Entering text into the input field will update the search result below

Banco Santander: Cautious In The Short-Term, Bullish In The Long-Term

Oct. 03, 2021 8:46 AM ETBanco Santander, S.A. (SAN)20 Comments
Ivo Kolchev profile picture
Ivo Kolchev


  • H1 2021 12.6% RoTE driven by North (31% of group underlying profits) & South America (again a 31% contribution to underlying profits).
  • Valuation at 78.5% of tangible book and CET1 ratio of 12.11% should limit short-term upside.
  • Long-term prospects are bright, with key risk being South America (20% of year-end 2020 Risk-weighted assets) currency exposure.
  • Selling options premium looks appealing given Banco Santander's prospects, valuation, capital position, and broader market environment.

Santander Bank

Orbon Alija/iStock Unreleased via Getty Images

Investment thesis

So far this year, I have covered several European banks, each with its unique set of circumstances, challenges, and opportunities, ranging from a restructuring/rerating story at Commerzbank (OTCPK:CRZBF) (

This article was written by

Ivo Kolchev profile picture
I ventured into investing in high school in 2011, mainly in REITs, preferred stocks, high yield bonds. More recently I have been combining long stock positions with covered calls and cash secured puts. I approach investing purely from a fundamental long-term point of view. Currently I mostly write articles for various websites. Previously I have worked as a data analyst at Dynamo Software serving clients in the asset management industry, at the Bulgarian stock exchange cash market operations desk using the T7 trading system, as an analyst/portfolio manager focused on Western Europe, as well as a junior accountant for special purpose vehicles issuing CLOs & CDOs . I just started a PhD in Finance (topic is valuation of banks, REITs, insurance companies and asset managers) and have passed the Level 3 of the CFA exam.- Disclosure: I am not a financial adviser. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of DB, SCGLF, CRZBF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (20)

Good analysis. Thanks
How many Banco Santanders are there?
DrStrange profile picture
@Bobbie B There's one Santander Mothership (the Spanish Bank) and many local subsidaries, some of them even listed, eg the US subsidary SC which will be delisted as soon as Santander buys the remaining outstanding shares:


All subsidaries are consolidated into the Mothership.
Outside GB, US and Germany, SAN operates is corrupt, financially unstable countries like LatAm, Eastern Europe etc. and is itself HQ in Spain where even the King himself is a cheat. Say no more.

SAN is up TTM but still only half of what it was 5y ago despite an historic ww stock boom. Any US bank (BAC, JPM, GS, MS etc.) would have been a better investment over the past 1-5y. SAN hasn't paid a div since 10/30/19 and if/when they do, Spain keeps 20 or 25% of foreign SH's/your dividend. Why bother?!
DrStrange profile picture
What an offensive comment. So Spain is corrupt because of the cheating King (which isn't even true)?

SAN didn't pay any Dividends since 10/30/19? First of this is not true, it paid a dividend this year and already announced the next Dividend to be paid on 11/01/21. So shareholders get two dividends this year. Last year no European bank was allowed to pay dividends this has nothing to do with SAN. Then the withholding... not sure why this would be a problem.

Sorry Ivo, how can you like such an offensive, factual wrong comment? You live in Bulgaria (eastern Europe). Now read his comment again and hear what he has to say about Eastern Europe.
Ivo Kolchev profile picture
@DrStrange well sure it's a bit harsh generalizing, but indeed corruption is a big issue in Eastern Europe. Of course you have corruption everywhere but I suppose when people are poor corruption's impacts are more visible. Hopefully things get better over time.
DrStrange profile picture
@Ivo Kolchev SAN's only Eastern Europe Country they mention in the reports is Poland which is 5% of total European Business, European Business is 30-40% of Global Business. Now everyone can judge for himself how exposed SAN is to the evil corruption of Eastern Europe.(Sidenote: The commentator mentions Germany. Well San doesn't even break out Germany Business share as it is so low).

So again: The comment is factual wrong on several points, distorts facts, generalizes and is offensive.
autofocus111 profile picture
Thanks for the writeup. Nice to see the dividend news and a buyback too. Big change from the dilutive scrips of old. The recent buyouts of SC and BSMX floats points to their interest in ex-EU operations.
I read similar analysis 10 years ago and the stock lost a lot since then. Very unlikely it will do better in the future.
@PaulPG I kind of feel the same way. Banco Santander is the injured horse that you think might recover, but never does.
DrStrange profile picture
@PaulPG Well it's a Spanish retailbank. It's no US Investmentbank. SAN had the falling yields issue, EUR short term rates negative (!!! not like in the US), and then the problems in its home market. And finally when everything started to look better COVID hit Spain hard (no more tourists, hard lock-down). Today SANTANDER is cheap, lots of tailwinds coming which the author fails to mention (eg NPL at a 10y low, falling COVID provisions, curve steepening). It's very likely San will do a lot better in the future.
Thanks for your article.
What is your opinion about corporate governance and management at Banco Santander?
Ivo Kolchev profile picture
@mmuller Glad you enjoyed in. Honestly I don't have anything specific to share on governance, but you are right to bring it up since it is operating in emerging markets. I live in Bulgaria and we had a very big hyperinflation crisis in 1997 driven exactly by banks giving loans to friends, family and fools. Afterwards a currency board with the euro was adopted which has been holding for 24 years now, so while corruption is alive and well at least you don't have the currency risk. So I would suppose, judging from my experience, that you can always find governance issues at local branches of international banks in emerging economies, but the real systemic risk is accumulated at banks entirely owned by local businessmen(basically they use them to finance their business with other people's money), and if such banks dominate an economy you don't have a stable banking system. I hope Latin America manages to make progress both on corruption and currency stability, it should materially raise people's standard of living.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.