SANTANDER says it remains on track to match 2008 results as Spain’s largest bank has reported a 4.5 per cent year-on-year decline in first-half net profits.
The lender, which is also the largest in the euro zone, said net profits for the six months to the end of June were €4.5 billion ($6.3 billion), compared with €4.7 billion at the same stage last year.
However, the year-on-year comparison was distorted by a series of factors, including the integration of Alliance and Leicester of the UK and of the deposits and branch network of Bradford and Bingley. The positive impact of these businesses was offset by a loss of €26 million from five months of consolidation of Sovereign of the US and the weakness of sterling and Latin American currencies against the euro.
Chairman Emilo Botín said yesterday that the company was studying the sale of its insurance units in Argentina, Chile and Mexico.
In Latin America, where the bank is preparing to float part of its Brazilian operation, Santander booked net profits of €1.8 billion, down 4 per cent year-on-year in euros, but ahead in local currencies in most of its main markets.
In Mexico, however, the economic downturn and the government reaction to swine flu was blamed for a 29 per cent decline measured in the local currency.
In most markets, however, Santander benefited from a wide spread between the cost of deposits and interest charged on loans. Net interest income for the six months was ahead 24 per cent, to €12.7 billion. Fee income, meanwhile, was flat at €4.5 billion.
From operating profits of €11.3 billion, up nearly 20 per cent, the bank set aside €4.6 billion in loan-loss provisions, 60 per cent more than a year ago. – Copyright The Financial Times 2009
