Santander Upbeat on Banco Popular Buy as Profit Rises -- Update
July 28 2017 - 2:34AM
Dow Jones News
By Jeannette Neumann
MADRID-- Banco Santander SA said Friday that net profit and net
interest income rose in line with figures it had pre-announced
early this month when it launched a capital increase to fund its
cleanup of Banco Popular Español SA.
Net profit rose to EUR1.75 billion ($2.04 billion) in the second
quarter from EUR1.3 billion a year earlier. Net interest income was
EUR8.61 billion compared with EUR7.57 billion. Those figures
include its acquisition of Banco Popular.
Santander Executive Chairman Ana Botín said that executives are
"extremely confident that the acquisition of Popular will deliver a
return on investment of 13%-14% by 2019."
Santander's capital ratio was 9.58% in June compared with 10.66%
in March under international regulations known as "fully loaded"
Basel III criteria. Santander has among the lowest ratios of major
European banks and investors are closely attuned to how it builds
its capital.
Taking into account Santander's EUR7.07 billion capital
increase, which closed Wednesday, its "fully loaded" capital ratio
was 10.72% as of June 17, which the bank said keeps it on track to
meet its target of above 11% in 2018.
Santander's ratio of bad loans to total loans edged up with the
acquisition of Banco Popular to 5.37% in the second quarter from
3.74% in the first quarter. Excluding Banco Popular, that ratio
would have fallen to 3.55%. Banco Popular's balance sheet was
weighed down by tens of billions of euros worth of foreclosures,
unsold land and other nonperforming assets accumulated when Spain's
real estate boom went bust starting in 2008.
Concerns about how Banco Popular was coping with its soured
assets, and whether it would be able to find a buyer or raise
capital, accelerated into an outright bank run earlier this year.
Banco Popular was rescued by Spanish and European Union authorities
and sold to Santander for a token EUR1 on June 7.
Since Santander's figures were expected, investors and analysts
will be listening closely to the conference call held by executives
later Friday morning for more details about how Santander expects
to dispose of Banco Popular's property assets.
In Santander's Brazil unit, net profit rose strongly
year-over-year in the second quarter. Meanwhile, net profit fell in
the bank's U.K. unit in both euros and sterling.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
July 28, 2017 02:19 ET (06:19 GMT)
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