Santander reports profit slip to 2.108 bln euros

28th April 2011, Comments 0 comments

Spanish banking giant Santander recorded a 4.8-percent drop in first-quarter net profits to 2.108 billion euros ($3.12 billion), but improved performance in Spain, it said on Thursday.

"This profit, which does not include any extraordinary results, is higher than the last two quarters of last year," the group noted a statement.

The figures were nevertheless slightly weaker than what seven analysts interviewed by Dow Jones Newswires had forecast: they had expected net profits of 2.17 billion euros.

Santander, along with other banks, is struggling with an economic downturn in Spain brought about by a collapse of the once booming property market in 2008.

Net interest income -- the difference between interest paid out on deposits and interest earned on lending -- rose 7.5 percent from a year earlier to 7.514 billion euros.

Bad loans as a proportion of total lending edged up to 3.61 percent from 3.34 percent a year earlier.

Gross income increased 6.0 percent from a year earlier to a record 10.852 billion euros.

"The performance of the branch networks in Spain are of particular note, growing by 7.0 percent to 1.562 billion after falling to their lowest levels in the fourth quarter of 2010, of 1.455 billion," Santander said.

The results were well received on the Madrid stock market, where Santander shares rose 1.64 percent to 8.614 euros after the opening in a market that was down 1.10 percent.

"These results highlight the enormous benefits of geographic diversification," Banco Santander Chairman Emilio Botin said.

"Revenues are growing at a good pace throughout the group and in Spain reversed the downward trend of recent quarters. I am convinced that this change will continue in the coming months."

Santander, the eurozone's biggest bank by market capitalisation, said Lisbon's requested international rescue package would have little effect on the company.

"The changed outlook that could result from the rescue plan requested by the Portuguese government would have an immaterial impact on the Group," Santander reported, although it said it holds 1.6 billion euros in Portuguese debt.

Santander's profits in Portugal plunged 34 percent in the first quarter to 90 million euros. The country represents 4.0 percent of its portfolio and 3.0 percent of its profits.

But the bank's financial director Jose Antonio Alvarez said in a telephone conference that its Portuguese subsidiary, Santander Totta, "is in a relatively good situation" compared to the rest of the sector.

Totta "is very well prepared" faced with "an outlook of stagnation which will have an impact on commercial revenues and the bad loans rate" and this impact will therefore be "moderate."

© 2011 AFP

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