(Updates with further comments from analyst meeting)
MADRID (Thomson Financial) - Santander SA CEO Alfredo Saenz reiterated that
the bank is focusing on organic growth and does not need any acquisition
opportunities to expand.
In response to a question regarding possible opportunities the current
credit crisis might provide, Saenz told analysts the situation "advises caution
... we are targeting important organic growth, particularly in Brazil.
"We do not in any way need any (acquisition) opportunity to grow," he added.
Santander acquired Banco Real in Brazil as part of its joint acquisition of
ABN Amro with Royal Bank of Scotland PLC and Fortis.
The Spanish bank's share in ABN Amro contributed 252 million euros to the
first quarter to March results, nearly all of which was generated by Banco Real.
Santander expects to take management control of Banco Real in the third
quarter.
During the conference call on first-quarter results, the CEO played down the
increase recorded in non-performing loans as a percentage of Santander's total
lending, which rose to 1.16 percent for the group as a whole from 0.82 percent.
In line with comments Monday from peer Banco Bilbao Vizcaya Argentaria SA's
CEO Jose Ignacio Goirigolzarri, Saenz flagged that the levels of bad loans in
Spain are coming from record lows.
He also noted that Santander's aggressive expansion in the consumer finance
business has contributed to the increase in non-performing loans in Spain in the
last quarters, but defended the bank's presence in this "very profitable"
activity.
Santander has a "comfortable" liquidity situation, Saenz said, also playing
down the erosion in the bank's core capital ratio to 6.1 percent end-March as
the effect of dividend payments.
He highlighted that the bank's UK arm Abbey also has "more than enough to
meet its liquidity requirements" as a result of its short-term markets
operations.
Abbey posted a 4 percent increase in net profit in the first quarter to 311
million euros from a year earlier, with mortgage lending rising 10 percent.
On the possibility that the decline in its U.S. unit Sovereign's share price
could lead to Santander making further write-downs, Saenz said there are no
plans for additional "adjustments."
Earlier, Santander said group net profit rose 22 percent to 2.206 billion
euros in the first quarter to March 31 from 1.802 billion a year earlier, in
line with consensus forecasts for about 2.15 billion.
Net interest revenue grew to 4.025 billion euros from 3.507 billion,
including dividends, in line with forecasts for 4.0 billion.
Operating profit increased to 4.236 billion euros from 3.236 billion.
Saenz concluded that the first-quarter results allows the bank to reaffirm
the objectives outlined at its Investor Day last September, which include 15
percent EPS CAGR in 2008-2009.
tfn.europemadrid@thomson.com
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