Santander profit plunges on property losses

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Santander profit plunges on property losses

Santander profit plunges on property losses
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Santander, the eurozone’s biggest bank, says its net profit for the first nine months of the year fell by two thirds from the same period last year.

That was because it wrote off five billion euros in losses from repossessed housing and unrecoverable loans to developers in Spain.

That big writedown meant its profit in the third quarter was 94 percent lower.

The bank also increased provisions against loan defaults in Spain to 9.5 billion euros during the nine months to September 30.

Rising bad loans in Spain have spread beyond the real estate sector as more Spaniards default on their debts in a crippling recession, with a quarter of the workforce out of a job. Bad loans hit record highs in August.

Santander is coping with the Spanish banking crisis better than rivals because it makes most of its profits elsewhere.

Spain accounts for just 16 percent of profit at Santander, with half coming from Latin America. But earnings also waned in profit-driver Brazil in the third quarter.

In Britain, Santander wrote off 52 million pounds (64.6 million euros) in costs it incurred with its abandoned purchase of 316 branches from Royal Bank of Scotland. Earlier this month Santander walked away from the deal, blaming RBS’s IT delays.

It also made a 232 million pound (288 million euros) provision for compensating customers for mis-selling, or the potential for future remediation, as regulators take a hard look at past practices. It included mis-selling of interest rate hedging products for business customers, but Santander did not add to its provision for the mis-selling of payment protection insurance.