Santander 4Q Net Profit Beat Expectations Despite One-Offs -- Earnings Review
01 February 2018 - 12:08AM
Dow Jones News
By Pietro Lombardi
Banco Santander SA (SAN.MC) released fourth-quarter results on
Wednesday morning. Here are some highlights:
PROFIT: Santander reported fourth-quarter net profit of 1.54
billion euros ($1.91 billion), beating analysts' expectations of
EUR1.48 billion, according to a consensus forecast provided by
FactSet. Last year's quarterly figure was about EUR1.6 billion. The
bank's full-year net profit of EUR6.62 billion--up from EUR6.2
billion--also came in above expectations, which were for EUR6.59
billion, according to FactSet.
GROSS INCOME: Santander's gross income also surpassed
expectations, with the Spanish bank reporting EUR12.06 billion in
gross income for the quarter and EUR48.39 billion for the year.
These figures compare with consensus forecasts of EUR11.9 billion
and EUR48.17 billion respectively.
WHAT WE WATCHED
EXCEPTIONAL ITEMS: One-off items weighed on Santander's
operating performance and hit profit, as analysts had expected.
"The group took a further EUR752 million charge in the fourth
quarter relating primarily to the impairment of goodwill for the
group's investment in Santander Consumer USA," Santander said.
The sale of a stake in Allfunds Bank and a small gain related to
U.S. tax reform partially offset these charges. Overall, Santander
reported a EUR382 million net charge for the quarter, in line with
Deutsche Bank's estimate of roughly EUR360 million.
BANCO POPULAR: Banco Popular SA generated a loss of EUR37
million in 2017, partly due to a EUR300 million charge for planned
integration costs in the third quarter, Santander said.
"Santander continues to expect the acquisition to generate a
return on investment of 13%‐14% in 2020," it said.
Societe Generale has said it sees significant restructuring
opportunities and that Santander "has already discussed...that it
may be able to 'beat' its EUR0.5 billion cost-synergies
target."
REGIONS: Santander's performance in Brazil is one of the main
positives in the fourth-quarter results, UBS said. Core revenue
grew 5% on-quarter, driving an overall performance that the Swiss
bank said beat its estimates by 15%. However, "Mexico's operating
income came 8% below expectations," UBS said, citing the country as
one of Santander's negatives. The U.K., another major market for
the Spanish bank, recorded a weak performance.
"[The] UK posted a poor quarter across the board," UBS said.
"Though we have conservative assumptions into 18-19E, UK remains
the biggest area of uncertainty."
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
January 31, 2018 07:53 ET (12:53 GMT)
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