Banco Santander has posted nine-month attributed earnings of 3.31bn euros for a 77 per cent increase from a year earlier as a result of lower provisioning requirements for bad loans.
For the third quarter, the Spanish bank generated attributed earnings of €1.055bn, below the Bloomberg consensus estimate of €1.08bn but well above the €122m profit generated a year earlier when the bank was highly affected by provisions.
Looking at results by geographic location, emerging markets made up 55% of earnings. Brazil made up 24%, the UK 15%, Mexico (11%), US (11%), and Spain (7%). Poland also made a significant contribution.
Quarterly revenue remained above the €10bn mark in constant rates while gross margin through nine months was €30.348bn for a 3% decline compared to a year earlier.
Meanwhile, costs remained flat in the quarter with a 3% year-on-year increase over a nine-month period for a total of €14.858bn. Santander assured that synergies in Spain and Poland are beginning to show although the bigger impact will take place in the next two years.
The net margin was €14.858bn for a 8% decrease at constant rates and an efficiency rate of 49%.
Non-performing loans rose by 0.25% to 5.43% in the quarter.
The BIS II core capital ratio was 11.56% for a 0.45% increase in the quarter, placing Santander in a 'very comfortable' position to comply with Basel III requirements, which become effective in 2014.
Santander Chairman Emilio Botin said that after years of making provisions, the bank was now in a position to build profits. "After several years of high levels of write-offs and reinforcement of capital, Banco Santander is preparing for a new period of increased profitability," he said.
Santander dividend to remain unchanged, "in line with Spain's situation"
Speaking at a webcast following an earnings presentation, Banco Santander Chief Executive Officer Javier Marín said there was an optimistic economic outlook and that "Spain is on the right path."
He pointed out that Spain's bad loan ratio will be near 7% at the end of the year but should decline in 2014. Santander's bad loan ratio stands at 5.43%.
In regards to the bank's dividends, Marín assured that the pay-out was perfectly in line with Spain's situation and that there are no plans to change dividend policy.
Marín also commented about the potential acquisition of one of the country's nationalized bank's, NovaCaixaGalicia (NCG) or Catalunya Caixa. Marín said the bank is always alert to opportunities but that the current priority is the integration of Banesto, increasing market share among business and high-wealth markets, and reducing deposit and credit costs.
Spain's 'bad bank' fund (Sareb) plans to carry out auctions to sell the two nationalized entities before the end of the year.
By 11:14, shares
of Santander were down 0.40% to €6.51.