Banco Santander Q1 Profit Rises, Offers To Buy 25% Of Its Brazilian Subsidiary

(RTTNews) - Spanish commercial bank Banco Santander, S.A. (SAN, BNC.L) Tuesday reported a higher first-quarter profit, reflecting mainly lower costs and a fall in loan loss provisions. Meanwhile, earnings per share declined from last year. The company also announced a tender offer for 25 percent of its subsidiary in Brazil.

Chairman Emilio Botín said, "2014 has started out with higher revenues, lower costs and provisions and more satisfied customers, which results in more profits."

For the first quarter, profit attributable to the Group increased 8.1 percent to 1.30 billion euros from 1.21 billion euros in the previous year. If exchange rates had not changed compared with the same period last year, net profit would have increased by 26 percent, the company said.

Meanwhile, earnings per share declined 1.9 percent to 0.113 euros from 0.116 euros per share a year earlier.

According to the firm, the profit figure is the highest of the last eight quarters and does not include the net capital gains from the sale of 85 percent of Altamira totaling 385 million euros, or the flotation of Santander Consumer USA totaling 730 million euros, which are in a fund that is pending assignation.

Pre-provision profit, or net operating income declined 6.7 percent to 5.28 billion euros.

Santander's basic revenues, comprising net interest income plus fee income, were 9.32 billion euros, down 4 percent year-on-year. Excluding exchange rate impact, revenues grew 7 percent compared with the first quarter of 2013.

Net interest income for the quarter decreased 3 percent to 6.99 billion euros from 7.21 billion euros in the preceding year.

Costs were 4.85 billion euros, down 4 percent from a year ago. Loan loss provisions fell 14 percent to 2.70 billion euros.

Deposits and mutual funds increased 1 percent compared with March last year, and totaled 732 billion euros.

Separately, Banco Santander said that it offers to acquire all shares of Banco Santander Brasil not already held by Grupo Santander, representing about 25 percent of Santander Brasil's share capital.

Banco Santander said it will offer a 20 percent premium over the last closing market price. The consideration offered under the transaction, which is expected to be completed by October, would be paid by means of Banco Santander shares.

Santander said it will acquire all shares held by shareholders accepting the offer and has no intention of causing the delisting of Santander Brasil from either the Sao Paulo stock exchange or the New York Stock Exchange.

In Madrid, Banco Santander shares are currently trading at 7.10 euros, up 0.05 euros or 0.72 percent, on a volume of 10.74 million shares.