Santander profit halves on property writedowns

MADRID: The eurozone's biggest bank, Santander , reported a
51 percent drop in first-half net profit on Thursday as it took
writedowns on deteriorating Spanish real estate assets sooner than
expected.
Santander had been expected to take the hit
on repossessed housing and unrecoverable loans to developers in the
second half of the year. The government has demanded banks recognize
more than 80 billion euros ($97 billion) in losses from a 2008 property
crash.
The bank reported net profit of 1.7 billion euros after
writing down losses of 2.78 billion euros on Spanish property assets.
Profit for the period before provisioning was 3 billion euros, in line
with analysts' expectations.
Santander has suffered less than
domestic rivals from a severe Spanish economic downturn and property
crash due to its diversified business in Brazil, Mexico, Poland and
Britain. Latin America accounts for half of profit.
Funding
holes in Spanish banks' balance sheets due to unrecognized losses from
the bursting of a housing bubble, worsened by loan defaults in a
recession, has pushed Spain to ask Europe for an up to 100 billion
euros ($121 billion) credit line to prop up lenders.
In a recent
external audit of Spain's banks, Santander was one of three judged not
to need capital even in a stressed scenario, alongside BBVA and CaixaBank .
Santander
said the provisions taken this quarter meant it had accounted for 70
percent of government demands regarding property writedowns.
"The provisions we are making will allow us to put real estate write-offs in Spain behind us by the end of this year," said Chairman Emilio Botin in a statement.
Santander said deposits in Spain had grown 15 percent, while quarterly revenues were the highest in the last 10 quarters.
The
April to June period covers the nationalization of Bankia, Spain's
biggest bank rescue ever, which sent shock waves through the country's
financial system.
Santander and smaller rival BBVA often gain
clients during times of uncertainty in Spain, as they are seen by
Spaniards as strong, stable banks.
Mid-sized Spanish banks Bankinter and Sabadell have both reported first half results brought low by writedowns against toxic property assets. - Reuters