Santander, the euro zone's largest bank, beat profit forecasts today as diversification away from a tough domestic market into fast-growing areas like Brazil paid off and it kept a lid on bad debt provisioning.
The quality of Santander's earnings pleased investors, but dealers said there was concern about the outlook for crisis-hit Spain, which accounts for about a quarter of group income.
"There are fears in general on Spain right now and as for Santander there are concerns it's not doing enough to address its property exposure," a Madrid-based trader said.
A healthy net interest margin and a tight leash on costs helped the bank, one of Europe's strongest in the downturn, to make a 2009 net profit of 8.9 billion euros last year, up 0.7 percent from 2008.
It made further provisions for bad debts of €9.484 billion, which increased its bad debt ratio to 3.24 per cent of total lending from 3.03 per cent at the end of September. The bank said it is targeting a ratio below 4 per cent for 2010.
However, in September Chief Executive Alfredo Saenz had said the bank was forecasting provisions of about €10 billion in 2009.
BBVA stunned investors last week with higher than expected provisions, including kitchen sinking its real estate loans in Spain, taking its bad loans ratio to 4.3 per cent.
Reuters