Why Banco Santander Is Up 7% This Year
Santander, which is Spain's largest bank and has acquired Abbey National, Bradford & Bingley, and Alliance & Leicester during the last 10 years, seems to have impressed investors with a series of mixed statements.
During January, Santander announced 2011 results that showed revenues up 5% to 44 billion euros, net profit down 35% to 5.4 billion euros, and a dividend sustained at 0.60 euros per share. Blighting the figures were net insolvency provisions of 10 billion euros and a further 3 billion euros of "extraordinary" provisions relating to Spanish properties.
During April, Santander's first-quarter statement revealed revenue up 8% to 11.3 billion euros and profits falling 24% to 1.6 billion euros. The bank explained that the shortfall was due to a significant increase in provisions for bad loans, which jumped 51% to 3.1 billion euros. However, Santander also declared a 0.15 euro per-share dividend to keep the annual payout running at 0.60 euros per share.
Then, in July, Santander disclosed half-year results that saw profits slump 51% after further write-offs relating to Spanish properties left second-quarter earnings at just 100 million euros. Santander also suggested that a further 2 billion euros of Spanish property writedowns would be incurred during the second half of 2012.
Nonetheless, Santander highlighted "pre-provision" profits up 6% to 12 billion euros for the half, with chairman Emilio Botin commenting: "The first-half results make us one of the most solid and efficient banks in the world and show we are able to increase revenues and keep costs under control even in a difficult environment. The provisions we are making will allow us to put real estate write-offs in Spain behind us by the end of the year."
Santander's next trading update will be published this week on Thursday, and shareholders hope it will reveal encouraging news.
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