Restructuring Costs Drag on Santander -- Update
April 30 2019 - 6:18AM
Dow Jones News
--Santander 1Q net profit fell 10% to EUR1.84 billion
--The bank reported a EUR108 million charge related to
restructuring and disposals
--Santander's core tier 1 ratio fell to 11.25% at the end of
March
By Pietro Lombardi
Banco Santander SA's (SAN.MC) net profit fell 10% in the first
quarter after costs related to asset sales and restructurings in
the U.K. and Poland, as well as high inflation in Argentina, hit
performance.
Net profit for the first three months of the year fell to 1.84
billion euros ($2.05 billion), from EUR2.05 billion a year earlier,
after it reported a EUR108 million charge related to restructuring
and disposals, the Spanish bank said Tuesday.
Total income fell 1% to EUR12.09 billion, it said.
Analysts had expected the bank to post a net profit of EUR1.83
billion and total income of EUR12.14 billion, according to a
consensus forecast provided by FactSet.
The bank delivered a "mixed set of results, with momentum in
Latin America largely offset" by the performance of its operations
in Spain and the U.K., Jefferies analysts said.
Santander shares trade 1.2% lower at 0917 GMT.
The bank's operations in the Americas contributed 52% of the
bank's underlying profit. Brazil, the main contributor, reported a
15% increase in underlying profit.
"Underlying profit has increased in seven of our 10 core
markets, with the U.S. our fastest-growing market again, increasing
attributable profit by 46% year-on-year, while Brazil and Mexico
are maintaining the positive momentum established in recent years,"
Executive Chairman Ana Botin said.
"This has been achieved despite a difficult operating
environment, particularly in the U.K. and Europe," she said.
As part of its overall strategy to deploy more capital in Latin
America, the bank announced earlier in April that it would make a
EUR2.56 billion all-stock offer for the shares it doesn't already
hold in its Mexico subsidiary. Santander's underlying profit in the
country grew by double-digits in the first quarter.
Elsewhere, the lender vowed to cut costs in Europe. Earlier this
month, the bank said it targeted EUR1.2 billion of annual cost
savings as part of its new medium-term plan, the bulk of which will
come from the European region.
Santander's common equity Tier 1 ratio--a key measure of
balance-sheet strength--was 11.25% at the end of March, slightly
down from 11.3% in December.
"We are confident we will achieve our medium-term targets,
including a RoTE of 13-15%," Ms. Botin said.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
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(END) Dow Jones Newswires
April 30, 2019 06:03 ET (10:03 GMT)
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