Banco Santander Q4 Profit Surges, Sees Strong Profit Growth Ahead

(RTTNews) - Spanish commercial bank Banco Santander, S.A. (SAN, BNC.L) reported Thursday a surge in its fourth-quarter profit, despite a decline in net interest income as well as net fees. Looking ahead, Chairman Emilio Botín stated that the company is embarking on a period of strong profit growth in the coming years after several years of strengthening the balance sheet and capital.

The fourth-quarter attributable profit to the group surged to 1.06 billion euros from last year's 423 million euros. The last year's ordinary attributable profit adjusted for net capital gains and provisions was 1.02 billion euros. Earnings per share were 0.09 euro, higher than 0.04 euro a year ago.

In the quarter, ordinary profit from continuing operations increased to 1.28 billion euros from 1.24 billion euros. Net operating income of 4.42 billion euros, meanwhile, declined from 5.34 billion euros a year ago.

In the quarter, net interest income declined to 6.28 billion euros from 7.10 billion euros a year ago. Net fees also declined from last year.

Sequentially, attributable profit edged up 0.4 percent, while net interest income edged down 0.1 percent from the preceding third quarter.

For fiscal 2013, Banco Santander recorded an attributable profit of 4.37 billion euros, a 90.5 percent increase on 2012. This increase resulted from the sharp decline in write-downs as the bank provisioned its real estate risk in Spain in 2012, the company said.

Meanwhile, annual pre-provision profit declined 15 percent to 19.91 billion euros, and net interest income declined 13.3 percent to 25.94 billion euros. Adjusted for foreign exchange, net interest income fell 7 percent. The company noted that its annual revenues dropped 2 percent to 40 billion euros.

On a geographical basis, net operating income declined 7.7 percent in Continental Europe, 16.4 percent in Latin America mainly Brazil, and 37 percent in USA, while it increased 2.7 percent in the United Kingdom.

According to the firm, 53 percent of Group profit came from emerging markets and 47 percent from mature markets. Latin America contributed 47 percent of group profit, Europe accounted for 43 percent and the United States 10 percent.

In the year, deposits were stable, while mutual funds grew 14 percent. Loans decreased 2 percent. In the emerging markets, deposits and loans rose 14 percent, while in the mature markets deposits fell 3 percent, and loans dropped 6 percent.

The company stated that the 2013 results marked a turnaround after the declining profits of recent years. The international economic crisis, which has been particularly severe in the euro zone, obliged the bank to make hefty write-downs that dragged down its results during that period.

In Madrid, Banco Santander shares are currently trading at 6.30 euros, down 0.08 euros or 1.27 percent, on a volume of 18.5 million shares.