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Santander outlines path to normality


Euro zone’s biggest bank expects extra regulations and funding costs to bite

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Santander expects it to be three years before its profit levels are back to normal as the burden of regulation and funding constraints take their toll.

The Spanish bank said its growth rates in mature markets are set to remain in single figures, while profits from emerging market activities should soon be growing at levels above 10 percent.

The euro zone’s biggest bank expects its return on equity to improve by between 3 and 6 percentage points over the next three years.

Santander outlined its expectations as it began meetings with investors and analysts in London on Thursday and Friday.

It expects bad debts to start falling next year in Spain and Portugal.

“From 2011 to 2014 we are going to work to regain lost profit. Specific provisions show an underlying downward trend and we expect the credit cycle to start improving in 2012,” said Alfredo Saenz, chief executive, in regard to Spain and Portugal.

Santander said its British arm plans to spend almost £500 million in the next two years to improve profitability ahead of its planned flotation. It is expected to spin off and list its British operations in 2013, delayed from this year.

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Santander outlines path to normality
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