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Banco Santander Brasil net drops as lending slows

By Rogerio Jelmayer
Banco Santander Brasil SA said its net profit declined in the third quarter, after lending slowed and costs increased as economic growth cooled again during the quarter
The Brazilian unit of Spanish bank Banco Santander SA  said net profit fell 6.8% to 1.41 billion Brazilian reais ($648 million)
The Brazilian bank accounts for an important part of Santander's Latin American operation, which is in turn the largest contributor to the Spanish bank's profits
Santander owns 75% of the Brazilian unit's shares
The bank's credit portfolio grew 7.1% in the period to BRL222 billion
Private-sector banks in Brazil have been more cautious of late amid slower economic growth
After a surprise expansion in the second quarter, economists believe the Brazilian economy slowed again in the third quarter, amid weakness in industry
Banks in Brazil were hurt in the third quarter by the central bank's decision in April to start raising interest rates, in an effort to bring down inflation, which had been above 6%
That move has driven up funding costs for banks, which haven't been able to fully pass on those higher costs to customers
Meanwhile, Santander's provisions for bad loans dropped to BRL2.7 billion in the third quarter from BRL3.2 billion in the year-ago period, while the default rate was 4.5% in the third quarter, down from 5.1% a year ago
The bank's return on equity fell to 10.6% at the end of the third quarter, from 10.9% in the second quarter of 2013
It did not unveil comparative figures for the year-earlier period.
The bank's expenses rose 2.2% to BRL4.1 billion in the third quarter

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El Genio dijo...

By Christopher Bjork
MADRID--Banco Santander (SAN.MC) Thursday reported a sharp rise in third-quarter net profit as the bank set aside less cash to cover souring losses in its Spanish home market, but its performance in Latin America weakened.

Net profit rose to 1.06 billion euros ($1.46 billion), roughly in line with the second quarter but sharply higher than the EUR122 million it reported a year earlier. Analysts were expecting profit of EUR1.01 billion.

The euro zone's largest bank by market value saw its profits squeezed last year when Spain's government forced all the country's lenders to cover losses on their vast property portfolios. This year the provisioning effort is smaller, but still considerable, because banks were recently told by their regulator to set aside more money to cover losses on debts they had previously refinanced.

Santander said it had set aside EUR2.6 billion to cover bad debts, down from EUR2.99 billion a year earlier. In the year-earlier period it also recorded a EUR1.14 billion property-related writedown.

Santander's net profit in the first nine months of the year rose 77% to EUR3.31 billion.

"After several years of high levels of write-offs and reinforcement of capital, Banco Santander is preparing for a new period of increased profitability," Chairman Emilio Botin said in a press release.

Latin America remained the biggest contributor to nine-month results, even as profit from the region fell 15% to EUR2.59 billion.

In Continental Europe, the bank swung back to a profit, thanks in part to the lower provisioning needs in Spain. Profit from the region totaled EUR833 million, compared with a EUR2.26 billion loss in the first nine months of 2012.

In the U.K., Santander's earnings rose 17% on the year in the three quarters, to 687 million pounds ($1.11 billion).