Banco Santander Chairman Expects In-Line 2010 Profits

Jun.15.10 | About: Banco Santander (SAN)

The chairman of Banco Santander (STD), the Spanish bank holding company, expects the company’s 2010 net profit to be consistent with the prior-year profit of € 8.9 billion, despite the economic downturn in its domestic market. The company would also maintain its dividend payout at 60 eurocents a share.

In a recent shareholders’ meeting, the chairman Emilio Botin has said that Banco Santander’s fast growth in markets outside Spain, particularly in Brazil, is expected to compensate and even outshine the reduced contribution from the Spanish markets.

Though Spain has been the largest contributor to Banco Santander’s earnings until now, the contribution from Spain is expected to fall to 21% this year from 26% in the prior year. However, Brazil’s contribution is expected to increase to 23% from 20% reported a year earlier. The share of the U.K. is expected to increase slightly to 17% from 16% reported in the previous year while contribution from the U.S. is expected to be up to 5% from 1%.

Banco Santander has also announced that it would buy back its 24.9% stake in its Mexican arm, Grupo Financiero Santander, for $2.5 billion from Bank of America Corp. (NYSE:BAC). The stake acquisition in Banco Santander Mexico, the third biggest financial group in that country, is a strategic feat as the Mexican economy is expected to grow meaningfully this year.

Santander’s domestic market is experiencing a deep recession and there remain worries over the Spanish sovereign’s debt that resulted in tough financing conditions for the Spanish banks. However, strategic acquisitions made in Brazil and the U.K. are expected to boost its earnings.