Tuesday, May 11, 2021
No menu items!
HomeBank CapitalCapital Calls: Santander’s Brazil gloom looks overdone

Capital Calls: Santander’s Brazil gloom looks overdone

Banco Santander’s chairwoman Ana Patricia Botin attends an annual results presentation at the bank’s headquarters in Boadilla del Monte, outside Madrid, Spain, January 30, 2019.

Concise insights on global finance.


UNFAIR DUES. Investors are not giving Ana Botin enough credit. Shares in Banco Santander (SAN.MC), the 53 billion euro Spanish bank she runs, fell 1% on Wednesday despite reporting a nearly two-thirds year-on-year rise in first-quarter pre-tax profit to 3.1 billion euros. A vaccination drive helped the United States eclipse Brazil as Botin’s largest profit contributor. But even in the crucial lusophone country , racked by alarmingly high infection rates read more , bad debt charges remained broadly stable.

South American resilience should mollify concerns about credit quality. If Botin can keep dud loans at 1.08% of lending, meaning perhaps 10 billion euros in annual loan-loss provisions, she stands to make 8.6 billion euros in annual net income, according to Breakingviews calculations based on Refinitiv-compiled analyst estimates and a 36% tax rate. That would equate to an impressive 13% return on tangible equity, implying shares currently priced at 80% of tangible book value should trade at a premium, assuming a 10% cost of equity. Such would be a fitting riposte to market sceptics. (By Christopher Thompson)

On Twitter http://twitter.com/breakingviews

Earlier in Capital Calls:

Sony caution jars with market mood read more

Sainsbury’s virus boost nears its sell-by read more

Australia takes fight to Apple and Google read more

Counter-espionage push impacts China Inc overseas read more

3M suffers from a congo discount read more

Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

Source link

Founder and CEO of the premier banking news informational website for the banking/financial industry, and applicants seeking careers exclusively in the finance field.


Please enter your comment!
Please enter your name here

- Advertisment -

Most Popular

Recent Comments

Skip to toolbar