Santander reports fall in net profits

| February 3, 2011 | 0 Comments
Santander reports fall in net profits

Spanish banking giant Santander has today reported a fall in 2010 net profits, due to changes on bad loan provisions.

The bank, which is the euro zone’s largest, said net income fell to €2.1 billion from €2.2 billion a year earlier.

Before the changes to one-off provisions, which were put in place as a precautionary reserve for loans turning bad, net profit would have only fallen by 3%, the bank said.

“This consistency was achieved in the worst economic context in several decades and is due in large part to the geographical and business diversification of the group,” it said.

Spanish banks have been hit hard by the economic downturn – partly due to the slump in the country’s once booming housing market.

The slump has led to many developers and homeowners unable to meet their loan payments.

Meanwhile, the bank said it experienced a 23% decline in net profit in continental Europe, but saw profits rise 25% in Latin America. It also enjoyed a 31% surge in Brazil, while net profit rose 11% in Britain.

In a statement, President Emilio Botin said: “Banco Santander has had another excellent year.”

The bank said its core capital ratio, a measure of financial strength, stood at 8.8% at the end of 2010 - against 8.5% in September.

Santander has a major UK presence after acquiring Abbey for £9.5 billion back in 2004.

In July 2008, it rescued troubled mortgage lender, Alliance & Leicester, and a few months later, it took ownership of Bradford & Bingley’s savings business and branch network.

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