Santander Profit Bolstered by U.K. Business -- Update
27 January 2016 - 6:34PM
Dow Jones News
By Jeannette Neumann
MADRID-- Banco Santander SA said fourth-quarter net profit was
basically flat from a year earlier as lending grew in the bank's
U.K. business, helping to counter weakness in Latin America, which
has been hit by currency turmoil, and Spain.
Santander posted net profit of EUR1.46 billion ($1.59 billion)
in the fourth quarter compared with EUR1.455 billion a year
earlier. Analysts had forecast net profit of EUR1.29 billion,
according to a poll by data provider FactSet.
Its net interest income that was also roughly in line with what
it had reported a year earlier, rising slightly to EUR7.89 billion
from EUR7.71 billion a year ago. Analysts had forecast EUR7.88
billion.
Net interest income, a key driver of profit for retail banks
such as Santander, is the difference between what lenders pay
clients for deposits and charge for loans.
Santander reported a "fully loaded" capital ratio of 10.05%
compared with 9.85% as of September of last year. Investors and
analysts will welcome that slight climb as they are closely
watching the pace at which Santander is able to generate capital
given concerns that the bank is one of the most weakly capitalized
European lenders.
Fees fell slightly in the fourth quarter from a year
earlier.
Net interest income in Santander's Spanish banking unit fell 16%
in the fourth quarter from the year earlier and total loans fell.
While Spain's economy is recovering after a deep recession, many
individuals and businesses in the country are prioritizing paying
off their existing debts rather than taking out new loans.
Rock-bottom interest rates have also hurt profitability. Net profit
in the Spanish unit fell to EUR94 million in the fourth quarter
from EUR289 million a year earlier.
Net interest income grew in the bank's U.K. unit.
Lending income fell, meanwhile, in Brazil. The Latin American
country posted an increase in net interest income in its local
currency, but Brazil's currency had fallen 26% against the euro as
of December 2015 from a year earlier. That chips away at
Santander's revenue in the South American country when it is
converted into euros on the lender's financial statements.
More individuals and businesses will struggle to pay their debts
on time during Brazil's recession.
Francisco Riquel, an analyst with Madrid-based
financial-services firm N+1 Group, estimates that Santander's
nonperforming loans in Brazil will more than double by 2017
compared with 2014.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
January 27, 2016 02:19 ET (07:19 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Banco Santander (NYSE:STD)
Historical Stock Chart
From Apr 2024 to May 2024
Banco Santander (NYSE:STD)
Historical Stock Chart
From May 2023 to May 2024