Tags: Banco Santander Chile | SAN | Banco Santander | STD | Chile | banking | Spain

Spanish Bank Santander Leads in Chile

By    |   Tuesday, 21 Jun 2011 09:05 AM

When times are good, people tend to think they will get even better. And with Chile’s economy surging on record-high copper prices, confident consumers are spending more and getting into debt. Combined with higher interest rates, this is good news for the country’s red-hot banking sector.

Banco Santander Chile (SAN), which is 75 percent controlled by its Spanish parent Banco Santander (STD), is the country’s No. 1 bank in terms of assets and equity in a highly competitive banking industry.

As of Dec. 31, Santander employed 11,000 people and had the largest private branch network in Chile with 504 branches.

In the first quarter of 2011, Santander posted pre-tax net income of $244 million, up 2.6 percent year-on-year, with a return on equity of 25 percent. Santander’s total loans increased 19.4 percent year-on-year to $34.1 billion, representing a 21.6 percent market share, including a 27.7 percent share of the consumer loan market.

Customer deposits increased 10.7 percent in the quarter, led by a record 40.7 percent rise in non-institutional deposits as the bank focused on increasing its core deposit base in line with growth of its loan portfolio.

Operating income, net of provisions and costs, increased 11 percent. The increase was partially offset by higher operating expenses, which increased 11.2 percent due to higher personnel expenses, mainly due to greater commercial activity in various business segments, especially retail banking.

“Santander stands out due to the quality of its management and its constant promotion of innovation as well as its solid capitalization structure,” said Chilean investment firm BICE Inversiones in a report.

Santander has one of the highest solvency levels of all Chilean banks and the capacity to raise more capital through subordinated debt. In addition, analysts say that future earnings should be enough to fund the company's asset growth without a decline in capital ratios.

“The bank has surprising capacity to implement strategies that add value to its bottom-line for shareholders,” said the Chilean brokerage Bci Estudios in a recent report.

Nearing high

BICE Inversiones expects Santander’s loan portfolio to grow 14.7 percent in 2011, in line with the banking industry’s positive outlook.

During the last 52 weeks, Santander’s ADR has traded at a high of $99.99 and a low of $60.11, gaining 50 percent in that period. However, the upside appears to be mainly incorporated into the share price, leading most analysts to recommend that investors hold or sell.

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When times are good, people tend to think they will get even better. And with Chile s economy surging on record-high copper prices, confident consumers are spending more and getting into debt. Combined with higher interest rates, this is good news for the country s red-hot...
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2011-05-21
Tuesday, 21 Jun 2011 09:05 AM
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