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- Financial markets are not efficient. We have seen evidence of this over and over again.
- Santander has exhibited steady profit improvements.
- Since July, without any significant fact arising to public knowledge, the bank started to diverge from the best performers in the banking industry.
- After comparing Santander's stock price performance with the general market, I think we might be looking at an entry point for the prospective investor.
- Banco Santander reports highest net income in 2.5 years' time and a sharply increasing CET1 ratio.
- The earnings don’t surprise me, but the CET1 ratio does, as it’s now more than 100bp higher than at the time the stress test was conducted.
- The bank’s improving capital position make it an interesting fully-capitalized European bank with exposure to emerging markets.
Banco Santander: 30% Potential Upside With A 7% Dividend While You Wait
- Banco Santander has experienced difficulty recently in Spain and Latin America but conditions in those regions have begun rebounding and Santander is positioned to benefit.
- Forecasts of 28% earnings growth and 6% revenue growth in 2015 coupled with a recovery in the Eurozone could fuel a sustained rise in the stock price.
- Banco Santander's 7% scrip dividend is an additional incentive for shareholders as the growth trajectory unfolds.
- Banco Santander sold off despite a solid earnings report.
- Santander is showing impressive performance in its units around the world and the Spanish economy is recovering.
- Santander is oversold and pays a nice dividend while you wait for the price to recover.
- We're focusing on the strengths and weaknesses of Citigroup in this article.
- Specifically, we're looking at its profitability, growth prospects and its potential to become an attractive income stock.
- We also focus on its valuation and find that it appears to offer good value when compared to a sub-industry peer.
The Major Catalyst For Santander That Nobody Is Talking About
- Santander has 1/5 of its total profit coming from Brazil, tied for the most from any nation.
- The Brazilian economy has been showing sluggish growth recently.
- The upcoming presidential election in Brazil provides an interesting opportunity for the economy to be put back on track.
- Santander is seen as another Southern European bank.
- However, the bank was able to maintain healthy levels of capital and liquidity.
- In the current scenario, banks with liquidity have access to good assets at attractive prices.
- Santander Bank has a good track record of making good deals when the opportunities arrive.
Banco Santander, S.A. Tops International Bank Credit Default Swap Trading 2010 To 2014
- The Depository Trust & Clearing Corporation has reported on 177,974 weeks of trading on 1,206 reference names, of which 111 were international banks, from 2010 to 2014.
- We analyze 14,737 weeks of trading for these banks and find that the most actively traded name, Banco Santander, S.A., averaged only 5.11 non-dealer trades per day.
- We caution against the use of credit default swap data for analysis or risk management without confirming trading volumes, if any, associated with the data.
Santander Looks Pricey Relative To Its Capital And Growth Prospects
- Santander has participated in the Spanish bank rally, but the Spanish NPLs are still high and the company's operations in Mexico and Brazil haven't been outperforming.
- Santander's capital looks a little thin, but management seems unwilling to go to the market to shore it up.
- Based on a long-term ROE estimate of 12.5%, these shares look overpriced and likewise seem to be factoring in a near-term RoTE of over 16%.
- Santander has been an attractive investment in the financial sector but has carried a high level of risk due to weakness in European economies which has scared investors.
- Management set forth a three phase plan to enhance profitability which has begun successfully.
- Santander is seeing improvement in many key metrics, making it a less risky investment than it was a year ago.
Where Banco Santander Is Experiencing Growth And Where It Is Lagging
- Growth is strong for the company in certain geographic regions.
- Other regions are experiencing a lag in business.
- The valuation remains attractive as investors are still catching on to the opportunity.
- The stock remains a buy especially with a 6.5% yield as icing on the cake.
- Consolidations after recent acquisitions are leading to decreased expenses.
- Revenue is sustainably growing through net interest income and net fee income.
- The recovering economic climate provides a tailwind for Banco Santander.
Banco Santander: Key Shifts Will Lead To Incredible Profitability
- A focus on client deposits as opposed to institutional deposits will raise net interest margins.
- Key acquisitions will allow for substantial revenue growth and diversification.
- Decreasing provisions for loan losses will add to profitability.
- Consolidations from overlaps after acquisitions will begin to reduce operating expenses.
Wed, Mar. 26, 4:04 PM
- The Fed approves 25 out of 30 capital return plans from the nation's largest lenders, but rejects those from Citigroup (C), RBS Citizens, HSBC North America, Santander Holdings (SAN), and, of course, Zions Bancorp (ZION).
- Press release
- Citi -3.3%, RBS -0.2%, HSBC -1.4%, Santander -1.5%, Zions -1.3% in after-hours trade.
Thu, Mar. 20, 5:07 PM
- Again, all 30 lenders subject to the Fed stress test passed with the exception of Zions Bancorp. Checking the individual results:
- Regional banks passing: BB&T Corp. (BBT), Comerica (CMA), Fifth Third (FITB), Huntington (HBAN), KeyCorp (KEY), M&T (MTB), PNC, Regions (RF), SunTrust (STI), U.S. Bancorp (USB).
- Credit card lenders: American Express (AXP), Discover (see here), Capital One (COF).
- Those controlled by overseas holding companies: BBVA Compass, BMO FInancial, HSBC North America, RBS Citizens Financial, Santander Holdings USA (SAN), UnionBanCal (MTU).
- Trust banks: Bank of New York (BK), State Street (STT), Northern Trust (NTRS).
- TBTFs: See here.
- More on Zions (ZION): The failure likely has something to do with CDOs on its books backed by trust-preferred securities. The bank signaled earlier this year it would likely resubmit its capital plan to the Fed as the test's calculation of its capital ratio wouldn't reflect Zion's planned sale of these.
Thu, Mar. 20, 10:35 AM
- The results of the Fed stress tests on the usual banking industry suspects are expected today, but this year's version includes 12 new companies added to last year's list of 18. Newly subjected U.S.-based lenders: DFS, NTRS, HBAN, MTB, ZION. Foreign-owned U.S. bank holding companies: BBVA Compass Bancshares, BMO Financial, HSBC N.A. Holdings, RBS Citizens Financial Group, Santander Holdings USA (SAN), UnionBanCal (MTU).
- The CCAR results - at which the Fed will give a thumbs up/thumbs down on banks' capital return plans - are due on March 26.
Tue, Mar. 18, 12:22 PM
- Blackstone (BX +1.8%) is teaming with Deutsche Bank (DB +1.6%), Lone Star Capital with JPMorgan (JPM +0.3%), and Apollo Global (APO -0.6%) with Banco Santander (SAN +1.3%) to win Commerzbank's (CRZBY +4%) so-called Project Octopus portfolio of Spanish real estate loans, with bids reportedly topping €3B (face value of loans is over €4B).
- Commerzbank is a forced seller as the bailed-out lender continues to move to get a grip on its capital levels (the German government is now a 17% owner).
Tue, Mar. 11, 11:33 AM
- The publication of the 285-page manual marks the start of phase 2 of the ECB's review of EU banks which is expected to run until August. The exam will cover €3.72T, or 58% of the banking system's risk-weighted assets. On average, central bank supervisors will review 1,250 credit files per bank.
- The move is part of a process by the EU to harmonize banking practices across borders, break the (often-toxic) link between governments and their banks, and bring credibility back to the sector. Along with this review, the ECB is conducting stress tests for the largest banks.
- Yesterday: German lenders - including Deutsche Bank (DB) - escape the need to revalue their mortgage portfolios.
- Also among those under review: SAN, BBVA, ING
Tue, Mar. 4, 8:01 AM
- Banco Santander's (SAN) debt rating is boosted by Moody's to Baa1 from Baa2 following the agency's lifting of its outlook for Spain (debt upgraded to Baa2 with positive outlook last week).
- "The group's risk-absorption capacity remains resilient despite ongoing asset-quality pressures. At end-December 2013, Santander's problem-loan ratio increased to 5.64% (end-December 2012: 4.54%), mainly driven by the increased level of problem loans in Spain. Despite the negative credit trends in the domestic market, Santander has been able to cope with increased provisioning efforts while maintaining very high pre-provision profitability metrics compared with international peers."
- BBVA's rating is lifted to Baa2 from Baa3.
- Both stocks are ahead about 2% premarket inline with the big rally underway as tensions cool in Eastern Europe.
Thu, Jan. 30, 4:22 AM
- Banco Santander's (SAN) Q4 net profit more than doubled to €1.06B ($1.45B) but fell short of forecasts of €1.2B.
- Net interest income dropped 11.6% to €6.28B.
- Overall lending -7%, but strong in Latin America
- Loan-loss provisions €2.4B, the lowest in eight quarters.
- Non-performing loans 5.64% vs 4.54% a year earlier.
- The IPO of Santander Consumer USA provides Santander with gain of €740M.
- "After several years of strengthening the balance sheet and capital, Banco Santander is embarking on a period of strong profit growth in the coming years," says Chairman Emilio Botín.
- Shares are -1.8% in Madrid. (PR)
Tue, Jan. 28, 1:05 PM
- Instead of outrage over the continuing "revolving door" between D.C. regulators and the banks (of which Bair was loudly critical of), keep in mind banks - especially the European ones - need qualified, independent directors, writes Antoine Gara.
- Santander (SAN +2.3%) is a case study - maintaining a fat dividend over the past few years at the expense of building up very much new capital (though it has sold some primo assets). Wells Fargo, by contrast, pays out a lower share of profits even though its financial position is far stronger. Santander's ratio of nonperforming loans rose to 5.43% in Q3, a nearly unimaginable level for the large U.S. banks. Its NPL reserve coverage, however, has fallen from 72.4% a couple of years back to 63.9% at the end of Q3.
- Would the Fed ever allow a bank in this condition to continue with such a large dividend?
Thu, Jan. 23, 7:35 AM
- Santander Consumer USA (SC) - the American lending unit of Banco Santander (SAN) - priced the offering last night at $24 per share, reports the NYT, the top end of the previously expected $22-$24 range (which had been bumped to $24-$25 yesterday).
- The company's P-E investors - including KKR, Robers, Centerbridge, and Warburg Pincus - plan to sell about 75M shares, up from previous estimates of 65M.
- Santander will allow small investors the chance to invest through Loyal3 - an online startup allowing individuals to invest as little as $10 per month to purchase stock.
- BTIG's Mark Palmer initiates the stock with a Buy rating and $31 price target, based on 12x his expected 2014 EPS.
Wed, Jan. 15, 11:57 AM
- Good news could be in store for European banks as chatter says the ECB is considering just a 6% capital requirement in its stress tests as opposed to the 8% previously promised. A small number of countries aren't even satisfied with 6% and reportedly may press for a lower number.
- Previous European bank stress tests are known mostly for giving passing grades to lenders who just a short while later required government bailouts.
- Tails in the air today include: Santander (SAN +1.6%), Deutsche Bank (DB +2%), ING (ING +0.9%), BBVA (BBVA +3.4%), Bank of Ireland (IRE -0.6%), and Allied Irish Banks (AIBYY +6.3%).
- Related ETF: EUFN
Mon, Jan. 13, 5:09 AM
- The Basel Committee for Banking Supervision has eased the way banks will have to report leverage ratios, or the amount of capital they hold against their loans and other assets.
- The regulations will not force banks to count 100% of their off-balance-sheet assets, such as much of their exposure to derivatives, and guarantees and letters of credit.
- That alterations will lower the need for banks to sell assets or raise capital to meet the Basel leverage-ratio requirements, which might be set at 3% or higher from 2018.
- The Stoxx Europe 600 Banks index is +1.5%.
- Major banks: RBS, HSBC, BCS, DB, CS, UBS, GS, JPM, C, MS, WFC, USB, BK, SAN, BBVA, LYG, NMR
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, EUFN, IPF, SEF, IAT, IYG, PFI, FXO, IXG, KBWB, KME, RKH, QABA, KRU, FINU, RWW, KBWR, RYF, FNCL, PSCF, AXFN, KRS, FINZ, EMFN, KBWX
Thu, Jan. 9, 10:59 AM
- Santander Consumer USA (SCUSA) - the U.S. consumer lender subsidiary of Banco Santander (SAN -0.6%) - files to raise up to $1.56B in an IPO, offering 65.2M shares at an expected range of $22-$24.
- Following the IPO, the company plans a quarterly dividend of $0.15 per share, an annualized yield of 2.6% at the midpoint of the offering range.
- The stock symbol will be "SC."
Dec. 11, 2013, 3:59 AM
- RBS (RBS) Finance Director Nathan Bostock has resigned after just 10 weeks in the job and is returning to Santander (SAN), where he has held several senior roles.
- Bostock will become the chief risk officer and deputy CEO at Santander's U.K. operations, which are set to be spun off at some point and separately listed.
- Bostock's departure is the latest blow for RBS as it carries out a review of its operations; last month, for example, IT problems left over 1M customers stranded.
- Shares are -1.6% in London.(PR)
Dec. 10, 2013, 12:48 PM
- HSBC looks to move more non-core assets of the books, agreeing to sell its 8% stake in Bank of Shanghai to Banco Santander (SAN -0.2%). The price hasn't been disclosed, but the stake was last seen on HSBC's balance sheet as an available-for-sale asset with fair value around $468M.
- "Our priorities going forward will emphasize the growth of our own operations in mainland China and our own partnership with Bank of Communications," says HSBC Asia Pacific boss Peter Wong.
- The deal, subject to regulatory approvals, is expected to close in H1.
Nov. 28, 2013, 1:22 PM
- The exposure of Europe's major financial institutions to domestic sovereign debt is on the rise, "now 9% of assets, up from a trough of 6% in September of 2009," FT writes.
- Data from Citi shows European banks' total exposure (as a percentage of their balance sheets) to the general government debt of the country in which they are domiciled is generally below peak levels but is still well above the historical average for most of the periphery including Spain, Italy, Portugal, and Ireland.
- "Although increased exposures are clearly part of ‘financial repression’ and ‘carry trade’, part of this is also a ‘natural’ trade-off from ongoing balance sheet deleveraging," Citi says.
- Europe financials ETF - EUFN
- Relevant European financials: DB, SAN, BBVA, NBG, BMDPF
Oct. 24, 2013, 12:56 PM
- Posting a nice rally after reporting Q3 results, Santander (SAN +0.8%) takes a sizable dip, but quickly recovers following Deutsche's downgrade to Sell with €6 (about $8.28) price target, with the team mentioning valuation and a disappointing Q3 earnings mix.
- Santander reported a big jump in net income thanks to a massive reserve release, but operations were somewhat less impressive. Net interest income of €19.7B was off 14% Y/Y and missed forecasts by €200M, net lending fell at an 8.7% annual pace, and Brazilian operations saw a 33% decline in net income even as provisions declined.
SAN vs. ETF Alternatives
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