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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)
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