Santander earns more than expected – shares significantly weaker

After another good quarter, the major Spanish bank Santander has become more optimistic when looking at the year as a whole.

Major Spanish bank Santander is looking more optimistic about the year as a whole after another good quarter. The bank announced in Madrid on Wednesday that it is well on its way to significantly exceeding the targets set for 2021. In the months of July to September, the institute, with a strong presence in Brazil, Great Britain, Mexico and the USA, earned almost 2.2 billion euros. As in the first two quarters, it exceeded the experts’ expectations. However, after a good run recently, the share fell significantly. In Madrid, the Santander share is currently falling by 2.41 percent to 3.2755 euros.

In the first nine months of the year, the bank achieved a profit of a good 5.8 billion euros, after falling into the red with more than 9 billion euros in the previous year due to the economic consequences of the Corona crisis. In the current year, Santander, like many competitors, is benefiting primarily from the fact that there are significantly lower burdens due to possible loan defaults.

Ana Botin, head of the board of directors, had already announced in the summer that the bank’s return on equity will exceed the target of more than ten percent for the current year. It now assumes that the forecast will be “significantly” exceeded. “This allows us to offer our shareholders attractive dividends and invest,” she said now.

The Spanish money house is expanding its business with private customers in the United States this year. As the bank is heavily involved in retail banking, it would benefit from rising interest rates in the UK and the US, for example. According to CFO Jose Antonio Garcia Cantera, an increase in the interest rate by one percentage point would bring the bank around 1.7 billion euros in additional income.

In the first three quarters, like-for-like earnings increased three percent to 34.6 billion – adjusted for currency effects, the increase was eight percent. The provision for possible loan losses fell by around a third to a little less than six billion euros. The return on investment adjusted for special effects was 12.6 percent, well above the target of ten percent, it said.

The shares listed in the EuroStoxx 50 (EURO STOXX 50) lost around three percent despite the billion-dollar profit and the positive outlook for 2021 by midday. This made the paper the weakest value in the leading euro zone index. Traders attributed this to profit-taking, among other things, after the share had risen significantly in recent weeks. With an increase of almost 30 percent this year, the Santander shares are still among the best standard stocks in the euro zone.

With a recent market value of a good 56 billion euros, Santander is one of the heavyweights among Europe’s financial institutions. In a sector comparison, however, the bank is in a rather poor position. The Stoxx 600 Banks industry index has risen by almost 38 percent since the end of 2020, and the shares in Spanish competitor BBVA have also outperformed Santander shares so far this year.




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