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27th April 2012

Santander profit down on loan losses

Santander reported Q1 net attributable of €1,604m (£1,314m $2,118m ¥172.1bn Y13,356m) DOWN 24% on the year ago period. Income was 8.3% higher overall with all sectors up with the exception of equity subsidiaries and 'other'. Alfredo Saenz, CEO, said in the results press conference that it had not written down the Spanish property assets to the new central bank standard yet. This will mean a further €1bn of charges to follow before the end of year deadline.

Geographically Europe showed improvements before impairments with the exception of the UK and elsewhere the US showed a fall also. An expense increase of 7.6% led to operating income before cost of credit up 9.2%. A more than 50% increase in provisions led to operating profit after DOWN 14.4%. Generally higher non-operational costs cut away further at the profit.


After several years of rapid profit growth the UK has continued its decline in profits first appearing last year. A combination of 11.5% fall in income and a 42% increase in loan provisions led to the 40% decline in net attributable. Loan loss provisions are explained as primarily due to a worse portfolio of the corporate portfolio.


Q1 income Summary 2012 2011 Change
€m €m %
Net interest income 7,821 7,075 10.6
Dividends 61 40 52.6
Income from equity-accounted method 136 225 (39.9)
Net fees 2,622 2,518 4.1
Gains (losses) on financial transactions 797 664 20.1
Other operating income/expenses (83) (40) >
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Gross income 11,354 10,482 8.3

Expenses
Personnel (2,637) (2,474) 6.6
Other general administrative expenses (1,911) (1,752) 9.1
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General administrative expenses (4,549) (4,227) 7.6
Depreciation and amortisation (525) (505) 4.1
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Operating expenses (5,074) (4,731) 7.2

Net operating income before credit costs 6,280 5,750 9.2
Net loan-loss provisions (3,127) (2,065) 51.4
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Net operating income after loan provisions 3,153 3,685 -14.4
Impairment losses on other assets (83) (48) 74.2
Other income (526) (546) (3.7)
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Profit before taxes 2,545 3,092 (17.7)
Tax on profit (716) (759) (5.6)
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Profit from continuing operations 1,829 2,332 (21.6)
Net profit from discontinued operations 1 (6) -—
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Consolidated profit 1,829 2,327 (21.4)
Minority interests 226 218 3.3
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Attributable profit to the Group 1,604 2,108 (23.9)