Banco Santander's earnings almost doubled last year due, due to lower provisioning needs, although the margins of Spain’s biggest lender remained under pressure, while earnings from Latin America fell due in part to currency factors.
Santander said Thursday that its net profit climbed 90.5 percent from a year earlier to 4.37 billion euros, although the contribution from Spain declined 45 percent to 478 million, with the economy only emerging from its longest recession in decades in the third quarter. Group net income in the fourth quarter alone rose to 1.06 billion euros from 423 million a year earlier.
Emilio Botín, chairman of the euro zone's largest bank by market share, said on Thursday that: “After several years of strengthening the balance sheet and capital, Banco Santander is embarking on a period of strong profit growth in the coming years.”
Despite the crisis, Santander's release boasted about the fact that it is one of the few lenders to have turned a profit "quarter after quarter for the last five years." This, said the bank, was thanks to its geographical diversification, which allowed 53 percent of earnings to come from developing markets and 47 percent from mature markets.
Latin America represented 47 percent of the group's profits, particularly Brazil with 23 percent, while Europe represented 43 percent. Spain contributed seven percent, Britain 17 percent and the United States 10 percent.
We are now stronger than in 2008 and better prepared to face changes in the global economy”
However, net attributable earnings of the Latin American division declined 23.6 percent, while those of Brazil were down 27.9 percent.
Net interest income, the difference between what a bank earns from loans and pays out on deposits, declined 13.3 percent to 25.935 billion euros.
According to Santander, these results indicate "a turnaround" after the dwindling profits of recent years, themselves a result of the international economic crisis, which forced lenders to clean up their balance sheets.
“Santander is one of the international banks that has overcome the crisis most successfully. We are now stronger than in 2008 and better prepared to face the changes in the financial system and the global economy itself,” Botín said.
Botín said he was confident that the recent turbulence in Argentina, which has seen sharp falls in the peso, would be short-lived. “As far as Argentina is concerned, the economy is showing signs of well-documented strength such as acceptable growth [prospects] for 2014, a private sector with little debt, low levels of unemployment, [forecast] record farm output for 2014 and high raw material prices,” he said.
“The bout of exchange rate instability in which the country is immersed is no reason for us to think that the situation described above will change, particularly bearing in mind the strong solvency and loan quality of the main banks,” he added.
Turning the domestic economy, the Santander chief said while positive signs have emerged of late, “the effects of the crisis will take time to disappear.”
“We should remain cautious. The economic backdrop is still difficult. Consolidating the recovery does not mean we are back to normal, if by normal we understand the years before the crisis,” he said.
Botín said unemployment still remains very high and must be reduced, while both private and public debt levels need to fall. He urged the government to push ahead with its reform agenda. “It is important to advance in the reforms that are still pending as they are vital for a return to satisfactory growth rates.”