Spain’s Santander bank falls short of expected profit gain

Santander, Europe's biggest bank by capitalisation, said on Wednesday its net profit edged up three percent last year to €5.97 billion ($6.5 billion), held back by provisions.

Spain's Santander bank falls short of expected profit gain
Santander Executive Chairwoman Ana Botin. Photo: Javier Soriano/AFP

In particular it put aside €600 million to cover possible costs of misselling insurance in Britain.

Without the exceptional charges, net profit would have climbed 12.9 percent to €6.57 billion, but this still missed the €6.92 billion expected by analysts surveyed by financial data provider Factset.

Net interest income, a key measure of profitability from lending operations, rose by 8.9 percent to €32.19 billion.

“In 2015, we have delivered ahead of plan in the right way, growing revenues by improving customer service and increasing loyal and digital customers,” Santander Group's Executive Chairwoman Ana Botin said in a statement.

The bank suffered less than its Spanish counterparts when the country's property bubble burst in 2008 thanks to its extensive international operations.

Britain remains Santander's top market, ahead of Brazil and Spain.

In Brazil earnings were hurt by the plunge of the real, but net profit still amounted to €1.63 billion.

The ratio of bad loans dropped to 4.36 percent at the end of 2015, down from 5.19 percent at the end of 2014.

It said a key measure of the funds it has to weather adverse financial events, fully-loaded CET capital, had risen to 10.05 percent from 9.65 at the end of 2014.

The bank aims to achieve a ratio above 11 percent in 2018.

Santander's shares fell 1.5 percent in early trading in Madrid while the main IBEX-35 index was down 0.4 percent.


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Spain’s Santander to shut UK branches as online banking surges

Santander is to shut almost one fifth of its British branches following a surge in online banking, the Spanish group said on Wednesday.

Spain's Santander to shut UK branches as online banking surges
Photo: AFP

Santander said it would close 140 branches, affecting 1,270 staff, of which about one third would be offered alternative roles in the company.

It meanwhile plans to retain 614 branches across the UK.

“The way our customers are choosing to bank with us has changed dramatically in recent years, with more and more customers using online and mobile channels,” said Susan Allen, head of retail and business banking at Santander.

“As a result, we have had to take some very difficult decisions over our less visited branches, and those where we have other branches in close proximity,” she added in Wednesday's statement.

Santander said that the number of transactions carried out via Santander branches had dropped by almost one quarter in the last three years.

Transactions via digital channels had doubled over the same period.

“We continue to believe that branches have a vital role to play and we will be refurbishing 100 of our branches over the next two years,” Allen added.