We use cookies to provide you with a better experience. If you continue to use this site, we'll assume you're happy with this. Alternatively, click here to find out how to manage these cookies

hide cookie message
RSS FeedFinancial Planning

Santander profits halve on write-downs

The Spanish bank said it had completed 70 percent of write-downs against repossessed housing

Article comments

Santander reported a fall in first-half profits following major write-downs stemming from the Spanish property crash, the Spanish bank said on Thursday.

The euro zone's biggest bank said first-half profit halved after it had completed 70 percent of write-downs against repossessed housing and unrecoverable loans to developers demanded by government in an attempt to belatedly recognise losses from a 2008 property crash.

"The provisions we are making will allow us to put real estate write-offs in Spain behind us by the end of this year," said chairman Emilio Botin in a statement.

A funding gap in Spanish banks' balance sheets due to bad property investments, worsened by loan defaults in a recession, has pushed Spain to ask Europe for an up to €100 billion (£78 billion) credit line to prop up lenders.

Santander has suffered less than domestic rivals from a severe Spanish economic downturn and the property crash due to its diversified business in Brazil, Mexico, Poland and Britain. Latin America comprises half of profit.

Analysts pointed to weaker revenues in Latin America and higher credit losses in the quarter, particularly Brazil which is suffering a sharp slowdown in economic growth, pushing up the rate of defaults across the banking sector.

Britain was also a weak spot, where historically low interest rates are eating into margins. Second quarter revenues for the British business were down 21 percent on the year-ago period to €954 million.

Shares were trading 1.5 percent higher at 1000 GMT at 4.4 euros per share, outpacing a steady blue-chip index.

Despite the woes gripping the Spanish banking sector, Santander said deposits in Spain had grown 15 percent, while quarterly revenues were the highest in the last 10 quarters.

The April to June period covers the nationalisation of Bankia, Spain's biggest bank rescue ever, which sent shock waves through the country's financial system.

Santander and smaller rival BBVA often gain clients during times of uncertainty in Spain, as they are seen by Spaniards as strong, stable banks.

The bank reported net profit of €1.7 billion after writing down losses of €2.78 billion on Spanish property assets. Profit for the period before provisioning was €3 billion, in line with analysts' expectations.

Santander is required to write down €8.8 billion by the end of the year following two banking reforms put out by the government in February and May.

photo credit: Reuters



Santander profits halve on write-downs
Financial Planning

Budget: What business wants

Budget: What business wants

CFOs are keen for the chancellor to avoid any uncertaintymore ..

Co-operative Group posts £2.5bn loss

Annual loss the worst in its 150 year historymore ..

Google sees 19% rise in Q1 revenue

However, company missed analysts' expectation as ad prices slidmore ..

Starbucks to move Europe HQ to UK

Coffee chain says move reflects growing importance of UK marketmore ..

Stay ahead of the curve

CFOs used to low interest rates ignore working capital optimisation at their perilmore ..

Digital streamlining of travel and expense claims [Part II]

Concur shows CFOs how to make life easier when the auditors come knockingmore ..

Send to a friend

Email this article to a friend or colleague:

PLEASE NOTE: Your name is used only to let the recipient know who sent the story, and in case of transmission error. Both your name and the recipient's name and address will not be used for any other purpose.

In Depth
How M&A teams can create value by challenging the CEO

How M&A teams can create value by challenging the CEO

A typical “hold” period of nine to 18 months can generate increased sale value more ..

In Depth
What every company needs to do about big data?

What every company needs to do about big data?

In the first of a three part series, Pat Brans explores just how big 'big data' will get? more ..


* *