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Santander profits shrink in Spain but grow in other markets

Source: Bloomberg - Thu 3rd Feb 2011

Echoing similar news from BBVA yesterday, Banco Santander, Spain's biggest bank, today reported that net profit in Q4 fell by 4.6% following lower earnings from its home market offset by growth from Brazil and the U.K. Net income fell to 2.1 billion euros from 2.2 billion euros the previous year, the Santander-based lender said in a filing to regulators today. However, the results were sill ahead of the estimates of 13 analysts surveyed by Bloomberg, which came in at 2.04 billion euros.

The bank has seen its home market suffer as an on-going result of the troubled property market and associated bad debt, aswell as higher funding costs. In October Sanatander revised its estimate for 2010 profits from a similar level to 2009's 8.94 billion euros as it now reacts to bad debt sooner in order to comply with newSpanish banking regulations.

Santander said its core capital ratio, a measure of financial strength, stood at 8.8% at the end of 2010, compared with 8.5% in September, and expects it to exceed 9% by the end of 2011. Spanish banks are under pressure to show they've shored up their capital bases after the government last month set a September deadline for them to meet a minimum core capital level of 8%.

The Bank has increased by 15% this year in Madrid trading, compared with an 11% gain in the 48-member Bloomberg Europe Banks and Financial Services Index. Shares in BBVA have climbed 23 % in the same period.

Profit from Santander's Spanish retail network fell to 248 million euros from 470 million euros on the previous year, the company reported. Profits from the U.K. grew to 452 million euros from 412 million euros a year earlier, while earnings from Brazil rocketed to 756 million euros from 578 million euros.

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