Spain's two largest banks post profits in 2008 despite crisis

29th January 2009, Comments 0 comments

Spain's two largest banks, Santander and BBVA, posted strong stock market gains Wednesday after they reported healthy net profits for 2008 despite a sharp international economic slowdown.

MADRID — Santander, the biggest Spanish bank, estimated its annual net profit for 2008 would be 8.87 billion euros (11.71 billion dollars), a 2.0 percent decline from the record profit of 9.03 billion euros it posted in 2007.

"The result is in line with our expectations and seeing that they did not have additional losses was good news," Fortis Bank analyst Diego Barron told AFP.

BBVA, Spain's second-largest bank, said its 2008 net profit fell 18.1 percent over the previous year to 5.02 billion euros, just below analysts' forecast of a full-year profit of 5.42 billion euros.

"We see 2009 with reasonable optimism because we have the sufficient means to sustain these results," BBVA chief executive officer Jose Ignacio Goirigolzarri told a conference call with analysts.

Spanish banks have largely avoided some of the problems in the US home loan derivatives market that have sunk many of their peers but they have been touched by the alleged fraud by US broker Bernard Madoff and a real estate market collapse at home.

Santander saw its reputation for prudence take a hit in December when it revealed its clients had lost 2.3 billion euros in investments in one of its funds which was wholly invested in Madoff products.

The bank late on Tuesday announced it will reimburse, using preferred shares, the 1.38 billion euros that its private banking clients invested in the fund in the first such move by a financial institution.

It said the move would cost it 500 million euros, a figure that will be absorbed in the bank's results for 2008, which will be officially presented on February 5.

BBVA meanwhile said its 2008 results included a provision of 302 million euros to cover its exposure to the alleged fraud run by Madoff.

Shares in Santander closed up 13.39 percent at 6.52 euros while BBVA ended the day up 7.54 percent at 6.99 euros. Both outperformed the benchmark Ibex-35 index which closed up 4.22 percent.


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