1st Half results press releas
Press release
Banco Santander registered first-half attributable profit of EUR 4.445 billion, a decline of 1.6%
The Group raised EUR 88,300 million in deposits during the half,
including EUR 30,000 million from Spain
§ The Group deepens its geographical diversification, with Continental Europe accounting for 43% of profit (Spain 22%), Latin America 37% (Brazil 22%), the U.K. 17% and Sovereign (in the U.S.) 3%.
§ Net operating income, the difference between income and costs, rose 7% to EUR 12,000 million in the first six months. Loans grew by 5% and customer funds by 12%.
§ Continental Europe: Attributable profit fell 6% to EUR 2,553 million. Lending fell by 0.2 percentage point and deposits grew by 34%.
§ Latin America: Attributable profit rose 20% to EUR 2,160 million. Lending rose by 20% and deposits by 19%, in euros.
§ Profit in Brazil rose 35% to a record EUR 1,294 million, with 28% growth in loans and 26% in deposits.
§ U.K.: Attributable profit rose 11% to £875 million and by 14% in euros to EUR 1,006 million. Loans rose by 6% and deposits by 14% in euros.
§ Sovereign generated profit of $227 million (EUR 172 million) after its third consecutive quarter of positive results.
§ Provisions for bad loans increased by 6% to EUR 4,919 million, though were down by 4% on a like-for-like basis (excluding the exchange rate effect and using the same perimeter).
§ Non-performing loans ended the period at 3.37%, up three basis points from the previous quarter, the lowest increase since the international financial crisis began in the summer of 2007. NPLs in Spain were 3.71%, well below the 5.47% average for the sector. The coverage ratio remained at 73%.
§ The efficiency ratio was 42.2%. The U.K. and Brazil were below 40% and Sovereign improved to 44% from 66% a year earlier.
§ The capital ratios underline Banco Santander's solvency, with a Tier 1 ratio of 10.1% and core capital of 8.6%, compared with 9.4% and 7.5%, respectively, a year earlier.
Madrid, July 29, 2010 - Banco Santander registered net attributable profit of EUR 4,445 million in the first half of 2010, a decline of 1.6% from the same period in 2009. Profit during the April-to-June quarter was EUR 2,230 million, the highest of the last four quarters. Banco Santander Chairman Emilio Botín said: "The first-half results make us confident we will obtain a full-year profit similar to last year's, which will allow us to maintain the dividend at EUR 0.60. This is possible thanks to our balance sheet strength and geographical diversification."
Sound P&L account in Grupo Santander H1'10
|
|
Var. o/H1'09 |
|
|
||
|
EUR Mill. |
H´10 |
Amount |
% |
% excl. fx and perimeter** |
|
|
Net Interest income |
14,499 |
+1,844 |
+14.6 |
+3.7 |
|
|
Fees |
4,809 |
+271 |
+6.0 |
-2.6 |
|
|
Trading gains and other* |
1,565 |
-609 |
-28.0 |
-24.3 |
|
|
Gross income |
20,874 |
+1,506 |
+7.8 |
-0.9 |
|
|
Operating expenses |
-8,811 |
-757 |
+9.4 |
+0.7 |
|
|
Net operating income |
12,063 |
+749 |
+6.6 |
-2.1 |
|
|
Loan-loss provisions |
-4,919 |
-294 |
+6.3 |
-4.1 |
|
|
Profit before tax |
6,331 |
+418 |
+7.1 |
-0.1 |
|
|
Consolidated profit |
4,903 |
+172 |
+3.6 |
-1.6 |
Minority interest Brazil: absorb 4 p.p. |
|
Attributable profit |
4,445 |
-74 |
-1.6 |
-5.7 |
|
(*).- Including dividends, equity accounted income and other operating results.
(**).- Perimeter: Sovereign (January '09 equity accounted income), Venezuela and SCF units and BNP Argentina branches.
The first-half income statement highlights Santander's capacity to generate recurrent profit even in difficult environments such as the current one. This conclusion was also seen in the stress tests carried out by the Committee of European Banking Supervisors and the Bank of Spain, which found that after two years of an adverse economic scenario, Banco Santander would maintain its end-2009 Tier 1 ratio of 10%, even as it continued to generate profit and distribute a payout of 50% to shareholders.
Results
Banco's Santander's net interest margin grew by 15% and income from fees and commissions by 6%, which, after a 30% decline in earnings from financial transactions, led to a nearly 8% increase in gross income to EUR 20,874 million. After operating costs, net operating income increased by 7% to EUR 12,063 million.
Provisions for bad loans were increased by 6% to EUR 4,919 million. This increase reflects a slowing in growth in provisions, given that the similar year-earlier figure was an increase of 61% and of 44% for all of 2009. Eliminating the exchange rate effect and on a like-for-like basis, provisions fell by 4%.
After these provisions, pretax profit rose 7% to EUR 6,331 million. After taxes and deductions for minority interests in Group subsidiaries, net attributable profit was EUR 4,445 million, a decline of 1.6%. This result consists entirely of ordinary earnings, as no capital gains were realized during the first six months.
The Santander group's overall efficiency ratio stood at 42.2% at the close of the first half, a slight deterioration as a result of declining revenues in Spain and Portugal, which both maintained their ratios below 40%. The most prominent improvement was achieved by Sovereign, which reduced its efficiency ratio from 66.1% in the first half of 2009 to 44.0% this year. Meanwhile, the U.K. efficiency ratio improved 1.3 point to 38.7% and Brazil by 0.9 point to 37.0%.
The non-performing loan rate was 3.37%, up just three basis points from the previous quarter and the lowest quarter-to-quarter increase since international financial crisis began in the summer of 2007. Meanwhile, reserves for loan-losses provide coverage for 73% of non-performing loans. The coverage ratio has been steady between 72% and 75% during the last year.
Banco Santander's NPL and coverage ratios are substantially better than those of its competitors in all its main markets. In Spain, the NPL rate for the Group's units is 3.71%, compared to an average of 5.47% for banks and cajas at the end of May. Similar differentials can be seen in the U.K. and Latin America. At the end of June, 2010, total reserves for loan losses stood at EUR 19,911 million, of which EUR 13,232 million were specific provisions and EUR 6,679 million generic.
… to obtain higher PROFITS in a large percentage of markets: the advantage of diversification
|
Attributable profit* H1'10 |
|
|
In EUR |
|
|
Mature markets: Continental Europe |
|
|
SAN network + Banesto |
22% |
|
SCF + Portugal |
11% |
|
Global Europe |
10% |
|
Restructuring mature markets (UK+Sov.) |
|
|
United Kingdom |
17% |
|
Sovereign |
3% |
|
Emerging markets: Brazil |
22% |
|
Emerging markets: Other countries Latam** |
15% |
(*) Over operating areas H1'10 attributable profit.
(**) Without discontinued operations in Venezuela and Argentina.
|
Mature markets: Continental Europe |
|
|
EUR million. |
|
|
H1'09 |
2,706 |
|
H1'10 |
2,553 |
* Variation (%) H1'10/H1'09: -5.6%
|
Restructuring mature markets (UK+Sov.) |
|
|
In constant EUR million |
|
|
H1'09 |
873 |
|
H1'10 |
1,178 |
* Variation (%) H1'10/H1'09: +35%
|
Emerging markets: Brazil |
|
|
In constant US$ million; continued operations |
|
|
H1'09 |
1,583 |
|
H1'10 |
2,011 |
* Variation (%) H1'10/H1'09: +27.1%
|
Emerging markets: Other countries Latam |
|
|
In constant US$ million |
|
|
H1'09 |
963 |
|
H1'10 |
1,059 |
* Variation (%) H1'10/H1'09: +10.0%
By geographical areas, Continental Europe generated net attributable profit of EUR 2,553 million, a decline of 6%, with the Santander branch network, the main unit, contributing EUR 912 million, a decrease of 14%. Santander Consumer Finance's relative performance is notable, with an increase of 30% to EUR 396 million in net profit. U.K. profit increased by 11% in pounds to £875 million, or 14% in euros, to EUR 1,006 million. Attributable profit in America rose 20% to EUR 2,160 million. Brazil registered the largest gain, or 35%, and made the largest contribution, EUR 1,294 million, followed by Chile, where profit rose 17% to EUR 301 million and Mexico, where profit rose by 26% to EUR 291 million.
Businesses in Continental Europe accounted for 43% of the Group's profit, including 22% from Spain, which Latin America accounted for 37%, including 22% from Brazil. The U.K. accounted for 17% of profit and Sovereign for 3%, after registering a profit in the first half of EUR 172 million, compared to a loss of EUR 26 million during the same period of 2009.
Business
Santander's strategy has been to increase customer funds, with the goal of increasing market share, to attract customers and deepen linkage with more and better customers, while improving the structure for funding assets through more stable deposits.
As a result of this approach, total customer funds managed by the Group increased 12% to EUR 993,774 million at the end of June. Customer deposits increased 23% to EUR 595,300 million. In the first six months of the year, the Group increased deposits by EUR 88,324 million, of which EUR 29,781 million were raised in Spain.
This strong growth in deposits has gone hand in hand with a 20% increase in investment funs under Management, to EUR 113,668 million.
Customer lending
Gross customer loans
EUR billion and % change Jun 10 / Jun 10
+5.3% *
|
Jun 09 |
709 |
|
Sep 09 |
686 |
|
Dec 09 |
700 |
|
Mar 10 |
701 |
|
Jun 10 |
747 |
|
(*) Excluding exchange rate impact: +0.1% |
|
Gross customer loans: June 2010
% over operating areas
|
Spain |
33% |
|
United Kingdom |
33% |
|
Other Europe |
12% |
|
Brazil |
9% |
|
Other Latam |
7% |
|
Sovereign |
6% |
Customer deposits in Continental Europe increased by 34% to EUR 238,123 million. Deposits in Spain, which account for three quarters of these deposits, grew by 43%. Deposits in Portugal grew by 17% and within Santander Consumer Finance by 38%.
Deposits in Latin America grew by 19% to EUR 127,886 million. In Brazil deposits increased by 26%; in Mexico by 19% and in Chile by 14%, with a positive contribution from the exchange rate effect.
Deposits in the U.K. grew by 14% (or 9% in pounds) to EUR 185,762 million. The Zero Current Account campaign attracted 150,000 new customers in the half.
Lending by the Santander Group grew by 5% to EUR 727,882 million at the end of June. In Continental Europe, customer lending came to EUR 329,680 million, nearly unchanged from a year earlier but up by more than EUR 8,600 million from the end of the first quarter. Lending improved in all units. Santander Totta increased loans by 3% on the year and Santander Consumer by 5%. Lending by the two units in Spain, the Santander branch network and Banesto, fell by 4% and 1%, respectively, from a year earlier, though both showed increased from the end of March.
Lending in Latin America grew by 20% in euros to EUR 116,605 million. Brazil increased by 28%, Chile by 21% and Mexico by 12%.
In the U.K., lending increased by 6% in euros, to EUR 240,573 million, or by 1% in pounds. Mortgage lending increased by 6% and lending to SMEs by 20%. The mortgage portfolio ended the quarter at EUR 163,900 million, while market share for new mortgages was 19%.
At the end of June, Spain and the U.K. accounted for the same proportion of Grupo Santander's balance sheet, with each contributing 33% of loans and 31% of customer funds. Continental Europe, which includes Spain, represents 45% of lending and 39% of customer funds; Latin America 16% of lending (of which 9% is in Brazil) and 24% of customer funds (of which 14% are in Brazil). Sovereign, in the U.S., accounts for 6% of lending and customer funds.
Customer funds under management
EUR billion and % change Jun 10 / Jun 09
|
|
Jun 09 |
Sep 09 |
Dec 09 |
Mar 10 |
Jun 10 |
|
|
Total |
884 |
867 |
900 |
932 |
994 |
+12.4%* |
|
Other customer funds |
137 |
144 |
144 |
149 |
151 |
+9.5% |
|
Other on-balance sheet funds |
305 |
289 |
288 |
289 |
292 |
-4.1% |
|
Deposits excl. repos |
442 |
434 |
468 |
494 |
551 |
+24.6% |
|
(*) Excluding exchange rate impact: +6.1%
|
||||||
Customer funds under management. June 2010
% over operating areas
|
Spain |
31% |
|
United Kingdom |
31% |
|
Other Europe |
8% |
|
Brazil |
14% |
|
Other Latam |
10% |
|
Sovereign |
6% |
The share and the dividend
Banco Santander's eligible capital at the close of the first half came to EUR 81,062 million, with a surplus of EUR 32,941 million above the required regulatory minimum. With this capital base, the BIS ratio, using Basel II criteria, comes to 13.5%, Tier I to 10.1% and core capital 8.6%, making Banco Santander one of the most solvent financial institutions in the world. The Standard & Poor's ratings agency recently confirmed Banco Santander's long-term debt rating at AA, making the bank one of four banking groups in the world with ratings of AA or above from the three main ratings agencies.
The first dividend against 2010 earnings, of EUR 0.135234, unchanged from a year earlier, will be paid on Aug. 1. This dividend is in line with the goal announced by Chairman Emilio Botín in the most recent Annual General Meeting to maintain the total payout to shareholders against 2010 earnings at EUR 0.60 a share, unchanged from 2009.
The Santander share ended June at EUR 8.74, up from EUR 8.56 a year earlier. The share recorded significant gains in the month of July, to more than EUR 10 a share, increasing market capitalization to above EUR 85,000 million. Banco Santander is the 10th largest bank in the world and first in the euro zone by market capitalization, and is the largest company in Spain.
At the close of June, Santander had 3,164,143 shareholders. Total employment in the Group is 170,264, serving more than 90 million customers in 13,671 branches, making Santander the international financial group with the most shareholders and the largest branch network.
More information can be found at www.santander.com
Key consolidated data
|
|
|
|
Variation |
|
|
|
|
H1 '10 |
H1 '09 |
Amount |
% |
2009 |
|
Balance sheet (million euros) |
|
|
|
|
|
|
Total assets |
1,220,024 |
1,148,460 |
71,565 |
6.2 |
1,110,529 |
|
Net customer loans |
727,882 |
694,068 |
33,814 |
4.9 |
682,551 |
|
Customer funds under management |
993,774 |
884,425 |
109,349 |
12.4 |
900,057 |
|
Shareholders' equity |
73,034 |
68,596 |
4,438 |
6.5 |
70,006 |
|
Total managed funds |
1,365,893 |
1,271,746 |
94,148 |
7.4 |
1,245,420 |
|
|
|
|
|
|
|
|
Income statement (million euros) |
|
|
|
|
|
|
Net interest income |
14,499 |
12,656 |
1,844 |
14.6 |
26,299 |
|
Gross income |
20,874 |
19,368 |
1,506 |
7.8 |
39,381 |
|
Net operating income |
12,063 |
11,314 |
749 |
6.6 |
22,960 |
|
Profit from continuing operations |
4,917 |
4,670 |
246 |
5.3 |
9,427 |
|
Attributable profit to the Group |
4,445 |
4,519 |
(74) |
(1.6) |
8,943 |
|
|
|
|
|
|
|
|
EPS, profitability and efficiency (%) |
|
|
|
|
|
|
EPS (euro) |
0.5126 |
0.5318 |
(0.0192) |
(3.6) |
1.0454 |
|
Diluted EPS (euro) |
0.5095 |
0.5291 |
(0.0196) |
(3.7) |
1.0382 |
|
ROE |
12.91 |
14.15 |
|
|
13.90 |
|
ROA |
0.85 |
0.86 |
|
|
0.86 |
|
RoRWA |
1.70 |
1.77 |
|
|
1.74 |
|
Efficiency ratio (with amortisations) |
42.2 |
41.6 |
|
|
41.7 |
|
|
|
|
|
|
|
|
BIS II ratios and NPL ratios (%) |
|
|
|
|
|
|
Core capital |
8.6 |
7.5 |
|
|
8.6 |
|
Tier I |
10.1 |
9.4 |
|
|
10.1 |
|
BIS ratio |
13.5 |
13.8 |
|
|
14.2 |
|
NPL ratio |
3.37 |
2.82 |
|
|
3.24 |
|
NPL coverage |
73 |
72 |
|
|
75 |
|
|
|
|
|
|
|
|
Market capitalisation and shares |
|
|
|
|
|
|
Shares outstanding (millions at period-end) |
8,229 |
8,156 |
73 |
0.9 |
8,229 |
|
Share price (euros) |
8.740 |
8.560 |
0.180 |
2.1 |
11.550 |
|
Market capitalisation (million euros) |
71,920 |
69,812 |
2,108 |
3.0 |
95,043 |
|
Book value (euro) |
8.40 |
7.99 |
|
|
8.04 |
|
Price / Book value (X) |
1.04 |
1.07 |
|
|
1.44 |
|
P/E ratio (X) |
8.52 |
8.05 |
|
|
11.05 |
|
|
|
|
|
|
|
|
Other data |
|
|
|
|
|
|
Number of shareholders |
3,164,143 |
3,061,966 |
102,177 |
3.3 |
3,062,633 |
|
Number of employees |
170,264 |
177,781 |
(7,517) |
(4.2) |
169,460 |
|
Continental Europe |
50,461 |
51,013 |
(552) |
(1.1) |
49,870 |
|
o/w: Spain |
33,387 |
33,744 |
(357) |
(1.1) |
33,262 |
|
United Kingdom |
22,843 |
23,347 |
(504) |
(2.2) |
22,949 |
|
Latin America |
86,734 |
92,137 |
(5,403) |
(5.9) |
85,974 |
|
Sovereign |
8,386 |
9,594 |
(1,208) |
(12.6) |
8,847 |
|
Corporate Activities |
1,840 |
1,690 |
150 |
8.9 |
1,820 |
|
Number of branches |
13,671 |
14,108 |
(437) |
(3.1) |
13,660 |
|
Continental Europe |
5,864 |
5,978 |
(114) |
(1.9) |
5,871 |
|
o/w: Spain |
4,857 |
4,918 |
(61) |
(1.2) |
4,865 |
|
United Kingdom |
1,328 |
1,329 |
(1) |
(0.1) |
1,322 |
|
Latin America |
5,757 |
6,050 |
(293) |
(4.8) |
5,745 |
|
Sovereign |
722 |
751 |
(29) |
(3.9) |
722 |
Note: The financial information in this report has approved by the Board of Directors at its meeting on July, 26 2010, following a favourable report from the Audit and Compliance Committee on July, 21 2010.
Key data by principal segments
|
|
Net operating income |
Attributable profit to the Group |
||||||
|
|
|
|
Variation |
|
|
Variation |
||
|
|
H1 '10 |
H1 '09 |
Amount |
% |
H1 '10 |
H1 '09 |
Amount |
% |
|
Income statement (million euros) |
|
|
|
|
|
|
|
|
|
Continental Europe |
5,265 |
5,373 |
(109) |
(2.0) |
2,553 |
2,706 |
(152) |
(5.6) |
|
o/w: Santander Branch Network |
1,559 |
1,715 |
(156) |
(9.1) |
912 |
1,066 |
(154) |
(14.4) |
|
Banesto |
746 |
778 |
(32) |
(4.1) |
385 |
416 |
(31) |
(7.4) |
|
Santander Consumer Finance |
1,611 |
1,497 |
115 |
7.7 |
396 |
303 |
93 |
30.5 |
|
Portugal |
380 |
379 |
0 |
0.1 |
260 |
285 |
(25) |
(8.9) |
|
United Kingdom |
1,817 |
1,603 |
214 |
13.4 |
1,006 |
885 |
122 |
13.7 |
|
Latin America |
6,179 |
5,259 |
920 |
17.5 |
2,160 |
1,806 |
354 |
19.6 |
|
o/w: Brazil |
4,298 |
3,281 |
1,017 |
31.0 |
1,294 |
961 |
333 |
34.7 |
|
Mexico |
757 |
850 |
(92) |
(10.8) |
291 |
230 |
61 |
26.4 |
|
Chile |
647 |
613 |
34 |
5.5 |
301 |
257 |
44 |
17.0 |
|
Sovereign |
580 |
223 |
357 |
159.8 |
172 |
(26) |
198 |
- |
|
Operating areas |
13,841 |
12,458 |
1,383 |
11.1 |
5,891 |
5,370 |
521 |
9.7 |
|
Corporate Activities |
(1,778) |
(1,144) |
(634) |
55.4 |
(1,446) |
(851) |
(595) |
69.9 |
|
Total Group |
12,063 |
11,314 |
749 |
6.6 |
4,445 |
4,519 |
(74) |
(1.6) |
|
|
Efficiency ratio (1) |
ROE |
NPL ratio * |
NPL coverage * |
||||
|
|
H1 '10 |
H1 '09 |
H1 '10 |
H1 '09 |
30.06.10 |
30.06.09 |
30.06.10 |
30.06.09 |
|
Ratios (%) |
|
|
|
|
|
|
|
|
|
Continental Europe |
36.3 |
35.3 |
18.60 |
20.12 |
3.85 |
3.10 |
73 |
75 |
|
o/w: Santander Branch Network * |
39.8 |
37.8 |
25.31 |
27.71 |
4.78 |
3.50 |
53 |
57 |
|
Banesto |
40.8 |
39.9 |
17.31 |
19.41 |
3.49 |
2.32 |
58 |
73 |
|
Santander Consumer Finance |
26.5 |
27.0 |
10.39 |
9.26 |
5.23 |
5.14 |
111 |
90 |
|
Portugal |
40.8 |
41.0 |
21.96 |
25.69 |
2.40 |
2.13 |
65 |
65 |
|
United Kingdom |
38.7 |
41.0 |
29.33 |
30.37 |
1.84 |
1.54 |
41 |
45 |
|
Latin America |
38.0 |
37.3 |
20.56 |
23.29 |
4.13 |
3.97 |
105 |
97 |
|
o/w: Brazil |
37.0 |
37.9 |
20.97 |
25.71 |
5.01 |
4.75 |
98 |
92 |
|
Mexico |
37.0 |
32.0 |
18.51 |
16.54 |
1.77 |
3.04 |
257 |
122 |
|
Chile |
35.1 |
32.4 |
26.58 |
28.39 |
3.31 |
3.30 |
97 |
94 |
|
Sovereign |
44.0 |
66.1 |
12.67 |
|
5.11 |
4.34 |
67 |
67 |
|
Operating areas |
37.7 |
38.0 |
20.30 |
21.87 |
3.35 |
2.80 |
74 |
74 |
|
Total Group |
42.2 |
41.6 |
12.91 |
14.15 |
3.37 |
2.82 |
73 |
72 |
(1).- With amortisations.
* Santander Branch Network is the retail banking unit of Banco Santander S.A. The NPL ratio of Banco Santander S.A. at the end of June 2010 stood at 3.65% (2.59% in June 2009) and NPL coverage was 61% (69% in June 2009).
|
|
Employees |
Branches |
||
|
|
30.06.10 |
30.06.09 |
30.06.10 |
30.06.09 |
|
Operating means |
|
|
|
|
|
Continental Europe |
50,461 |
51,013 |
5,864 |
5,978 |
|
o/w: Santander Branch Network |
18,765 |
19,231 |
2,930 |
2,935 |
|
Banesto |
9,750 |
10,063 |
1,768 |
1,819 |
|
Santander Consumer Finance |
9,974 |
9,518 |
312 |
354 |
|
Portugal |
6,215 |
6,532 |
762 |
775 |
|
United Kingdom |
22,843 |
23,347 |
1,328 |
1,329 |
|
Latin America* |
86,734 |
92,137 |
5,757 |
6,050 |
|
o/w: Brazil |
51,402 |
50,898 |
3,588 |
3,612 |
|
Mexico |
12,405 |
12,843 |
1,092 |
1,081 |
|
Chile |
11,725 |
11,912 |
499 |
502 |
|
Sovereign |
8,386 |
9,594 |
722 |
751 |
|
Operating areas |
168,424 |
176,091 |
13,671 |
14,108 |
|
Corporate Activities |
1,840 |
1,690 |
|
|
|
Total Group |
170,264 |
177,781 |
13,671 |
14,108 |
(*).- In July 2009, sale of Banco de Venezuela (5,600 employees; 285 branches).
This information is provided by RNS
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