Spanish property writedowns batter Santander’s earnings

City A.M. Reporter
SANTANDER’S profits halved in the first half of the year after it took writedowns on deteriorating Spanish real estate assets, the bank revealed yesterday.

Profits fell to €100m (£78.3m) for the second quarter and €1.704bn for the half, down 51.3 per cent on the same period of 2011.

Expenses rose 5.1 per cent on the year, and staff levels actually rose 0.1 per cent in the year to 187,251.

The Eurozone’s biggest bank said it had now completed 70 per cent of required writedowns against repossessed housing and unrecoverable loans to developers demanded by regulators in an attempt to belatedly recognise losses from a 2008 property crash.

Although in line with the provisions ordered by the Spanish government, traders were surprised the bank was willing to take such a slice of these losses so early in the year.

“The provisions will allow us to put real estate write-offs in Spain behind us by the end of this year,” explained chairman Emilio Botin.

Shares rose 10.6 per cent on the day, closing at €4.51, lifted in part by Mario Draghi’s speech hinting at more ECB support for the economy.