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 MADRID, Spain, Oct. 21 /PRNewswire/ -- Banco Santander (NYSE: STD), the most international of Spain's private banks, had net income during the first nine months of the year reach 67,425 million pesetas ($514.4 million), which represents an 8.69-percent increase over the 62,034 million pesetas achieved in the same period last year, it was announced by Emilio Botin, chairman.
 For the nine months ended Sept. 30, 1993, net income per share was 525.38 pesetas ($4.01 per ADR), an increase of 3.16 percent over the previous year. The Group continues to maintain its high level of capitalization with a BIS ratio of 12.2 percent.
 On Oct. 31, 1993, a quarterly dividend of 62 pesetas will be paid, similar to the one paid on July 31, 1993. This is the second quarterly dividend dispersed for fiscal 1993, and represents the recent change in dividend policy from two to four payments annually. ADR holders will receive a dividend equivalent to the exchange rate in effect on the day of payment.
 "We consider this nine-month earnings increase to be satisfactory, particularly in light of the difficult economic climate in Spain and most of the rest of Europe. We are most pleased with our significant share price improvement since the beginning of the year," Botin said. "Once again, the international diversification of the Group's activities, the active management of our client base in Spain and the strong performance of our treasury and capital markets business have been the main factors contributing to these results."
 "The difficult economic climate will continue to have a negative impact on our activity during the following months, but I am confident that the strength of the Group's balance sheet, its diversification and the dynamism of its commercial activity will continue to provide satisfactory results for Santander," the chairman added.
 Financial Review
 Significantly, the Group's profit and loss account includes a 19.60-percent increase in net interest income to 177,661 million pesetas ($1,355.5 million) and a five-fold increase in other ordinary income to 68,792 million pesetas ($524.9 million). Fee and commission revenues grew at a more moderate rate of 8.77 percent to 57,312 million pesetas ($437.3 million).
 Operating expenses increased 16.46 percent to 128,059 million pesetas ($977.1 million), of which 3.35 percent is related to the impact of devaluation of the peseta on overseas expenses. Nevertheless, the Group's cost/income ratio improved slightly over the same period last year to stand at 54.5 percent. As a consequence of the above, there was a 17.13-percent gain in operating profit.
 "The excellent results achieved under the heading 'Other Ordinary Income' totaling 68,792 million pesetas ($524.9 million), include profits derived from treasury and capital markets activities in the different venues in which the Group operates," Botin said.
 Extraordinary income for the nine months of 4,296 million pesetas ($32.78 million) was much lower than the previous year.
 Provisions made during the first nine months of the year totaled 66,477 million pesetas ($507.2 million). Most of these provisions have been used to maintain 100-percent coverage of the Group's non-performing loans (NPL's), which continued to increase at a rate of 19.32 percent during the period. The strict criteria used to estimate the level of NPL's, as well as the provisions made, constitute a reserve for the time when the value of NPL's may start to fall significantly. At present, Santander does not consider that this time is close. NPL's as a percentage of risk assets reached 3.47 percent, which is below the Spanish-banking sector's average.
 After provisions, the Group's net income reached 67,425 million pesetas ($514.4 million) at the end of nine months, an increase of 8.69 percent over the previous year.
 The Group's average total assets as of Sept. 30 increased 31.57 percent during the last 12 months, due in part to the increase in treasury and capital markets activity both in Spain and overseas. Consequently, financial ratios have been affected, with net interest income over average total assets decreasing from the 3.44 percent to 3.12 percent and ROA from 1.43 percent to 1.19 percent.
 Domestic Operations
 The Group's operations in Spain have continued to emphasize, on the credit side, mortgage lending, where the Group currently offers the most attractive terms in the market, with an effective fixed-interest rate of 9.65 percent per annum.
 Mutual funds continued to be the most attractive savings product. The Group presently manages 1.13 billion pesetas ($8,621.6 million), representing a leading market share of 13.30 percent.
 "The increase in operating expenses, which includes a significant proportion of non-recurring commercial expenditures, and an increase in non-performing loans in Spain, constitute the most negative factors affecting the Group's performance," Botin said.
 On Sept. 14, an agreement was signed with BT (formerly British Telecom) to establish a joint-venture company in Spain to be known as BT Telecommunicaciones. The new company will focus on the data- transmission market, recently opened to competition by the Spanish government. The company plans important investments that will enable it to offer the Group's customers, and the market as a whole, high-quality service.
 International Operations
 The Group has continued its international expansion by increasing its operations abroad and developing new activities.
 In Portugal, following the Group's bid to acquire additional shares of Banco de Commercia y Industria, Santander now controls 74.8 percent of the Portuguese bank which, together with the Royal Bank of Scotland and Metropolitan Life Insurance, represents a combined holding of 93 percent.
 As anticipated, Santander has increased its share in First Fidelity Bancorporation to 20.1 percent through the exercise of existing warrants. This investment supports First Fidelity's expansion, including its recent acquisition of Village Financial Services, located in New York State.
 The IBOS network, developed jointly with the Royal Bank of Scotland, has continued to expand, offering new products and services. The integration of other major international bank networks into IBOS should take place shortly, Botin said.
 "Within the Group's overall international activities, the strong performance of Santander Investment (Banco Santander de Negocios) deserves special mention," the chairman said. "It has participated in several notable transactions during the last year, such as the privatization of the Argentine Hydroelectric plant 'El Chacon,' and Santander Investment already occupies a leading position in the ranking of international players active in the Latin American market. Furthermore, it has been issuer and co-lead manager, together with Morgan Stanley, of a 10-billion peseta equivalent call-warrant issue in Deutschemarks at a five-year fixed peseta interest rate and has obtained very satisfactory results in its various other trading activities."
 The consolidated Santander Group is composed of Banco Santander, 15 additional banks and another 126 companies of various nationalities in which it maintains an ownership position. With over $60 billion of assets, the bank had net income for 1992 of 66,152 million pesetas, an increase of 11.80 percent over the preceding year. For 1992, ROA was 1.10 percent and ROE was 20.32 percent. Through a network of over 1,750 offices in 28 countries, the Group provides an effective system to fully meet the individual financial needs of its customers in Spain, and has the largest and most profitable international network among private Spanish banks.
 Each Banco Santander ADR is the equivalent of one ordinary Spanish Banco Santander share.
 Conversion of Spanish pesetas was translated into dollar amounts at the exchange rate of U.S. $1 equals 131.066 pesetas.
 For the nine months ended Sept. 30, 1993 and 1992
 (Amounts in millions)
 Nine months ended Nine months ended Pct.
 9/30/93 9/30/92 Change
 Interest income $ 5,038.3 Pta. 660,350 Pta. 485,622 35.98
 Interest expense 3,682.8 482,689 337,073 43.20
 Net interest income 1,355.5 177,661 148,549 19.60
 Fees and commissions 437.3 57,312 52,692 8.77
 Operating margin 1,792.8 234,973 201,241 16.76
 Staff expenses 629.7 82,529 71,862 14.84
 Overhead expenses and
 taxes other than
 income tax 347.4 45,530 38,100 19.50
 Total operating
 expenses 977.1 128,059 109,962 16.46
 Operating profit 815.7 106,914 91,279 17.13
 Other ordinary income 524.9 68,792 12,910 432.86
 Extraordinary items 32.7 4,296 21,853 (80.34)
 Depreciation (139.5) (18,282) (18,619) (1.81)
 Writedown of investment
 securities (1.7) (228) (3,272) (93.03)
 Net provisions (507.2) (66,477) (16,628) 299.79
 Income before tax 724.9 95,015 87,523 8.56
 Provision for
 income tax 210.5 27,590 25,489 8.24
 Net income $ 514.4 Pta. 67,425 Pta. 62,034 8.69
 Group 450.1 59,000 56,767 3.93
 Minority interests 64.3 8,425 5,267 59.96
 total assets $ 57,895.8 Pta.7,588,170 Pta.5,767,548 31.57
 U.S. Dollar $1 equals 131.066 Pesetas
 -0- 10/21/93
 /CONTACT: Banco Santander Corporate Communications, 1 581 3700; or Philip L. Thomas of The P.L. Thomas Group, 312-906-8060, for Banco Santander/

CO: Banco Santander ST: IN: FIN SU: ERN

ML -- DE007 -- 5036 10/21/93 09:49 EDT
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Date:Oct 21, 1993

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