Santander profits hit by loan provisions
Santander, the biggest Spanish bank, reported a 26pc decline in third-quarter profit and said it will miss a 2010 earnings goal because of rules forcing it to recognise bad loans earlier.
Net income fell to €1.64bn from €2.22bn a year earlier the lender said in a filing to regulators today, below the average estimate of €1.93bn in a Bloomberg survey of 13 analysts. Santander will now miss a June forecast of reporting similar profit in 2010 to last year’s €8.94bn.
Santander has spent $10bn since June buying a Polish lender and assets in the UK, the US and Germany as Chairman Emilio Botin diversifies the bank’s business across its 10 main markets and reduces its dependence on Spain.
Profit plunged in its home market, where funding costs have risen and the bank set aside €472m to meet a Bank of Spain order to account more quickly for impaired assets.
“I’m still worried about Spain, which makes me glad they have diversified their business into other countries,” said Peter Braendle, who holds Santander shares as part of the $61bn he helps manage at Swisscanto Asset Management in Zurich. “The margin pressure will continue in Spain.”
Santander fell as much as 1.4pc by 9:07am in Madrid trading. They have fallen 20pc this year, compared with a 3.5pc drop in the 53-member Bloomberg Europe Banks and Financial Services Index.
Banco Bilbao Vizcaya Argentaria, Spain’s second-biggest lender, which yesterday reported a 17pc drop in quarterly profit, has declined 26pc.
Bad loans as a proportion of total loans rose to 3.42pc from 3.37pc in June and 3.03pc a year ago, Santander said.