As local competitors began to acknowledge the effects of the harsh recession hitting the Spain, Banco Santanderet BBVA, two champions of the sector, continue to exceed the expectations of analysts. The nine first months of the year, the decline in the profits of the first was limited to 2.8, for a total of EUR 6.7 billion, and the second to 7.2 (EUR 4.1 billion), when all other acteurs of Spanish finance record a drop to two digits of their results. La Caixa, the number three, has limited the damage with a benefit in withdrawal from 10.2 to 1.4 billion, but Caja Madrid (622 million) and Banco Popular (651 million), which complete the quintet of the sector, were, respectively, posted 44.8 falls and 32.
Alfredo Saenz, the vice-PDG of Santander, announces clearly this year stability of ordinary net income 2008 (EUR 8.9 million), that suggests Angel Cano, the new CEO of BBVA, suggesting a last surprise trimestresans.
Geographic diversification
The explanation of this beautiful resistance lies in the geographic diversification of the two enemy brothers of the espagnole Bank. The Iberian market (Spain, Portugal) contributes more than 10 of the results of Banco Santander behind the activities of credit consumption (27), Brazil (16) and Britain (16). In BBVA, the Spanish market is still 42 of the profits, but the balance is lean across the Atlantic between the Mexique (24), South America (15) and the United States (2), where the Bank grow lights, with large ears open for new acquisitions, according to its leader.
If the analysts start to question the results of some market players suspected of artificially maintaining their performance undervaluing their losses (or even below), the two champions appear, a priori, beyond reproach.
In the third quarter, Santander a vested all of its gains, is EUR 2.2 billion which 1.4 billion from the recent introduction on the stock exchange of its Brazilian subsidiary, its provisions and the strengthening of its own. His unpaid rates rose from 1.7 to 3 in one year with a ratio of coverage from 105, to 73, and the Group increased by 54 its allocations for doubtful accounts. It now has a mattress of provisions of EUR 18 billion, of which 10.5 billion countercyclical. Its "core capital" is about to be increased to 8.4.
BBVA acted similarly when booking the 830 EUR million drawn from the recent sale of a portion of its network of agencies in Spain to the strengthening of countercyclical provisions, bringing the total to 4.6 billion. The allocations for deterioration of assets have increased in the same time by 77 to EUR 3.7 billion. While its unpaid rate has doubled in a year, at 3.7, with a ratio of 68 coverage, the Bank also treated its core capital", from 6.2 in late December to 8 today, following the issuance, last month, of convertible shares for a total of 2 billion.
While some announce a difficult period in Spain, the two groups, which are stabilization on unpaid (Santander does not plan to dépasser a rate of 3.5), are rather optimistic for 2010 because of their geographical diversification.
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