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3rd February 2012

Multiple factors dent Santander profits

Santander reported net attributable of €47m (£39m $62m ¥4.7bn Y391m) for the quarter and €5,351m (£4,469m $7,050bn ¥538.3m Y44,478m) for the full year DOWN 98% and 35% respectively. In common with other Spanish banks Santander made a special writedown of real estate and loans linked to the sector following government pressure in Q4. This is shown as an extraordinary item in the accounts. The attributable profit before this writedown was €1,717m for the quarter €5,351m for the full year DOWN -18% and -14% on the respective periods of 2010.


In the table below operating profit can be seen a little lower only for the quarter and ahead for the full year. Small loan impairment increases were countered by reduced impairment on other assets. Other income losses increased and were the reason for the lower profit at the pre-tax level. The bank did not comment on the construction of the other income losses.


Regionally the most concerning item must be the fall in profits from Brazil & Chile. Whilst largely countered by increased Mexican profits Latin America was down in profitability as a region - and this regions has been the one that has driven Santander growth more than any other factor in recent years. The need to repay UK customers mis-sold Payment Protection Insurance was the main reason for a 42% fall in UK profits equal to €820m. Banesto and Portugese operations were the main reason for a 15% fall in profit from the rest of Europe (excludes Santander brands in Spain and the UK).


Income Summary 2011-Q4 2010-Q4 2011-FY 2010-FY
€m €m €m €m
Net interest income 7,969 7,329 30,821 29,224
Dividends 101 111 394 362
Income from equity-accounted method 40 4 57 17
Net fees 2,454 2,445 10,471 9,734
Gains (losses) on financial transactions 482 715 2,500 2,606
Other operating income/expenses (38) 9 18 106
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Gross income 11,008 10,613 44,262 42,049

Personnel Expenses (2,644) (2,421) (10,326) (9,330)
Other general administrative expenses (1,987) (1,746) (7,455) (6,926)
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General administrative expenses (4,631) (4,168) (17,781) (16,256)
Depreciation and amortisation (534) (531) (2,109) (1,940)
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Operating expenses (5,164) (4,698) (19,889) (18,196)

Net operating income 5,843 5,915 24,373 23,853
Net loan-loss provisions (2,785) (2,404) (10,562) (10,258)
Impairment losses on other assets 11 (310) (173) (471)
Other income (531) (16) (2,822) (1,072)
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Profit before taxes 2,538 3,186 10,817 12,052
Tax on profit (634) (874) (2,936) (2,923)
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Profit from continuing operations 1,904 2,311 7,881 9,129
Net profit from discontinued operations (3) (10) (24) (27)
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Consolidated profit before extraordinary item 1,901 2,301 7,857 9,102
Minority interests 184 201 836 921
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Attributable profit before extraordinary item 1,717 2,101 7,021 8,181
Net extraordinary capital gains and provisions (1,670) — (1,670) —
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Attributable profit to the Group 47 2,101 5,351 8,181