Thursday, May 13, 2010

Santander Bank’s Profits Soar in spite of Spain Debt Fears

The Banco Santander posted 6% rise in profits for their first quarter profits leaving behind the doubts and worries about Spain's economy. The driving force behind the profits was Latin America and Britain.

The bank’s UK profits rose by 15% to £426 million. It alone holds 13.4% of Britain's existing mortgage stock, one out of every 5 home loans in Britain were from Santander in the first quarter of 2010.

Santander acted cautious while lending money to its home market Spain. The bank’s total loans in Spain were down 5% on the year. But the company said the fall in loans was due to lack of demand for credit. Spain’s contribution to the bank’s profits also slumped by 8% with £1.9 billion.

Santander which is the eurozone's biggest bank has an exposure of just €200 million to Greek sovereign debt, but €3 billion to Portuguese and €24bn to government bonds issued by Spain.

The Bank’s spokesman said the company’s deposits are increasing making it less reliant on wholesale funding to stimulate its lending.

Santander currently owns Abbey, Alliance & Leicester and the deposit book of Bradford & Bingley. This shows it wants to make a strong hold in the UK market. They say they want and will continue to support UK’s economy by increasing lending to small and medium-sized businesses by 18% and by writing one in five mortgages to UK households. It opened 276,000 new current accounts and 340,000 Individual Savings Accounts during the cross-tax year campaign while it increased investment sales by 5%.

The bank by making profit in the current heated up market has proved there are no rules to make profits the trick is in managing the resources well.

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