TIDMBNC
RNS Number : 6611I
Banco Santander S.A.
17 June 2011
Press Release
Banco Santander's Annual Shareholders' Meeting
Emilio Botin: "We expect profit to be in line with 2010 and to
maintain the dividend at EUR 0.60 per share"
-- "Over the coming years, I am confident that the real
potential of the bank's results will be reflected in the
significant rates of growth of our profit."
-- The Board of Directors yesterday agreed to pay a first
interim dividend for 2011 on 1 August amounting to 0.13 euros per
share, which is equal to that paid in 2010.
-- "After three years of a strong economic and financial crisis
we can assure that the international economy is recovering."
-- "Our business in Spain has reached a moment in which the
trend is clearly changing, a turning point. The customer margin is
recovering and non-performing loans have peaked."
-- "Now is the time to continue working towards reducing the
distance from those countries that are making a clear recovery. To
do so, the key is completing the restructuring of the financial
system.
-- "Spain will get through this crisis, as it has always done in
difficult moments. What is needed can be summed up in three words:
Reforms, work and confidence. We have very competitive companies
and the best prepared generation of young people in the history of
the country."
-- "With a dividend yield of 7.5%, the Banco Santander share is
clearly an excellent investment opportunity."
-- "Our aim is to further improve our business model in terms of
geographical diversification, balance sheet strength, liquidity,
high return on our share capital, dividends, operating efficiency,
service quality and a strong and attractive brand."
Madrid, June 17, 2011 - Banco Santander Chairman Emilio Botin
today presided over the Bank's Annual Shareholders' Meeting, which
approved the bank's 2010 results. Banco Santander registered net
attributable profit of EUR 8,181 million last year, down 8.5% from
2009. Mr. Botin said: "Against the difficult backdrop of 2010,
marked by instability in the markets, significant changes in
financial regulation and a fragile economic recovery, Banco
Santander was able to achieve an excellent year. This profit is
from ordinary income, does not include any type of extraordinary
gains and was achieved along with a highly prudent provisioning
policy."
In his speech to shareholders, Santander's Chairman recalled
that, "For a fourth year in a row, Banco Santander was one of the
banks with the largest profits worldwide, which confirms its
ability to be profitable even in more difficult economic scenarios.
Accumulated profit over the last four years amounted to EUR 35
billion, which places the bank in third place worldwide in terms of
earnings. During this same period, Banco Santander kept shareholder
remuneration stable, distributing a total of EUR 18.8 billion."
Botin described the four pillars which support Banco Santander's
growth and differentiate Santander from other large international
banks:
-- Capital and liquidity strength: "The strength of the balance
sheet has been one of our priorities in 2010 and we have continued
making this a priority during the first few months of 2011. Banco
Santander has high solvency ratios of maximum quality," Botin said.
He explained that core capital is now above 9% (last year, this
ratio closed at 8.8%) which is greater than that stipulated by the
new regulation. He added: "This excellent performance is to a large
extent the result of the Group's ability to organically generate
capital. Banco Santander has a rate of return on capital which is
one of the highest among the main global banks." Regarding the
liquidity position, he recalled that the Bank raised EUR 109
billion in deposits and launched issues in various markets
amounting to EUR 38 billion.
-- Strict risk management. "We maintain our non-performing loans
ratios below the system average in all geographical areas in which
we are present. In addition, except for Spain and Portugal, the
non-performing loans ratio already shows a downward trend in the
Group's other main units. This is all being reinforced with a very
conservative provisioning policy. In recent years we have
recognised provisions amounting to EUR 27.3 billion, and we have
limited exposure to the construction and property development
sector in Spain."
-- The customer-focused retail banking business model: Retail
banking represents 80% of the Group's profit. "Banco Santander has
the largest international banking branch network, with 14,700
offices providing service to 101 million customers. Over the last
year and a half, we have increased our distribution capacity by
1,100 offices and the number of customers by nine million. Our
retail banking business model is closely related to our structure
of autonomous subsidiaries in terms of capital and liquidity, which
is strengthened by listing our main subsidiaries on the stock
market."
-- Geographical diversification: "Banco Santander's strategy in
recent years has been aimed at reaching a critical mass and high
quotas in our 10 main markets, of which half are developed markets
and half are emerging markets," Botin said. He highlighted that
"over the last few years, Banco Santander has been able to offset
the weak results in Spain and Portugal with the high growth of our
profits in Latin America and the growing results from the
integration of our banks in the United Kingdom and the United
States. We are the only international bank with a significant
presence in six economies of the G-20. The presence of Banco
Santander in Latin America is double that of the second global bank
in the region."
He outlined the excellent economic fundamentals and stability of
Brazil, which accounts for 25% of the Group's profit. "Banco
Santander anticipated Brazil's positive outlook and invested
$27.100 billion in this market. After unifying the brand and
technological integration, we expect to obtain greater commercial
strength and gain market share in the coming years." The rest of
Latin America represents 18% of the Group's profit and is also a
fundamental platform for growth."
Regarding the U.K, where Santander has 1,412 branches and which
accounts for 18% of the Group's profit, Botin said: We are the
second retail bank in terms of deposits, offices and mortgages and
the only international bank that is succeeding in this
country."
Botin also mentioned the Bank's business in Spain, which
contributes 15% to total profit. "After a few years of economic
weakness, which translated into less profit, our business has
reached a moment in which the trend is clearly changing, a turning
point. The results obtained during the first quarter have shown
this: the customer margin is recovering and non-performing loans
have peaked. We expect the non-performing loans ratio in Spain to
reach its highest level in 2011."
As to Portugal, he said: "We expect the sovereign debt crisis in
Portugal to have a very minimum impact on the Group. He explained
that the portfolio of Portuguese government debt amounts to EUR
1.600 billion. "Our bank is the most solvent and solid of the
country and represents 4% of the Group's business and 3% of
profit," he added.
Botin went through the acquisitions carried out in 2010 in
Germany (173 branches of SEB bank) and Poland (Zachodni Bank). He
said: This strategy of strengthening our geographic position was
accompanied by a policy of divestments which allowed the amount of
purchases carried out by Banco Santander in the last three years to
be virtually equal to the figure obtained from sales, totalling EUR
14 billion."
Botin highlighted the Group's strategy of listing its main
subsidiaries on local markets and mentioned the following
advantages:
- It is consistent with our model of autonomous subsidiaries in
terms of capital, liquidity and living wills.
- It enhances the value of our subsidiaries and serves as an
instrument for local purchases.
- It enables us to provide incentives to local teams.
- It is a potential source of very flexible and immediate
capital for the Group.
- Lastly, it promotes transparency and good corporate
governance
The international economic environment
Botin devoted part of his speech to a review of the
international economic outlook. "After three years of acute
economic and financial crisis, we can say that the international
economy is recovering. In particular, the data confirms the
strengthening of the emerging economies." In advanced economies, he
said that "the main countries show increasingly stronger signs of
consolidating their rate of growth, which will positively impact
other countries that are still in a slow recovery phase."
Regarding Spain, he noted that "In the past year, important
steps were taken with a view to recovering the confidence of
international markets. Structural reforms were launched which have
allowed Spain to remain separate from the peripheral countries.
Therefore, now is the time to continue working towards reducing the
distance. from those countries that are making a clear recovery. To
do so, the key is completing the restructuring of the financial
system. If we look at it with perspective, the changes that have
been made to the sector have been very significant over a short
period of time.
However, it is fundamental to move forward quickly on two
issues:
- First, the recapitalisation of certain institutions and their
stock exchange listings.
- Second, ensure its profitability, which requires paying
special attention to margins and reducing costs."
"Looking to the future, I am confident that Spain will get
through this crisis, as it has always done in difficult moments.
What is needed can be summed up in three words: reforms, work and
confidence. We have very competitive companies and the best
prepared generation of young people in the history of the country.
The situation of our economy offers many important challenges for
the bank. The key element is that solvent projects and the
productive sectors of the Spanish economy receive the necessary
financing.
Lastly, Botin discussed the future of the bank and his
confidence in the outlook for the share price. "The performance of
the Santander share is absolutely not in line with the trend of
results in recent years or the solidity of our balance sheet," he
said. He added that he is confident that "in view of our Group's
prospects for generating future profits, the Bank's share will
strongly recover and reflect the real value of the Santander Group.
With a dividend yield of 7.5%, the Banco Santander share is clearly
an excellent investment opportunity." He recalled that goal of
keeping shareholder remunration in 2011 at EUR 0.60 a share, and
announced that the Board of Directors yesterday agreed to
distribute, from Aug. 1, the first dividend against 2011 results of
EUR 0.13 a share, unchanged from the same dividend in 2010.
"During the first few months of 2011 we have confirmed our
ability to generate recurring profit. Profit for the first quarter
amounted to EUR 2.108 billion. The forecast for the second quarter
is that these trends will continue. Accordingly, in 2011 we expect
to obtain net profit in line with that obtained in 2010," he said.
He added that, "In the coming years, I am confident that the real
potential of the bank's results will be reflected in the
significant rates of growth in our profit."
"Our strategy will not change. Our aim is to further develop our
business model in terms of geographical diversification, balance
sheet strength, liquidity, high return on our share capital,
dividends, operating efficiency, service quality, a strong and
attractive brand. Our objective is not size for the sake of size,
but rather the solidity and profitability of the Bank. Therefore,
we will analyse opportunities for acquisition or divestment as
carefully and with as much detail as we have always done. We will
only consider investments that fit into our business model and
clearly add value for shareholders in the medium term. Today Banco
Santander is a more solvent, leading bank with greater potential
for growth than at the beginning of the financial crisis," he
concluded.
Alfredo Saenz: "Our presence in emerging markets will be a key
driver of growth for the Group in the coming years"
Banco Santander Chief Executive Alfredo Saenz, explained the
bank's 2010 results and his vision of the future to shareholders.
"We are one of the best positioned international Banks to continue
generating profitable growth in the coming years. We are
well-diversified, with one of the most solid balance sheets in
international banking, with a presence in markets that are growing
and with a banking model that has proved its success, year after
year," Saenz said.
Saenz reviewed performance in the various markets in which the
bank is present: mature markets, where the recovery is still
beginning and emerging markets with strong growth." This portfolio
of businesses reflects the advantages of a well-diversified Group:
each one of the units is in a different cycle and this translates
into strong stability for the Group's earnings. Our presence in
emerging markets will be a key driver of growth for the Group in
coming years," he said.
The Chief Executive outlined three important challenges facing
the sector:
- "The lack of growth in business volumes in economies that will
continue to deleverage alter years of growth in lending, for
example Spain and Portugal as well as the U.K. and the U.S."
- "New banking regulations, which place pressure on the
underlying returns of the system, diminish the supply of credit and
make it more expensive. We are living through very significant
regulatory changes in the financial sector that will make it more
solid, stable and robust." Regarding the new capital and liquidity
requirements know as Basel III, Saenz noted that they would not
come into full effect until 2019. He also pointed out that some
very important issues are still to be concluded, for example the
regulations regarding systemic risk. "The authorities now recognize
that size is not the most important factor in reviewing systemic
risk; rather other factors, such as the risk assumed by the
institution and the degree of interconnection among its various
units and businesses."
- High funding costs for financial institutions in financial
markets, which in turn affect customers and lowers their demand for
credit. The differentials at which the bank issues in wholesale
markets are going to be higher than what we saw prior to 2007."
"The financial sector has a clear mission to accomplish in the
coming years: recognize the changes in the landscape; adapt
ourselves to them; and seek out markets or sectors with high
potential for growth," said Saenz. He also identified the key
characteristics that winning Banks will have in the new landscape:
balance sheet solidity; critical mass in the markets n which they
operate; strong presence in growing markets and, specifically, in
emerging markets.
"We have great opportunities ahead of us and we are working to
make sure we take advantage of them. We are well positioned to
continue generating profitable growth and, therefore, to continue
to add value despite the difficult environment for the sector.
"
This information is provided by RNS
The company news service from the London Stock Exchange
END
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