Bank expects rise in profits
SANTANDER, Spain, June 21 (Reuters) – Spain’s biggest bank, Banco Santander said on Saturday it would significantly boost profits in 2008, buoyed by growth in Latin America just as many of its international peers suffer credit crunch woes.
Attributable net profit should come in at over 10 billion euros in 2008, following recurrent net profit of 8.11 billion euros in 2007, up 23 percent from a year earlier, Chairman Emilio Botin said on Saturday.
“It will be practically all recurrent profit,” Botin told a shareholders’ assembly in Santander, reaffirming the bank’s target of boosting earnings per share by 15 percent.
He said the worst of the credit crunch, which has slashed earnings at many big banks, was now over.
“In terms of risk premiums and liquidity tensions, the worst has now passed and normality should be gradually restored in world markets,” Botin said in a speech.
Santander, which has risen to be the world’s seventh-largest bank in terms of stock market capitalisation from eleventh three years ago, will pay a first dividend on 2008 results of 0.135234 euros per share, 10 percent more than the equivalent dividend last year.
“Our aim is to use 50 percent of our ordinary profits for dividends,” Botin said.
The global financial shakeout, which has hit bank valuations, could present takeover opportunities, Botin said, but any possible buy would have to add value and add to earnings per share as quickly as possible.
“Naturally, it is our duty to be on the lookout for any possible chances of non-organic growth, but we will never do a deal just to get bigger,” Botin said.
Santander has won a reputation for being one of Europe’s most acquisitive banks after expanding strongly in Latin America and then pulling off the first cross-border takeover in Europe when it bought British mortgage lender Abbey in 2004.
Last year it bought Brazil’s Banco Real and this year has been picking up consumer finance units around Europe.
Recently its name has been linked to banks that could be sold in a shake-up of the German banking sector and on Thursday, Reuters reported it was considering buying Dresdner Bank, whose retail business is estimated at about 8 billion euros.
One source said the talks were not as advanced as negotiations between Dresdner’s owner Allianz
Botin declined to comment on the matter, but told reporters he was happy with Santander’s business in Germany, where he saw profits of 600-700 million euros this year.
Santander foresees a good year in Latin America, where it has a strong presence, with net profit up 20 percent in dollar terms.
Analysts have said Santander should be careful not whittle down its capital ratios at a time when its home market is seeing a jump in defaults and the global economy is so uncertain but most expect it is only a matter of time before it swoops again.