Banco Santander is very confident

Banco Santander, to date, has looked very robust as a financial institution in weathering the credit crisis. Despite significant exposure to bubble markets Spain and the UK, the company has not been required to write down a large amount of credit losses.

A few months ago, I speculated in a post entitled Santander: US, Spanish and UK mortgage exposure that these losses may be yet to come as they were for HBOS. Since then, HBOS has imploded while Santander has steadily risen in the table of global bank size by market capitalisation. I still believe Santander has a number of writedowns still to come. But, for now at least, its Chairman Emilio Botin is smiling.

The following is my translation of an excerpt from today’s El Mundo article about Santander’s AGM.

“Crisis? What crisis? That’s what shareholders of Banco Santander should have been thinking upon listening to the company’s president, Emilio Botin, announcing this morning that he expected profit this year to exceed 10 billion euros, compared with 9.06 billion in 2007.Once again, in the shareholders general meeting, Botín utilised his speech to offer a profit forecast for the full year. The bank will not change its numbers from September 2007’s forecast, despite the financial and economic crisis, and continues to believe that earnings per share will rise by 15%.

Botin admitted that the banking industry was going through “a very complex period — probably the most difficult we’ve seen in a generation of bankers.” A crisis that Santander has used to climb in the ranking of banks by market capitalisation, to become the seventh in the world.

“Today we are worth more than the second, third, fourth and fifth Spanish banks combined. And more than the largest and second-largest German ones,” Botin said. A message addressed to Germany amid acquisition rumours about the purchase of Dresdner Bank by the Spanish company.”

El Mundo, 21 Jun 2008

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