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Reserve for tax contingencies (Note 23) 2,076,861 1,798,275 2,395,446 2,086,111
Reserve for tax contingencies - responsibility of
former controlling stockholders (Note 23.h) 609,613 558,627 609,613 558,627
Provision for deferred taxes 716,125 447,839 741,839 456,073
Taxes payable 151,090 119,997 179,579 142,888
Accrued taxes on income 5,837 1,615 12,147 1,677
Total 3,559,526 2,926,353 3,938,624 3,245,376
Current 156,927 121,612 191,726 144,565
Long-term 3,402,599 2,804,741 3,746,898 3,100,811
Nature and origin of deferred tax liabilities

Bank

derivatives 223,354 211,311 - 434,665
Adjustment to fair value of available-for-sale securities 141,556 107,792 (766) 248,582
Deferred income from derivatives (1) 82,929 - (50,843) 32,086
Other - 792 - 792
Total 447,839 319,895 (51,609) 716,125
Long-term 447,839 716,125
Bank
Balances

for-sale securities 12,233 116,928 12,885 (490) 141,556
Deferred income from derivatives (1) - 137,476 87 (54,634) 82,929
Total 18,723 482,721 12,972 (66,577) 447,839
Consolidated

derivatives 223,394 212,373 - 435,767
Adjustment to fair value of available-for-sale
securities 144,581 107,792 (3,790) 248,583
Deferred income from derivatives (1) 82,929 - (50,843) 32,086
Excess depreciation of leased assets 5,169 - (2,000) 3,169
Others - 22,234 - 22,234
Total 456,073 342,399 (56,633) 741,839
Long-term 456,073 741,839
49

Consolidated
Balances

for-sale securities 12,233 119,835 13,331 (818) 144,581
Deferred income from

derivatives (1) - 137,480 87 (54,638) 82,929
Excess depreciation of leased assets - 6,166 539 (1,536) 5,169
Total 18,723 491,924 13,957 (68,531) 456,073
(1) Income from derivatives to be taxed on a cash basis, according to Law No. 11,051/04, regulated by Federal Revenue
Service (SRF) Regulatory Instruction No. 575/05.
21. Subordinated Debts
Consist of securities issued according to the rules of the Central Bank of Brazil, which are
used as Level II Reference Equity for calculating the operating limits.
Bank/Consolidated
Issuance Maturity Amount Interest rate 12/31/2007 12/31/2006
September-
Perpetual Bonds (1)
05 Indeterminate US$500 million 8.70% 887,790 1,071,583
Subordinated
Certificates
of Deposit (2) June-06 July-16 R$1,500 million 105.00% CDI 1,813,986 1,613,559
Subordinated
Certificates
of Deposit (2) October-06 September-16 R$850 million 104.50% CDI 983,802 875,590
Subordinated
Certificates July-06 to
of Deposit (2) October-06 July-16 R$447 million 104.50% CDI 534,047 475,307
Total 4,219,625 4,036,039
Current 2,140 2,584
Long-term 4,217,485 4,033,455
(1) Perpetual bonds issued by the Grand Cayman branch with quarterly interest payments. These bonds do not have a
maturity date or mandatory redemption, although they may, at the discretion of Banco Santander S.A. and with prior
authorization by the Central Bank of Brazil, be redeemed in full in December 2010 or on any subsequent interest
payment date.
(2) Subordinated certificates of deposit issued by Banco Santander S.A. with yield paid at the end of the term together
with the principal.
50

22. Other Payables - Other

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Reserve for labor and civil contingencies
(Note 23) 1,254,590 1,127,232 1,302,177 1,182,844
Reserve for contingencies - Responsibility
of former controlling stockholders (Note
23.h) 270,625 333,909 270,625 333,909
Pension plan (Note 35) 495,170 4,109,294 495,170 4,109,968
Credit cards 1,565,455 1,012,821 1,565,455 1,012,821
Sale of right to receipt of future flow of
payment orders from abroad (1) 644,160 862,653 644,160 862,653
Payables for acquisition of assets and rights
(2) 461,796 236,473 461,796 236,473
Accrued liabilities
Personnel expenses 449,391 372,661 461,583 381,575
Administrative expenses 280,057 275,754 282,096 279,353
Other payments 155,936 5,885 158,748 5,982
Payables to suppliers 209,431 128,162 210,238 129,337
Agribusiness credit notes - LCA 244,855 - 244,855 -
Creditors for unreleased funds 90,940 38,637 90,940 38,637
FGTS (severance pay fund) for amortization 12,433 11,183 12,433 11,183
Other 629,207 329,992 640,450 341,729
Total 6,764,046 8,844,656 6,840,726 8,926,464
Current 4,714,958 6,351,468 4,706,948 6,380,149
Long-term 2,049,088 2,493,188 2,133,778 2,546,315
(1) Payable for sale of right to receipt of future flow of payment orders receivable from foreign correspondent banks, in
the amount of US$360 million, with charges equivalent to 5.5% p.a., payable semiannually until September 2011.
(2) Refers basically to export note loan operations in the amount of R$419,540 (12/31/2006 - R$184,629).
23. Contingent Assets and Liabilities and Legal Obligations - Tax and Social Security
Banco Santander S.A. and its subsidiaries are parties to judicial and administrative
proceedings involving tax, civil and labor matters arising in the normal course of their
business.
Reserves were recognized based on the nature, complexity and history of the lawsuits, and
the opinion of the in-house and outside legal counsel. Santander’s policy is to accrue the full
amount of lawsuits whose likelihood of unfavorable outcome is probable.
Legal obligations - tax and social security were fully recognized in the financial statements,
except for the cases which, in Management’s opinion, based on experts’ evaluation and the
status of the lawsuit, will not produce effects on the balance sheet for Santander entities.
Management understands that the recognized reserves are sufficient to cover possible losses
on the lawsuits.
51

a) Contingent assets
In 2007 no contingent assets were accounted for.
b) Contingent liabilities and legal obligations by nature

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Reserve for tax contingencies (1) (Note

2,076,861 1,798,275 2,395,446 2,086,111
20)
Reserve for labor and civil
1,254,590 1,127,232 1,302,177 1,182,844
contingencies (Note 22)
Reserve for labor contingencies 1,036,653 906,595 1,074,131 951,988
Reserve for civil contingencies 217,937 220,637 228,046 230,856
Total 3,331,451 2,925,507 3,697,623 3,268,955
Current 449,913 349,703 469,550 353,993
Long-term 2,881,538 2,575,804 3,228,073 2,914,962
(1) Includes, mainly, legal obligations.
c) Changes in contingent liabilities and legal obligations

Bank
2007 2006
Tax Labor Civil Tax Labor Civil
Balance as of
December 31 1,798,275 906,595 220,637 23,373 121,181 75,992
Balances absorbed - - - 1,725,704 845,635 158,046
Recognition (1) 322,454 818,936 113,903 60,675 132,681 42,268
Reversal of reserve (14,979) - - (7,596) (63) -
Write-offs due to
payment (28,889) (688,878) (116,603) (3,881) (192,839) (55,669)
Balance as of
December 31 2,076,861 1,036,653 217,937 1,798,275 906,595 220,637
Escrow deposits - other
receivables (2) 572,260 213,421 31,374 561,561 338,465 28,229
Escrow deposits -
securities (2) 14,168 17,838 6,207 16,398 32,661 19,477
52

Consolidated
2007 2006
Tax Labor Civil Tax Labor Civil
Balance as of
December 31 2,086,111 951,988 230,856 23,373 121,181 75,992
Balances absorbed - - - 2,007,829 890,760 167,845
Recognition (1) 360,260 833,363 118,542 79,622 137,194 43,673
Reversal of reserve (20,557) (415) (1,101) (16,336) (151) (69)
Write-offs due to
payment (30,368) (710,805) (120,251) (8,377) (196,996) (56,585)
Balance as of
December 31 2,395,446 1,074,131 228,046 2,086,111 951,988 230,856
Escrow deposits -
other receivables (2) 681,413 221,563 32,884 651,810 339,282 29,493
Escrow deposits -
securities (2) 26,553 17,869 6,281 31,478 32,957 19,879
(1) Includes the accrual for tax contingencies for the period, recorded under "Tax Expenses".
(2) Do not include escrow deposits for possible and/or remote contingencies and appeal deposits.
d) Legal obligations - tax and social security
Refer to judicial and administrative proceedings involving tax and social security
obligations, as described below:
Difference in CSLL (social contribution tax) rate - R$1,177,845 - Consolidated

R$1,250,652 (12/31/2006 - R$1,127,756 - Consolidated - R$1,196,991): challenges the
payment of the difference in CSLL rate from 8% to 18% applied to financial
institutions, in disagreement with the constitutional principle of equal treatment. A court
injunction was obtained. On June 15, 2005, the former Banespa received an unfavorable
decision from the lower court. The Bank filed an appeal with the Federal Regional
Court, which was accepted for supersedeas and remanding effects. On January 14, 2008,
the Court denied the appeal filed by the Bank. This decision is appealable to higher
courts.
Deductibility of CSLL from IRPJ (corporate income tax) - R$333,398 -

Consolidated R$392,786 (12/31/2006 - R$318,040 - Consolidated - R$370,886): seeks
deduction of CSLL expense from income tax calculation. A court injunction was
obtained. Concurrently, the Bank filed for suspension of the alleged debt and, on March
29, 2000, the judge authorized the escrow deposit. Subsequently, the former Banespa
received an unfavorable decision and filed an appeal with the Federal Regional Court,
which was accepted for remanding and supersedeas effects. The appeal was denied and
appeals were filed requesting clarification of the decision. The case is awaiting
judgment.
53

Summer Plan (economic stabilization plan) IRPJ/CSLL - R$30,203 - Consolidated -

R$81,657 (12/31/2006 - R$29,288 - Consolidated - R$78,099): Lawsuit seeking
elimination of inflation effects resulting from the Summer Plan in the income and social
contribution tax basis. The lower court issued a decision unfavorable to the Bank and,
after an appeal was filed, the Federal Regional Court rendered a decision
acknowledging the application of the rate of 42.72%. Appeals filed are awaiting
judgment.
FGTS (severance pay fund) - R$52,412 - Consolidated R$55,434 (12/31/2006 -

R$49,783 - Consolidated - R$50,381): Lawsuit claiming the unconstitutionality of
charges created by Supplementary Law No. 110/01 equivalent to 10% on the balance of
FGTS accounts in the event of dismissal without cause and 0.5% on compensation to
employees. The companies were successful in this lawsuit relating to 2001 and, with
respect to the other years, are awaiting the conversion into cash of the escrow deposits
made.
PIS and Cofins - R$208,249 - Consolidated R$210,883: lawsuit filed by several

companies of the conglomerate against the provisions of article 3, paragraph 1 of Law
No. 9,718/98, pursuant to which PIS and COFINS must be levied on all revenues of
legal entities. Previously, PIS and Cofins were levied only revenues from services and
sale of goods. The injunction filed by Banco Santander S.A. received an unfavorable
judgment in the federal court. In September 13, 2007 the Federal Regional Court
accepted the Bank appeal that began to pay PIS and COFINS only on revenue from
services. The federal government filed appeals requesting clarification of the decision
and is awaiting judgment.
e) Tax and social security contingencies
Refer to judicial and administrative proceedings related to taxes and social security
classified, based on the legal counsel’s opinion, as probable loss, for which reserves
were recorded. The matters in dispute refer to the following:
ISS (service tax) - Financial Institutions - refers to administrative and judicial

proceedings with several municipalities that require the payment of ISS on several
revenues from operations that usually do not qualify as service provision. The updated
amount involved is R$62,875 - Consolidated R$87,994 (12/31/2006 - R$51,216 -
Consolidated - R$69,512).
INSS (social security contribution) - refers to administrative and judicial proceedings

seeking collection of social security contribution and salary premium for education on
amounts that normally are not of a salary nature. The updated amount involved is
R$93,042 - Consolidated R$120,498 (12/31/2006 - R$109,170 - Consolidated -
R$140,702).
54

f) Labor contingencies
These are lawsuits brought by labor unions and former employees claiming labor rights
they understand are due, especially payment for overtime and other labor rights,
including retirement benefit lawsuits.
For labor claims considered to be similar and usual, the reserve is recorded based on the
history of payments made. Other labor claims are controlled individually and the
reserves are recognized based on previous court decisions and the stage of each lawsuit.
g) Civil contingencies
Refer to lawsuits for indemnity and review of lending agreements.

Lawsuits for indemnity seek indemnity for property damage and/or pain and suffering,
relating to the consumer relationship, principally with undue protest, return of checks,
inclusion of debtors’ information into the credit restriction master file, elimination of
inflation effects in escrow deposit accounts and other matters.
Lawsuits for review refer to challenges of lending agreement clauses by customers.
There are also lawsuits filed by minority stockholders of the former Banco Noroeste
against corporate acts in 1998 and 1999. Although there are unfavorable decisions from
the lower court, experts believe that the Bank has good chances to overturn such
decisions through the appeals filed with the São Paulo State Court of Justice.
For civil lawsuits considered to be similar and usual, the reserve is recorded based on
the history of payments made, based on the legal counsel’s evaluation of success and
classification. Other lawsuits are controlled individually and the reserves are recognized
based on the status of each lawsuits, law and previous court decisions.
h) Other lawsuits under the responsibility of former controlling stockholders
Refer to tax, labor and civil lawsuits in the amounts of R$609,613, R$177,791 and
R$92,834 - Bank and Consolidated (12/31/2006 - R$558,627, R$219,313 and
R$114,596), respectively, recorded under “Other payables - tax and social security”
(Note 20) and “Other payables - other” (Note 22) which are the responsibility of the
former controlling stockholders of the acquired entities. The lawsuits have guarantees
under the agreements signed at the time of the acquisitions in the amount of R$880,238
(12/31/2006 - R$892,536), recorded under “Other receivables - other” (Note 12). These
lawsuits have no effects on the balance sheet for the Bank and Consolidated.
55

i) Contingent liabilities classified as possible loss risk
Refer to judicial and administrative proceedings involving tax, civil and labor matters
assessed by the legal counsel as possible loss, which were not accounted for. The main
lawsuits are:
Deductibility of Expenses on Allowance for Doubtful Receivables- Administrative
collection by the Federal Revenue Service in view of the deduction from the IRPJ and
CSLL basis of losses on lending operations performed in 1998 and 2000. The Bank is
awaiting judgment and understands that the collection is undue since the expenses met
the deductibility conditions of Law No. 9430/96 as they referred to definitive losses.
The updated amount involved is approximately R$190 million (Bank and
Consolidated).
CPMF (tax on banking transactions) on Customer Operations - in May 2003, the

Federal Revenue Service issued an Infraction Notice against Santander Distribuidora de
Títulos e Valores Mobiliários Ltda. (Santander DTVM) and another Infraction Notice
against the former Banco Santander Brasil S.A., both in the amount of R$290 million.
The notices refer to the collection of a CPMF tax credit on transactions conducted by
Santander DTVM in the management of its customers’ funds and clearance services
provided by the Bank to Santander DTVM, according to the agreement between these
two companies, in 2000, 2001 and the first two months of 2002. Both companies
consider that the tax treatment adopted was adequate since said transactions were
subject to CPMF at zero rate. The Board of Tax Appeals judged the administrative
proceedings, annulling the infraction notice of Santander DTVM and confirming the
infraction notice of the Bank. In both cases, an administrative appeal can be filed with
the Higher Board of Tax Appeals (CSRF). The updated amount of each proceeding is
approximately R$ 500 million.
IRPJ and CSLL on Reimbursement arising from Contractual Guarantees – in

December 2007, the Federal Revenue Service issued an Infraction Notice in the amount
of R$307 million against Banco Santander S.A. The notice refers to the collection of
IRPJ and CSLL for tax year 2002 on amounts reimbursed by the former controlling
stockholder of Banco Santander S.A. for payments made by the Bank that were the
responsibility of the controlling stockholder. The Federal Revenue Service understood
that the amount deposited in favor of Santander S.A. is not a reimbursement but a
taxable income. The Bank has filed an administrative defense.
Addition to the Price on the Purchase of Shares of Banco do Estado de São Paulo
S.A. - Banespa - the former Banco Santander S.A. (former controlling stockholder of
Banespa) filed an ordinary action claiming the inexistence of legal relationship before
the National Treasury in relation to item 3.1 of the Banespa’s Share Purchase and Sale
Agreement. Such item provided for the payment of an addition to the minimum price
should Banespa be released from the tax contingency recognized at the time of the
56

privatization upon the setting of the minimum price. The updated amount involved is
approximately R$263 million. After an unfavorable lower court decision, the Bank is
awaiting a decision on the appeal at the court and understands that the collection is
undue since the payment of the tax contingency by Banespa did not qualify under the
hypotheses included in the agreement that could generate addition to the price paid.
Semiannual Bonus or Profit Sharing - labor lawsuit relating to the payment of a

semiannual bonus or, successively, profit sharing to retired employees from the former
Banco do Estado de São Paulo S.A. - Banespa, hired by May 22, 1975. This lawsuit was
filed by Banespa’s Retirees Association. The involved amount is not disclosed due to
the current stage of the lawsuit and the possibility of affecting its progress.
24. Stockholders’ Equity
a) Capital
Fully paid-up capital is composed of 132,768,479 thousand registered shares without

par value, of which 9,612,358 thousand refer to the capital increase approved at the
Extraordinary Stockholders’ meeting on June 25, 2007, consisting of 5,142,958
thousand common shares and 4,469,400 thousand preferred shares, in the amount of R$
1,500,000, subscribed with interest on capital and dividends of R$ 892,957 and in cash
of R$ 607,043, held as follows:
Shares in thousands
Common Preferred Total
Brazilian residents 498,688 2,048,621 2,547,309

Foreign residents 70,537,235 59,683,935 130,221,170
Total 71,035,923 61,732,556 132,768,479
b) Dividends
In accordance with the Bank’s bylaws, stockholders are entitled to a minimum dividend
equivalent to 25% of net income for the year, adjusted according to legislation.
Preferred shares are nonvoting and nonconvertible, but have the same rights and
advantages granted to common shares, in addition to priority in the payment of
dividends 10% higher than those paid on common shares, and in the capital
reimbursement, without premium, in the event of liquidation of the Bank.
The Executive Board’s and Board of Directors’ meeting held on June 29, 2007
approved the payment of dividends, based on the reserve for dividend equalization in
the amount of R$521,762 (R$3.7553 - common shares and R$4.1308 - preferred shares,
in reais per thousand shares).
57

The Executive Board’s and Board of Directors’ meeting on December 21, 2007
approved the payment of dividends, based on the income reported in the balance sheet
as of June 30, 2007, in the amount of R$647,050 (R$4.6570 - common shares and
R$5.1227 - preferred shares, in reais per thousand shares) and on income for the 3rd
quarter of 2007, in the amount of R$327,628 (common shares R$2.3580 - preferred
shares PN R$2.5938, in reais per thousand shares). The dividends will be attributable to
mandatory minimum dividends for fiscal 2007.
The Executive Board’s and Board of Directors’ meeting on December 26, 2007
approved the payment of dividends, based on the income reported in the balance sheet
for this specific purpose as of October 31, 2007, in the amount of R$240,728 (R$1.7326
- common shares and R$1.9058 - preferred shares, in reais per thousand shares). The
dividends will be attributable to mandatory minimum dividends for fiscal 2007.
In 2006, interim dividends were approved for payment based on retained earnings for
2002, 2003 and 2005, in the amount of R$ 206,033 (common and preferred shares – R$
7.7686 per thousand shares) and on income reported in the balance sheet as of
November 30, 2006 for this specific purpose, in the amount of R$ 223,000 (common
shares – R$ 1.7303 and preferred shares – R$ 1.9033 per thousand shares).
c) Interest on capital
The Executive Board’s and Board of Directors’ meeting held on June 29, 2007
approved the payment of interest on capital, calculated in the first half of 2007, in the
amount of R$263,000 (R$1.8929 - common shares and R$2.0822 - preferred shares, in
reais per thousand shares and R$1.6089 - common shares and R$1.7698 - preferred
shares, net of income tax, in reais per thousand shares), which will be included in the
Bank’s calculation of mandatory minimum dividends for 2007 and generated a tax
benefit of R$89,420.
The Executive Board’s and Board of Directors’ Meeting on December 26, 2007 approve
the payment of interest on capital, based on the income for the 2nd half of 2007, in the
amount of R$264,600 (R$1.9044 - common shares and R$2.0948 - preferred shares, in
reais per thousand shares and R$1.6187 - common shares and R$1.7806 - preferred
shares, net of income tax, in reais per thousand shares), which will be included in the
calculation of mandatory minimum dividends for 2007 and generated a tax benefit of
R$89,964.
In 2006, interest on capital was approved for payment based on income for the first
three quarters of 2006, in the amount of R$ 130,000 (common shares – R$ 1.01 –
preferred shares – R$ 1.11 per thousand shares and common shares – R$ 0.86 and
preferred shares – R$ 0.94, net of income tax, per thousand shares), which generated a
tax benefit of R$ 44,200.
58

d) Reserve for dividend equalization
Limited to 50% of capital, this reserve is intended to provide funds for the payment of
dividends, including dividends in the form of interest on capital, or advance payments,
for purposes of compensation to stockholders.
e) Consolidated stockholders’ equity
The Consolidated Stockholders’ Equity is decreased by R$36,839 (12/31/2006 -

R$44,287) of unrealized results and the realization of these results affected net income
for the year by R$7,448 (12/31/2006 - R$36,308).
25. Operating Ratios
a) Basel Accord (operating limit)
Brazilian financial institutions are required to maintain stockholders’ equity

commensurate with their asset exposure risk, weighted by factors varying from 0 to
300%, and ratio of equity to risk-weighted assets of at least 11%. This ratio is
determined on a consolidated basis and, as of December 31, 2007 and 2006, Santander
was in compliance with the aforementioned limit, as shown below:
Operating assets (1)
12/31/2007 12/31/2006
Risk-weighted assets
Reduced risk: 20% 573,750 335,909
Reduced risk: 50% 4,387,959 2,565,399
Normal risk: 100% 66,313,143 55,153,129
Risk: 300% 10,292,586 9,980,637
Total risk-weighted assets 81,567,438 68,035,074
Basel Accord rate 11% 11%
Required stockholders' equity to assets 8,972,418 7,483,858
Swap credit risk 530,926 349,557
Interest rate risk 275,794 484,473
Required stockholders’ equity 9,779,138 8,317,888
Adjusted stockholders’ equity 9,264,593 7,975,611
Tax credit reduction - National Monetary Council Resolution No. 3059/2002 (283,773) (225,883)
Decrease in deferred charges (415,259) -
Adjustment to fair value of available-for-sale securities (342,438) -
Adjusted stockholders’ equity - TIER I 8,223,123 7,749,728
Subordinated debt 4,111,562 3,874,864
Adjustment to fair value of available-for-sale securities 342,438 -
Reduction of financial institutions’ instruments for funding (16,717) -
Reduction in foreign branches or investments in foreign financial institutions (70) -
Adjusted stockholders’ equity - TIER I and TIER II 12,660,336 11,624,592
Margin 2,881,198 3,306,704
Ratio - TIER I 9.25% 10.25%
Ratio – Total 14.24% 15.37%
(1) Index calculated based on the consolidated financial statements of the financial institutions.
59

b) Fixed assets to equity ratio
Brazilian financial institutions are required to maintain stockholders' equity

commensurate with their investments in permanent assets. The fixed assets to equity
ratio cannot exceed 50% of stockholders' equity, adjusted pursuant to prevailing
regulations. As of December 31, 2007 and 2006, Santander is in compliance with the
aforementioned ratio, with fixed assets to equity ratio of 12.18% and 16.50%,
respectively.
26. Related-Party Transactions
Transactions among the entities of Santander are carried out under usual market rates and
terms, comparable to those applied in transactions with unrelated parties. The principal
transactions and balances are as follows:
Bank
12/31/2007 12/31/2006
Assets Income Assets Income
(Liabilities) (Expenses) (Liabilities) (Expenses)
Cash 36,509 - 16,054 -

Banco Santander, S.A. - Spain 36,498 - 16,029 -
Other 11 - 25 -
Interbank investments 1,596,363 61,123 667,182 19,472
Banco Santander, S.A. - Spain 1,588,247 57,273 651,467 14,411
Santander Brasil Arrendamento Mercantil S.A. 8,116 3,850 15,715 1,361
Other - - - 3,700
Securities and derivatives 3,606,295 1,064,110 3,115,515 298,471
Santander Brasil Arrendamento Mercantil S.A. 3,430,722 364,096 3,069,237 198,397
Banco Santander, S.A. – Spain 14,929 15,316 753 15,767
Santander Benelux, S.A., N.V. 159,925 683,398 43,728 81,915
Other 719 1,300 1,797 2,392
Lending operations - - 73,387 2,394
Santander Overseas Bank, Inc - Puerto Rico - - 73,387 2,394
Dividends and bonuses receivable 143,458 - 24,652 -
Santander Brasil Arrendamento Mercantil S.A. 30,941 - 4,845 -
Mobiliários 26,947 - 6,222 -
Santander S.A. Corretora de Câmbio e Títulos 25,809 - 6,462 -
Santander S.A. Serviços Técnicos, Administrativos
e de Corretagem de Seguros 36,331 - 1,708 -
Santander Investimentos em Participações S.A. 6,800 - - -
Santander Asset Management Distribuidora de
Títulos e Valores Mobiliários Ltda. 16,604 - 4,709 -
Other 26 - 706 -
Trading account 2,535 - - -
Banco Santander, S.A. – Spain 2,535 - - -
Foreign exchange portfolio – assets 1,248,462 - 360,828 -
Banco Santander, S.A. – Spain 1,085,359 - 360,828 -
Santander Benelux, S.A., N.V. 163,103 - - -
Receivables from affiliates 48,330 229,568 9,627 72,416
Banco Santander, S.A. – Spain 5,673 4,718 - -
Santander Brasil S.A. Corretora de Títulos e
Valores Mobiliários 1,594 12,772 5 31
Santander Brasil Arrendamento Mercantil S.A. 169 1,901 100 710
60

Bank
12/31/2007 12/31/2006
Santander Seguros S.A. 32,878 170,339 6,944 61,975

Santander Banespa Seguros S.A. 3,370 19,030 - -
Santander Capitalização S.A. 1,973 20,711 1,478 9,619
Other 2,673 97 1,100 81
Deposits (4,124,146) (409,260) (3,376,005) (215,915)
Santander Brasil Arrendamento Mercantil S.A. (3,487,168) (376,402) (3,152,635) (186,523)
Santander Investimentos em Participações S.A. (304,089) (17,489) (15,082) (917)
Santander Companhia Securitizadora de Créditos
Financeiros - - (109,165) (6,953)
Mobiliários (91,757) (2,081) (1,327) -
Santander S.A. Corretora de Câmbio e Títulos (118,156) (3,122) (663) -
Produban Serviços de Informática S.A. (11,865) (323) - -
Altec Brasil S.A. (47,082) (5,049) (43,826) (2,743)
Santander Asset Management Distribuidora de
(45,652) (3,908) (41,621) (2,673)
Títulos e Valores Mobiliários Ltda.
Other (18,377) (886) (11,686) (16,106)
Money market operations (54,596) (9,488) (135,537) (48,141)
Mobiliários (35,017) (4,472) (64,797) (3,643)
Santander S.A. Corretora de Câmbio e Títulos (19,579) (3,807) (55,240) (3,293)
Produban Serviços de Informática S.A. - (1,209) (15,500) (1,003)
Banco Santander Brasil S.A. - - - (36,743)
Other - - - (3,459)
Securities issued abroad - (325) - -
Banco Santander, S.A. – Spain - (325) - -
Borrowings and onlendings (1,323,936) (57,456) (961,796) (10,657)
Santander Overseas Bank, Inc - Puerto Rico (969,762) (57,456) (568,180) (10,657)
Banco Santander Puerto Rico (330,514) - (388,212) -
Santander Trade Services, Ltd. (3,195) - (1,813) -
Banco Santander Brasil Intl Limited - - (485) -
Banco Santander, S.A. - Spain (19,507) - (3,106) -
Banco Santander, S.A. - Uruguay (958) - - -
Derivatives (126,864) (554,546) (21,696) (74,283)
Banco Santander, S.A. - Spain (5,051) (25,831) (6,811) (11,684)
Santander Benelux, S.A., N.V. (115,070) (519,196) (14,678) (40,279)
Santander Overseas Bank, Inc - Puerto Rico (3,320) (5,284) - -
Santander Brasil Arrendamento Mercantil S.A. (3,423) (4,235) (207) -
Other - - - (22.320)
Foreign exchange portfolio - liabilities (1,251,108) - (355,432) -
Banco Santander, S.A. - Spain (1,093,493) - (355,432) -
Santander Benelux, S.A., N.V. (157,615) - - -
Dividends and bonuses payable (1,411,725) - (963,005) -
Grupo Empresarial Santander, S.L (1,411,683) - (963,005) -
Santander Seguros S.A. (42) - - -
Trading account (15) - (37) -
Mobiliários (15) - (37) -
Payables to affiliates (6,653) (3,228) (1,747) (1,556)
Banco Santander, S.A. - Spain (6,371) - (10) -
Other (282) (3,228) (1,737) (1,556)
Other payables - other (5,112) (31,917) (403) (17,178)
Produban Serviços Informáticos Generales, S.L. (665) (4,001) - -
Aquanima Brasil Ltda. - (16,946) - (16,533)
Altec, S.A. – Chile (4,395) (5,717) - -
61

Bank
12/31/2007 12/31/2006
Universia Brasil S.A (52) (5,253) - (578)

Other - - (403) (67)
27. Income from Services Rendered

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Income from fund management 583,355 318,061 622,105 339,273

Checking account services 619,585 331,383 619,567 331,384
Lending operations 1,017,917 329,147 1,017,917 329,147
Insurance 369,940 123,399 446,220 158,465
Credit cards 345,906 118,772 345,906 118,772
Receiving services
Collection 133,451 71,717 133,451 71,717
Bills, taxes and fees 72,595 41,674 72,595 41,674
Securities brokerage and placement services 83,769 18,157 227,904 63,173
Guarantees provided 76,905 31,021 76,905 31,021
Other 168,172 125,169 178,849 133,546
Total 3,471,595 1,508,500 3,741,419 1,618,172
28. Personnel Expenses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Compensation 1,114,920 601,442 1,125,880 606,502

Charges 426,347 272,537 430,650 278,176
Benefits 317,044 154,602 320,834 155,950
Training 30,550 19,140 30,559 19,263
Other 4,564 3,402 5,749 3,402
Total 1,893,425 1,051,123 1,913,672 1,063,293
62

29. Other Administrative Expenses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Outside and specialized services 994,773 472,968 1,016,188 494,600

Depreciation and amortization 416,231 205,979 416,387 206,096
Advertising, promotions and publicity 266,617 120,851 267,632 121,122
Data processing 211,797 115,332 212,133 115,518
Communications 234,563 112,367 240,980 114,587
Rentals 164,886 93,395 164,706 93,183
Transportation and travel 135,423 78,028 136,135 78,380
Security services 102,467 55,429 102,467 55,429
Asset maintenance and upkeep 76,445 43,064 76,447 43,068
Utilities 64,025 33,343 64,069 33,349
Financial system services 58,521 29,492 66,484 32,085
Materials 34,141 20,507 34,144 20,511
Other 68,489 44,051 73,328 45,521
Total 2,828,378 1,424,806 2,871,100 1,453,449
30. Tax Expenses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
COFINS (tax on revenue) 489,233 221,963 506,005 230,229

ISS (service tax) 152,673 66,664 166,995 73,002
PIS/PASEP (tax on revenue) 79,500 36,069 82,243 37,358
Other 82,514 31,635 90,326 36,054
Total 803,920 356,331 845,569 376,643
31. Other Operating Income

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Monetary gain 10,435 56,929 10,556 57,013

Monetary adjustment of escrow deposits 133,960 54,168 149,396 60,178
Recovery of charges and expenses 99,961 29,233 88,994 32,793
Monetary adjustment of recoverable taxes 7,025 96,528 13,223 99,435
Interest received 22,759 11,847 26,131 11,906
Dividends and bonuses 17,001 9,706 22,589 10,239
Reversal of operating accruals
Tax (Note 23.c) 14,979 7,596 20,557 16,336
Labor (Note 23.c) - 63 415 151
Civil (Note 23.c) - - 1,101 69
Other 60,595 131,233 65,006 131,918
Other 51,702 55,037 58,180 59,780
Total 418,417 452,340 456,148 479,818
63

32. Other Operating Expenses

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Interest and updating of actuarial liability (Note 35) 99,314 368,414 99,314 368,414
Amortization of unrecognized actuarial losses (Note
35) - 34,909 - 35,583
Operating accruals
Tax (Note 23.c) 92,563 46,186 111,255 61,573
Labor (Note 23.c) 818,936 132,681 833,363 137,194
Civil (Note 23.c) 113,903 42,268 118,542 43,673
Other 217,431 82,709 226,011 89,109
Goodwill amortization - 79,565 - 79,565
Commissions 13,490 674 40,710 7,290
Legal fees and costs 45,087 25,003 46,658 25,070
Amortization of expenses on exclusivity contracts
for provision of banking services (1) 203,477 34,878 203,477 34,878
Credit cards 114,119 28,400 114,119 28,400
Serasa/SPC (credit reporting agency) 42,121 24,991 42,139 24,994
Interest on sale of right to receipt of future flow of
payment orders from abroad 38,455 23,063 38,455 23,063
Monetary losses 55,030 15,658 55,227 17,899
CPMF/IOF (taxes on banking transactions) 65,325 8,204 67,125 15,182
Brokerage fees 22,505 7,323 22,513 7,327
Exchange variation - foreign branch 96,865 7,091 96,865 7,091
Provision for employees’ shares – 150 years (2) 76,663 - 77,240 -
Other 262,307 126,776 292,027 133,024
Total 2,377,591 1,088,793 2,485,040 1,139,329
(1) Refers mainly to the amortization of the expenses on the acquisition of payroll credit rights (Note 14).
(2) In June 2007, the Stockholders’ Meeting of Banco Santander, in Spain, approved the distribution of 100 shares to each
employee as part of the celebration of its 150 years.
33. Nonoperating (Expenses) Income

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Gain on sale of Investments (1) 474,747 1,673 772,720 1,673

(Recognition) reversal of allowance
12,258 (1,504) 13,470 53
for losses on other assets
Gain on sale of other assets 13,116 4,127 19,361 4,771
Capital losses (42,699) (22,417) (42,821) (22,419)
Expense on assets not in use (31,092) (21,099) (31,300) (21,396)
Other (expenses) income (Note 18) (237,574) 8,646 (237,302) 10,580
Total 188,756 (30,574) 495,128 (26,738)
(1) In 2007, Santander sold investments and reported nonrecurring gains of R$771million from the partial sale of shares
of Serasa, Bovespa and BM&F, and full sale of the Banespa Grand Cayman branch, recorded in “gain on sale of
investments”. The amount, net of taxes, is R$513 million.
64

34. Derivatives
Santander uses derivatives to reduce market risks arising from its operations. Market risk
management is performed by an independent area, whose practices include the measurement
and monitoring of limits formally established by internal committees, portfolio risks,
sensitivity to interest rate fluctuations, exchange risk exposure and liquidity gaps, among
other practices for monitoring risks of fluctuations in asset prices, interest rates and other
factors which may affect Santander’s portfolio position in the different markets in which it
operates.
Market risk is the exposure to interest rates, exchange rates, price of goods, price of shares
and other according to the type of product, volume of operations, term and conditions of the
agreement and underlying volatility.
Credit risk is the exposure to losses in the event of default by a counterparty. The exposure
to credit risk in futures contracts is minimized by daily payment in cash. Swap agreements
are subject to credit risks in the event the counterparty is unable or unwilling to fulfill its
contractual obligations.
Operating risk is the probability of financial losses resulting from inadequate or failed
people, processes and systems or any other adverse market conditions.
The fair value of swaps is computed based on the estimated cash flow, discounted to present
value according to the applicable interest rate curves, representative of the market
conditions at the balance sheet date. For options, Santander adopts statistical models that
consider the volatility of the asset price and interest rates representative of the market
conditions at the balance sheet date.
The principal interest rates are obtained from futures and swap agreements traded on the
BM&F. Adjustments to these curves are made whenever certain points are considered
illiquid or when due to unusual reasons, they do not fairly represent market conditions.
65

As of December 31, derivatives were as follows:

Bank
12/31/2007 12/31/2006
Trades Trades
Swap Asset Liability Net Asset Liability Net
CDI (interbank deposit

rates) 27,362,370 17,934,203 9,428,167 20,985,000 10,773,168 10,211,832
Fixed interest rate - R$ 4,536,786 1,559,034 2,977,752 5,200,389 1,592,173 3,608,216
Fixed interest rate -
foreign currency 635,893 1,116,117 (480,224) 416,247 736,013 (319,766)
Indexed to price and
interest rates 11,172,838 12,516,102 (1,343,264) 6,057,723 7,503,912 (1,446,189)
Indexed to foreign
currency 6,751,463 16,847,199 (10,095,736) 5,049,707 16,569,090 (11,519,383)
Other indexes 23,834 193,329 (169,495) 77,788 200,248 (122,460)
Total 50,483,184 50,165,984 317,200 37,786,854 37,374,604 412,250
Fair value 329,683 436,279
Counterparty
Customers 26,311,515 25,932,767 378,748 25,725,839 25,314,944 410,895

Related parties 1,619,003 1,611,603 7,400 2,334,786 2,325,741 9,045
Financial institutions 22,552,666 22,621,614 (68,948) 9,726,229 9,733,919 (7,690)
Total 50,483,184 50,165,984 317,200 37,786,854 37,374,604 412,250
Maturity
Up to 3 months 19,101,340 18,834,141 267,199 10,396,606 10,329,947 66,659
From 3 to 12 months 11,996,818 11,913,827 82,991 9,646,587 9,603,065 43,522
Over 12 months 19,385,026 19,418,016 (32,990) 17,743,661 17,441,592 302,069
Total 50,483,184 50,165,984 317,200 37,786,854 37,374,604 412,250
Market
BM&F 29,541,531 29,596,908 (55,377) 15,793,074 15,759,999 33,075
Over the counter 20,941,653 20,569,076 372,577 21,993,780 21,614,605 379,175
Total 50,483,184 50,165,984 317,200 37,786,854 37,374,604 412,250
Consolidated
12/31/2007 12/31/2006
Trades Trades
Swap Asset Liability Net Asset Liability Net
CDI (interbank deposit

rates) 27,340,649 17,535,630 9,805,019 20,980,544 10,429,191 10,551,353
Fixed interest rate - R$ 4,136,333 1,537,245 2,599,088 4,860,359 1,587,681 3,272,678
Fixed interest rate -
foreign currency 635,893 1,116,117 (480,224) 416,247 736,013 (319,766)
Indexed to price and
interest rates 11,172,838 12,516,102 (1,343,264) 6,057,723 7,503,912 (1,446,189)
Indexed to foreign
currency 6,751,463 16,847,199 (10,095,736) 5,044,973 16,569,090 (11,524,117)
Other indexes 23,834 193,329 (169,495) 77,788 200,248 (122,460)
Total 50,061,010 49,745,622 315,388 37,437,634 37,026,135 411,499
Fair value 329,768 432,984
66

Consolidated
12/31/2007 12/31/2006
Trades Trades
Counterparty Asset Liability Net Asset Liability Net
Customers 26,311,515 25,932,767 378,748 25,725,839 25,314,944 410,895

Related parties 1,196,829 1,191,241 5,588 1,985,566 1,977,272 8,294
Financial institutions 22,552,666 22,621,614 (68,948) 9,726,229 9,733,919 (7,690)
Total 50,061,010 49,745,622 315,388 37,437,634 37,026,135 411,499
Maturity
Up to 3 months 19,028,746 18,762,005 266,741 10,337,141 10,270,717 66,424
From 3 to 12 months 11,828,605 11,746,605 82,000 9,490,070 9,446,865 43,205
Over 12 months 19,203,659 19,237,012 (33,353) 17,610,423 17,308,553 301,870
Total 50,061,010 49,745,622 315,388 37,437,634 37,026,135 411,499
Market
BM&F 29,541,531 29,596,908 (55,377) 15,793,074 15,759,999 33,075
Over the counter 20,519,479 20,148,714 370,765 21,644,560 21,266,136 378,424
Total 50,061,010 49,745,622 315,388 37,437,634 37,026,135 411,499
Bank/Consolidated
12/31/2007 12/31/2006
Premium Premium
Options Notional Cost Fair value Notional Cost Fair value
Options - Dollar
Call option purchased
position 20,803,174 40,527 24,011 2,529,603 32,738 9,816
Put option purchased
position 2,300,670 29,053 26,508 1,334,012 26,796 30,736
Call option sold position (30,966,641) (803,998) (620,886) (20,336,293) (504,019) (440,390)
Put option sold position (21,013,420) (1,092,604) (1,120,631) (15,634,847) (825,162) (831,070)
(28,876,217) (1,827,022) (1,690,998) (32,107,525) (1,269,647) (1,230,908)
Options – other (1)

Call option purchased
position 30,808,317 136,302 127,903 19,676,933 121,743 122,777
Put option purchased
position 34,523,290 52,906 62,500 5,161,337 42,565 45,536
Call option sold position (57,199,347) (191,859) 75,935 (29,773,615) (134,252) (93,041)
Put option sold position (32,332,587) (123,691) (458,957) (13,782,049) (71,331) (122,258)
(24,200,327) (126,342) (192,619) (18,717,394) (41,275) (46,986)
Total (53,076,544) (1,953,364) (1,883,617) (50,824,919) (1,310,922) (1,277,894)

(1) Includes share options and indexes.
Bank/Consolidated
12/31/2007 12/31/2006
maturity Notional Notional
Up to 3 months (23,500,178) (15,130,427)

From 3 to 12 months (15,628,797) (16,964,103)
Over 12 months (13,947,569) (18,730,389)
Total (53,076,544) (50,824,919)
67

Bank/Consolidated
12/31/2007 12/31/2006
Future Contracts Notional Notional
Exchange coupon - DDI

Asset position 3,417,298 7,479,303
Liability position (2,395,124) (2,463,929)
Interest rates (DI1 and DIA)
Asset position 8,038,348 12,209,205
Liability position (8,201,301) (5,242,252)
Dollar (Dol)
Asset position 5,115,296 2,202,047
Liability position (38,523) (40,955)
Index
Asset position 978 134,285
Treasury Bonds
Treasury Notes 10
Asset position 143,354 -
Others
Asset position 15,382 19,567
Total 5,723,217 13,470,215
Maturity
Up to 3 months 7,782,308 23,228
From 3 to 12 months 3,566,246 (1,756,551)
Over 12 months (5,625,337) 15,203,538
Total 5,723,217 13,470,215
The amounts pledged to guarantee BM&F derivative transactions are comprised of federal
government securities in the amount of R$2,722,245 (12/31/2006 - R$2,357,496) -
Consolidated R$2,801,041 (12/31/2006 - R$2,388,449).
Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Assets
Swap differentials receivable 1,778,808 729,960 1,775,469 726,458
Forward purchases receivable 751,113 66,580 751,113 66,580
Forward sales receivable 535,774 82,471 535,774 82,471
Exercisable option premiums - shares 5,370 71,122 5,370 71,122
Exercisable option premiums - financial
assets and commodities 235,552 137,743 235,552 137,743
Other derivatives 113,695 89,044 113,695 89,044
Total 3,420,312 1,176,920 3,416,973 1,173,418
Current 2,616,361 651,419 2,614,123 649,977
Long-term 803,951 525,501 802,850 523,441
68

Bank Consolidated
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Liabilities
Swap differentials payable 1,449,125 293,681 1,445,701 293,474
Forward purchases payable 764,965 63,512 764,965 63,512
Option premiums - shares 1,075 32,132 1,075 32,132
Option premiums - financial assets and
commodities 2,123,464 1,454,627 2,123,464 1,454,627
Other derivatives 228,926 167,333 228,926 167,333
Total 4,567,555 2,011,285 4,564,131 2,011,078
Current 3,226,639 1,361,055 3,226,346 1,360,938
Long-term 1,340,916 650,230 1,337,785 650,140
35. Pension Plan
a) Benefit Plan - Banesprev
I) The Bank and its subsidiaries sponsor Banesprev - Fundo Banespa de Seguridade
Social, a private pension fund intended to provide retirement and pension benefits that
supplement those provided by government, as defined in the basic regulations of each
plan.
Plan I
Plan I, fully defrayed by the Bank, covers employees hired on or after May 22, 1975,
and those hired by May 22, 1975 who are also entitled to death benefits. As of
December 31, 2007, the beneficiaries of this plan are 286 active participants and 10,579
retirees/pensioners.
Plan II
Effective July 27, 1994, when the new text of the Statutes and Basic Regulations of Plan
II came into effect, Plan I participants who opted for the new plan began contributing
44.94% of the funding rate established by the actuary for each year. As of December 31,
2007, the beneficiaries of this plan are 5,418 active participants and 6,388 retirees/
pensioners.
Supplemental Pension Plan
The Supplemental Pension Plan was created in view of the privatization of Banespa and
is managed by Banesprev. This Plan, effective January 1, 2000, is provided only to
employees hired until May 22, 1975. As of December 31, 2007, the beneficiaries of this
plan are 14 active participants.
69

Plan V
Banco Santander S.A. had a pension plan for the employees transferred from Banco do
Estado de São Paulo S.A. - Banespa, who were hired until May 22, 1975.
Beginning on January 12, 2007, the payment of pension benefits, as set forth in the
Personnel Regulation of Banco do Estado de São Paulo S.A. - Banespa that was merged
into Banco Santander S.A. on August 31, 2006, and in Clause 44 of the Collective
Labor Agreement - ACT 2004/2006 (Adhesion to the Voluntary Migration to the New
Pension Plan Regime) is being made by Banesprev, a private pension entity. For such
purpose, the Bank created Pension Plan V, which was approved by the Secretariat for
Pension Plans (SPC) according to Administrative Rule No. 879 of January 11, 2007.
The Bank transferred to Banesprev the actuarial obligations at the present value of
R$4,019,160 and assets in the amount of R$3,598,816, of which R$3,478,816 refers to
securities and R$120,000 refers to cash. The obligation recorded in Other Payables, in
the amount of R$336,661, is being paid by the Bank in 250 months.
As of December 31, 2007, the beneficiaries of this plan are 75 active participants and
12,589 retirees/pensioners.
Based on the independent actuary’s report, the position of the benefit plans is as
follows:
Actuarial Assumptions Adopted in the Calculations 2007 2006

Plan V Other Plans Plan V Other Plans
Nominal discount rate for actuarial obligations 16.7% 14.6% (1) 16.5% 14.4% (1)
Expected nominal rate of return on plan assets 16.7% 14.6% (1) 16.5% 14.4% (1)
Estimated long-term inflation rate 4.2% (2) 4.0%
Estimated nominal salary increase 4.2% (2) 4.0%
Estimated nominal benefit increase 4.2% (2) 4.0%
General mortality table AT-2000 AT-2000
Disability table Mercer disability table Mercer disability table
Expected turnover rate * 2.0%(2) * 2.0%(2)
Retirement probability 100% when first eligible 100% when first eligible
(1) Except for the Pension Plan, for which the nominal rate of 14.7% (2006 - 15.4%) was used.
(2) Except for the Pension Plan, for which the estimated rate of 3.8% was used.
(3) Except for the Pension Plan, for which the expected turnover rate of 0% was used
(*) 0.1/(Length of service + 1) up to the age of 50 years.
70

2007 2007
Reconciliation of assets and liabilities Plan V Other Plans Plan V Other plans
Fair value of plan assets 3,811,161 4,143,415 - 3,612,495

Present value of actuarial obligations 4,150,799 3,459,338 4,019,160 3,083,562
Adjustments for allowed deferrals:
Unrecognized actuarial losses (24,195) (68,237) (83,683) (46,143)
Unrecognized actuarial gains - 502,007 - 433,564
Net actuarial asset (liability) (1) 315,443 (250,307) 3,935,477 (141,512)
Payments in the period (520,765) - (680,005) -
Expenses recognized in the period 64,842 8,526 680,892 -
Recognized actuarial losses - - - 17,714
Contributions made in the period (2) 3,684,876 23,949 - 27,043
Estimated contributions from sponsor in 2008 51,995 18,240
(1) As provided for in article 49, item “g” of CVM Resolution 371/2000, the above surplus was not recorded in the
financial statements of Banco Santander S.A.
(2) In 2007 this balance includes the initial transfer and the monthly amounts paid to Banesprev for Plan V.
I.b) Defined Contribution Plans
Plan III
Plan III covers employees hired on or after May 22, 1975, previously enrolled in Plans I
and II. In this plan, contributions are made by both the sponsor and participants.
Plan IV
Plan IV covers employees hired on or after November 27, 2000, in which the sponsor
contributes only to risk benefits and administrative costs.
Contributions made to Plans III and IV amounted to R$1,239 (12/31/2006 - R$511).
b) Benefit Plans - Sanprev
Banco Santander S.A. sponsors Sanprev - Santander Associação de Previdência, a

private pension entity intended to provide benefits that supplement those provided by
government, in accordance with Supplementary Law No. 109/2001. The benefit plans
have the following characteristics:
Sponsors: Banco Santander S.A., Sanprev - Santander Associação de Previdência,

Santander Brasil Arrendamento Mercantil S.A., Santander Brasil S.A. - Corretora de
Títulos e Valores Mobiliários, Santander Seguros S.A., Santander Investimentos em
Participações S.A., Santander Asset Management Distribuidora de Títulos e Valores
Mobiliários Ltda., Universia Brasil S.A. and Altec Brasil S.A.
71

Types of Plans:
• Plan I was established on September 27, 1979 as a defined benefit plan for
employees of plan sponsors, and has been in the process of discontinuance since
July 1, 1996. As of December 31, 2007, the beneficiaries of this plan are 9 active
participants and 129 retirees/pensioners.
• Plan II provides a risk coverage for employees of plan sponsors and is funded
exclusively by the sponsors through monthly contributions corresponding to 1.16%
(0.77% in 2006) of the total payroll, structured as a defined benefit plan. Monthly
contributions are apportioned as follows: 0.28% (0.27% in 2006) for risk benefits
and 0.88% (0.50% in 2006) for the administrative program. As of December 31,
2007, the beneficiaries of this plan are 5,903 active participants and 26
retirees/pensioners.
• Plan III provides period-certain annuity and monthly life annuity for employees of
contributing sponsors and is structured as a defined contribution plan, whereby
contributions are freely made by participants starting at 2% of the contribution
salary. As of December 31, 2007, the beneficiaries of this plan are 5,984 active
participants and 196 retirees/pensioners.
Financial and Actuarial Methods:
• Plan I - capitalization (supplementary benefits for length of service, supplementary

benefits for disability, supplementary benefits for temporary pension and death) and
simple coverage method (supplementary benefits for sickness and birth allowance).
• Plan II - capitalization (supplementary benefits for temporary pension,

supplementary benefits for disability and death) and simple coverage method
(supplementary benefits for sickness and birth allowance).
• Plan III - capitalization (monthly life annuity).

The result of the independent actuary’s valuation is as follows:
2007 2006
Actuarial assumptions adopted in the
calculations
Nominal discount rate for actuarial obligations 10.4% 10.2%
Expected nominal rate of return on plan assets 10.4% 10.2%
Estimated long-term inflation rate 4.2% 4.0%
Estimated nominal salary increase 4.2% 4.0%
Estimated benefit increase rate 4.2% 4.0%
General mortality table AT-2000 AT-2000
Disability table Mercer disability table (1) Mercer disability table (1)
Expected turnover rate Null (1) Null (1)
Retirement probability 100% when first eligible (1) 100% when first eligible (1)
(1) Except for Plan III - N/A.

72

2007 2006
Reconciliation of assets and liabilities

Fair value of plan assets 130,306 124,600
Present value of actuarial obligations, by plan: 72,496 70,943
Plan I 62,426 60,972
Plan II 10,070 9,971
Adjustments for allowed deferrals
Unrecognized acturial gains (22,102) (23,900)
Net assets (1) 35,708 29,757
Contributions for the period - Plans II and III (defined
contribution) 2,772 2,361
Estimated contributions from sponsor in 2008 746
(1) Pursuant to article 49, item “g”, of CVM Resolution No. 371/2000, the above surplus was not recorded in the
financial statements of Banco Santander S.A.
c) Other
I) Banco Santander S.A. is the sponsor of pension plans for associated employees,
structured as defined benefit plans. As of December 31, 2007, the beneficiaries of this
plan are 1 active participant and 1,348 retirees/pensioners.
Result of the independent actuary’s valuation:
2007 2006
Actuarial assumptions adopted in the calculations
Nominal discount rate for actuarial obligations 16.7% 16.5%
Expected nominal rate of return on plan assets 16.7% 16.5%
Estimated long-term inflation rate 4.2% 4.0%
Estimated nominal salary increase 4.2% 4.0%
Estimated benefit increase rate 4.2% 4.0%
General mortality table AT - 2000 AT - 2000
Disability table Not applicable Not applicable
Expected turnover rate 0.0% 0.0%
Retirement probability 0.0% 0.0%
Reconciliation of liabilities 2007 2006
Present value of actuarial obligations 186,550 169,906

Unrecognized actuarial gains (32,613) (13,129)
Accrued net actuarial liability 153,937 156,777
Payments in the period (28,787) (27,363)
Expenses recognized for the period - Interest on actuarial obligations 25,946 27,968
Amortization of unrecognized actuarial losses - 17,869
Expense to be recognized in 2008 27,291
II) The Bank contributes to Cabesp - Caixa Beneficente dos Funcionários do Banco do
Estado de São Paulo S.A., an entity that covers health and dental care expenses of
employees hired until Banespa privatization in 2000.
73

2007 2006
Reconciliation of assets and liabilities

Fair value of plan assets 2,782,114 2,430,500
Present value of obligations 2,786,206 2,028,008
Unrecognized actuarial gains 148,346 -
Net assets 144,254 402,492
Contributions for the period 36,184 30,643
d) Variable Compensation Program
Santander established a variable compensation program for its executives based on the
controlling stockholder’s shares appreciation. The conditions set for receiving the
compensation were met and the variable compensation can be paid between January 15,
2008 and January 15, 2009.
In 2007, a new Variable Compensation Program was approved as an incentive to the
executives’ long-term commitment to the Group’s objectives, according to the policy
established by the controlling stockholder. The program consists of annual grants and
exercise right periods of 2 and 3 years, provided that preestablished conditions related
to total return to stockholders and earnings per controlling stockholder’s share are met.
Santander recorded daily pro rata expenses of R$10,134 (2006 - R$2,058) -

Consolidated R$10,311 (2006 - R$2,107), relating to the above-mentioned plans.
74

36. Income and Social Contribution Taxes

Bank
12/31/2007 12/31/2006
Social Social
Income contribution Income contribution
tax tax tax tax
Income before taxes, net of profit sharing 1,895,150 1,895,150 822,258 822,258
Interest on capital (527,600) (527,600) (130,000) (130,000)
Income before taxes 1,367,550 1,367,550 692,258 692,258
Total income and social contribution tax charges
at the rates of 25% and 9%, respectively (341,888) (123,080) (173,064) (62,303)
Additions (deductions) 557,040 41,624 166,395 62,694
Equity in subsidiaries 128,527 46,270 26,457 9,525
Temporarily nondeductible provisions 383,042 (19,766) 19,831 7,011
Reserve for maintenance of integrity of
stockholders’ equity 220,888 79,519 100,338 36,123
Adjustment to market value (40,631) (14,627) 11,884 4,277
Nondeductible expenses and provisions (60,636) (22,907) (27,016) (9,586)
Merged companies’ income - - 45,068 16,225
Other additions (deductions) (74,150) (26,865) (10,167) (881)
Tax loss carryforwards (215,152) 24,437 2,042 (391)
Income and social contribution tax expense -
current - (57,019) (4,627) -
Provision for income and social contribution
taxes - merged companies - - (18,720) (7,662)
taxes – prior year (203) - - -
Income tax expense - foreign countries (7,227) - (816) -
taxes - deferred (122,994) (43,763) 42,480 16,540
Income and social contribution tax credits 32,382 12,172 34,059 13,508
Income tax (130,424) (100,782) 18,317 8,878
Deferred tax assets 71,780 102,224 (68,028) (14,114)
Adjustment to market value 196,007 70,562 (20,305) (7,309)
Adjustments and temporary differences (124,227) 31,662 (47,723) (6,805)
Recorded income and social contribution taxes (58,644) 1,442 (49,711) (5,236)
75

Consolidated
12/31/2007 12/31/2006
Social Social
Income contribution Income contribution
tax tax tax tax
Income before taxes, net of profit sharing 2,016,179 2,016,179 857,117 857,117
Interest on capital (527,600) (527,600) (130,000) (130,000)
Unrealized gains (losses) 7,448 7,448 (36,308) (36,308)
Income before taxes 1,496,027 1,496,027 690,809 690,809
Total income and social contribution tax charges
at the rates of 25% and 9%, respectively (374,006) (134,642) (172,702) (62,173)
Additions (deductions) 484,450 15,632 160,422 60,095
Equity in subsidiaries 737 265 3,823 1,376
Temporarily nondeductible provisions 374,952 (22,726) 15,448 5,356
Reserve for maintenance of integrity of
stockholders’ equity 220,888 79,519 100,338 36,123
Nondeductible expenses and provisions (60,872) (21,729) (26,903) (9,545)
Merged companies’ income - - 45,068 16,225
Other additions (deductions) (11,736) (5,469) 10,685 6,253
Tax loss carryforwards (213,732) 25,440 7,672 1,630
current (103,288) (93,570) (4,608) (448)
taxes - merged companies - - (18,720) (7,662)
prior year (203) - - -
Income tax expense - foreign countries (7,227) - (816) -
taxes - deferred (121,775) (44,044) 43,815 16,563
Tax credit - Insufficient depreciation 2,000 - 997 -
Income and social contribution tax credits 32,382 12,172 34,334 13,508
Income and social contribution tax expense (232,493) (137,614) 19,671 8,453
Deferred tax assets 90,098 109,229 (68,989) (12,633)
Adjustment to market value 195,677 70,444 (20,447) (7,362)
Tax credit - Insufficient depreciation - - (1,922) -
Income and social contribution tax credits (105,579) 38,785 (46,620) (5,271)
Recorded income and social contribution taxes (142,395) (28,385) (49,318) (4,180)
37. Combined Financial Information
With the legal merger occurred on August 31, 2006, as mentioned in Note 2, the individual
and consolidated financial statements for 2007, including all merged operations of Banco do
Estado de São Paulo S.A - Banespa, Banco Santander Brasil S.A. and Banco Santander S.A,
are not comparable with the individual and consolidated financial statements for 2006, since
the merged entities were not subsidiaries and, consequently, consolidated by the merging
entity.
The statement of income for 2006 shows the results of operations for the first half of Banco
Santander Meridional, prior to the merger, plus results of operations for the second half
(after the merger).
76

For adequate comparison, we are presenting the Bank’s combined income statements and
the consolidated combined statements (including the subsidiaries of the merged entities) for
2006, considering the consolidation of all merged entities, as if the merger had occurred in
January 2006.
The statement of income for 2006 includes the income earned by Banco Santander
Meridional and the merged banks in the first half of 2006, plus the results of operations of
Banco Santander Banespa S.A. for the second half of 2006, after the merger, assuring
comparability between 2006 and 2007.
Such information is presented only for purposes of additional analysis arising from the
comparison of balances and transactions and is not intended to represent what might have
occurred had the entities been merged into Banco Santander Meridional in January 2006.
The information is not intended to present the financial statements of a legal entity
separately and is not necessarily indicative of future results.
Individual and Consolidated Statement of Income for the year Ended December 31,
2007 and Individual and Consolidated Combined Statement of Income for the year
Ended December 31, 2006.
Bank
Bank Consolidated
Bank Combined Consolidated Combined
2007 2006 2007 2006
FINANCIAL INCOME 14,600,226 13,749,669 14,424,304 13,570,858

Lending operations 7,834,678 6,831,010 7,935,791 6,884,653
Leasing operations 2,065 5,093 57,375 82,812
Securities transactions 6,087,091 5,695,457 5,753,307 5,393,257
Derivatives 299,913 835,854 301,352 827,881
Compulsory investments 376,479 382,255 376,479 382,255
FINANCIAL EXPENSES (8,994,461) (8,912,944) (8,575,234) (8,538,266)

Funding operations (6,559,456) (6,994,512) (6,145,942) (6,613,908)
Borrowings and onlendings (297,504) (484,699) (297,504) (484,716)
Foreign exchange operations (47,313) 82,898 (47,313) 82,898
Allowance for loan losses (2,090,188) (1,516,631) (2,084,475) (1,522,540)
GROSS PROFIT FROM FINANCIAL

OPERATIONS 5,605,765 4,836,725 5,849,070 5,032,592
OTHER OPERATING (EXPENSES) INCOME (3,499,195) (3,434,637) (3,914,864) (3,537,154)

Income from services rendered 3,471,595 2,715,966 3,741,419 2,964,281
Personnel expenses (1,893,425) (1,920,197) (1,913,672) (1,941,528)
Other administrative expenses (2,828,378) (2,535,238) (2,871,100) (2,591,423)
Tax expenses (803,920) (661,297) (845,569) (706,348)
Investments in affiliates and subsidiaries 514,107 190,268 2,950 3,873
Other operating income 418,417 673,156 456,148 726,948
Other operating expenses (2,377,591) (1,897,295) (2,485,040) (1,992,957)
INCOME FROM OPERATIONS 2,106,570 1,402,088 1,934,206 1,495,438
77

Bank
Bank Consolidated
Bank Combined Consolidated Combined
2007 2006 2007 2006
NONOPERATING (EXPENSES) INCOME 188,756 (50,173) 495,128 (45,139)
INCOME BEFORE TAXES ON INCOME AND

PROFIT SHARING 2,295,326 1,351,915 2,429,334 1,450,299
INCOME AND SOCIAL CONTRIBUTION TAXES (57,202) 100,183 (170,780) 50,360

Provision for income tax (130,424) (41,372) (232,493) (80,779)
Provision for social contribution tax (100,782) (11,173) (137,614) (25,321)
Deferred tax credits 174,004 152,728 199,327 156,460
PROFIT SHARING (400,176) (290,067) (413,155) (299,445)
INCOME BEFORE MINORITY INTEREST 1,837,948 1,162,031 1,845,399 1,201,214
Minority Interest - - (3) (2)
NET INCOME (1) 1,837,948 1,162,031 1,845,396 1,201,212

(1) The realization of unrealized results affected income for the years by R$7,448 (2006 - R$39,181).
38. Other Information
a) In Bank and Consolidated, co-obligations and risks on guarantees provided on behalf of

customers, recorded in memorandum accounts, amounted to R$15,299,229 (12/31/2006
- R$10,480,793).
b) The total net book value of investment funds managed by Santander Group is
R$55,911,429 (12/31/2006 - R$41,260,951) and the total net book value of managed
investment funds is R$60,887,770 (12/31/2006 - R$46,005,087).
c) The insurance coverage in effect as of December 31, 2007 covering global bank risks,
fire, vehicle and other risks, amounts to R$1,922,107 (12/31/2006 - R$1,913,359) -
Consolidated R$1,930,827 (12/31/2006 - R$1,919,159).
Bankers’ blanket insurance was contracted for Banco Santander S.A. with coverage of
R$163,923 - Consolidated R$172,643 (12/31/2006 - R$220,227 - Bank and
Consolidated), which can be used separately or jointly, provided that it does not exceed
the contracted amount.
78

d) Restricted operations were as follows:

Bank/Consolidated
Assets (Liabilities) Income (Expense)
12/31/2007 12/31/2006 12/31/2007 12/31/2006
Restricted operations on assets

Lending operations 8,140 266,020 9,749 6,604
Liabilities - restricted operations on assets
Deposits (8,140) (265,937) (9,689) (6,513)
Net income 60 91
There are no default operations or court challenges regarding restricted operations on

assets or funds raised to be used in these operations.
e) In compliance with National Monetary Council Resolution No. 3198 of May 27, 2004,
Santander Banespa joined the Single Audit Committee through the lead institution
Banco Santander Banespa S.A. A summary of this committee’s report is being provided
together with the combined financial statements of Santander.
39. SUBSEQUENT EVENTS
a) Changes in tax legislation
On January 3, 2008, Executive Act No. 413 was enacted to, among other provisions,
determine an increase in CSLL rate from 9% to 15% for financial institutions and private
insurance and capitalization companies. This Executive Act is subject to the approval of the
National Congress, which has not yet occurred. The deferred tax assets and liabilities were
recorded in the balance sheet according to the tax rate in effect as of December 31, 2007.
This Executive Act is effective beginning May 1, 2008 and, if the Executive Act is signed
into law, there will be an increase in CSLL expense and an increase in CSLL tax assets and
liabilities.
On the same date, Decrees No. 6339 and No. 6345 were enacted, changing the rates of IOF
(tax on financial transactions) on several financial transactions, including lending
operations, effective January 4, 2008. Since it refers to a tax substitution, the Bank is
responsible for withholding and paying said tax at the new rates.
The CPMF (tax on banking transactions) was discontinued on December 31, 2007 by
decision of the Brazilian Senate. Thus, beginning January 1, 2008 financial transactions will
not be subject to the payment of the CPMF, which previously was levied at the rate of
0.38%.
b) On December 28, 2007, Law No. 11,638 was enacted that alters, revokes and adds new
provisions to the Brazilian Corporate Law (Law No. 6404, of December 15, 1976),
primarily to enable the convergence of Brazilian accounting practices with accounting
79

standards generally accepted in the international capital markets and increase the
transparency of the financial statements in general.
The changes and requirements introduced by the Law are effective for fiscal years
beginning on or after January 1, 2008, in line with international accounting practices;
however certain of these changes will be, subject to additional interpretation and regulation
by applicable regulatory agencies. Management is evaluating the effects of the application
of this new law on the financial statements.
The following summarizes certain of the significant changes introduced by the Law:
- Change from the Statement of Changes in Financial Position to the Statement of Cash
Flows.
- A new requirement for the presentation of a Statement of Value Added.
- The ability to maintain separate or auxiliary accounting ledgers and records in

accordance to tax regulations, since as follow it calculates the base income to taxation,
be prepared the necessary adjustments in order to prepare the required financial
statements in conformity with the Brazilian Corporate Law.
- Creation of two new account groups: intangible assets in permanent assets and valuation
adjustments to shareholders’ equity, to be used to record the fair value adjustments for
certain assets and liabilities, specially for certain qualifying financial instruments, and
additionally the foreign currency exchange rate variations on foreign investments.
- Modification of the definition of those assets to be recorded under the caption Property,
Plant and Equipment in the balance sheet, to be those rights in tangible assets that are
maintained or used in the operations of the company’s business, including those rights
received as a result of transactions that transfer the benefits, risks and control of such
assets to the company.
- Requirement that periodic review and analysis of the recoverability of amounts recorded
in property, plant and equipment, intangible assets and deferred charges be performed.
- Requirement that for transactions involving the merger or spin-off between unrelated
parties that result in the effective transfer of control, the related assets and liabilities of
the entity being merged or spun-off should be recorded at fair market value.
- Elimination of the parameter in determining the applicability of the equity method of

accounting for investments in affiliates and subsidiaries and a new requirement that the
equity method of accounting for such investments is required when management has
significant influence over the investee.
80

- Creation of the tax incentive reserve - so as to enable public companies, based on CVM
regulation, to record donations and investment grants as part of earnings in the income
statement (immediately or on a deferred basis) in accordance with international
standards and no longer as capital reserve.
- Elimination of the revaluation reserves.
***
81
INVESTOR RELATIONS
Rua Amador Bueno, 474 – 4th floor

04752-005 – São Paulo – SP – Brazil
Tel.: (55 11) 5538 – 8654
Fax.: (55 11) 5538 – 8361
E-mail: ri@santander.com.br

Financial Statements of Banco Santander S.A. for 2007

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Financial Statements of Banco Santander S.A. for 2007

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FINANCIAL STATEMENTS

BANCO SANTANDER S.A.

Dear Shareholders, The combination of the good performance of the

Santander Banespa Companhia de Arrendamento 2. Assets and Liabilities

and obligation. 2006, reaching R$116,037 million. Of this amount,

In 2007, the returns on the average stockholders’ equity

Stockholders’ Equity payroll and suppliers, specialized sales force and

dedicated to conquest new customers, among them is levers of sustainable growth.

organic growth through branch network, acquisition of

Santander has a portfolio of 8 million customers around and Capitalization Companies).

the country and a distribution network of 2,104 points of

respectively, in 12 months. The growth of market share

over a period of 12 months. obtain international experience through several

Santander Group’s to all its employees, as a celebration

leasing operations of R$392 million and stockholders’ National

Santander operates in accordance with global

non-audit services from Deloitte Touche Tohmatsu

and unique treatment to the customer;

Bank’s policies of credit and determines its inherent risks,

which is responsible for the capital management and Board of Directors

structural risks, including country-risk, liquidity and Executive Board

interest and exchange rates risks;

and February 6, 2008).

- Advanced risk management methodologies, such as the

a confidence level of 99% and timeframe of one day) and

The Market Risks structure is part of the Vice-presidency

Further details of the structure, methodologies and

It is Santander’s policy to restrict the services provided by

INDEPENDENT AUDITORS’ REPORT

To the Management and Stockholders of

São Paulo, February 1, 2008

DELOITTE TOUCHE TOHMATSU Francisco A.M. Sant’Anna

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

CURRENT ASSETS 80,628,674 66,188,689 79,709,547 65,359,913

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

LONG-TERM ASSETS 36,030,615 36,078,760 34,688,468 34,904,937

PERMANENT ASSETS 2,814,584 2,703,754 1,638,921 1,762,249

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

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

CURRENT LIABILITIES 79,400,360 67,904,862 76,142,723 66,419,740

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

LONG-TERM LIABILITIES 30,693,189 29,004,921 30,550,671 27,590,169

DEFERRED INCOME 78,892 41,522 78,892 41,522

STOCKHOLDERS' EQUITY 9,301,432 8,019,898 9,264,593 7,975,611

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

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

FINANCIAL INCOME 7,321,375 14,600,226 7,415,307 14,424,304 7,307,110

FINANCIAL EXPENSES (4,875,064) (8,994,461) (4,566,219) (8,575,234) (4,356,119)

OTHER OPERATING (EXPENSES) INCOME (1,578,890) (3,499,195) (1,854,385) (3,914,864) (1,919,434)

INCOME FROM OPERATIONS 867,421 2,106,570 994,703 1,934,206 1,031,557

PROFIT SHARING (251,021) (400,176) (141,871) (413,155) (147,702)

INCOME BEFORE MINORITY INTEREST 880,001 1,837,948 767,311 1,845,399 803,619

Minority Interest - - - (3) -

NET INCOME (Note 24.e) 880,001 1,837,948 767,311 1,845,396 803,619

Number of shares (thousands) 132,768,479 132,768,479 123,156,121

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

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

Adjustment to fair value -

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

BANCO SANTANDER S.A. (formerly Banco Santander Banespa S.A.)

SOURCES OF FUNDS 14,061,135 39,004,227 21,063,589 38,997,018 19,864,817

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