The aggressively acquisitive bank said it would work to
consolidate recent buys after a multi-billion euro spending spree since the
beginning of the summer on assets from Britain to Mexico.
“(There’s) nothing expected, nothing on the horizon,” Chief
Executive Alfredo Saenz told analysts.
The bank said profit for 2010 would fall short of its
forecasts after taking a greater-than-expected charge for bad Spanish assets
under new Bank of Spain accounting rules enforced after a property crash and
the nation’s worst recession in half a century.
Santander reported a 9.8 percent fall in nine-month net
profit after the one-off hit of 472 million euros ($652 million) for the
provisions, against around 400 million euros estimated by the bank at end-July,
and higher-than-expected costs.
“The miss was cost and provision driven,” said Ronit Ghose,
analyst at Citi.
Shares fell 1.00 percent against a little changed Spanish
blue chip index and a 0.1 percent rise in European banks. The stock fell as low
as 8.985 euros, its lowest in nearly a month.
Santander had previously said it expected 2010 net profit to
be in line with the 8.9 billion euros it achieved in 2009.
“Underlying trends are quite solid but the numbers look weak
at first glance and are not a positive catalyst,” said analyst Arturo de Frias
at Evolution Securities, who rates the stock “buy.”
Under new rules which came into effect on Sept. 30, the Bank
of Spain has cut the time over which banks can fully provide for estimated
losses on non-performing loans. It has also required a further 10 percent
writedown on properties held for more than two years.
Home market Spain, comprising the Santander retail banking
network and the contribution from majority-owned unit Banesto, now accounts for
23 percent of Santander’s net profit, less than the 25 percent brought by
Britain and 34 percent from Brazil.
Santander shares have fallen 19 percent from the beginning
of the year. Hedge funds used Spanish banking shares as proxies for Spain
earlier this year as investors fretted the country faced a Greek-style debt
crisis.
The bank, whose shares have underperformed European peers by
around 16 percent since the beginning of the year, said its bad loans as a
percentage of total loans at a group level rose to 3.42 percent, from 3.37
percent at end June.
Santander’s list of acquisitions has raised concerns about
its capital strength just when regulators are forcing banks to hold more and
better quality capital under the Basel III rules.
“Our key concern remains capital adequacy under Basel III,”
said Andrew Lim, analyst at Matrix.
Saenz ruled out a capital hike to boost the bank’s reserves
but said a flotation of its UK business was likely for the first part of 2011.
No adviser had yet been appointed for the deal, he said.
A UK listing would be the highest profile London flotation
since telecoms firm Orange nine years ago and Santander is expected to sell
about 20 percent of the business, sources have told Reuters.
That could value the business at over 15 billion pounds and raise
more than 3 billion pounds to boost strained group capital.
