Santander Losses Down to Bad Credit in Spain
Spanish banking giant Santander revealed today that it suffered a drop in profits last year due to the amount of bad credit and unredeemed loans in its domestic market of Spain.
Santander has been making strong inroads into the UK banking system and is currently vying with rivals such as Nationwide, Tesco and Sainsbury’s to provide the lowest headline rates on its unsecured personal loans. This indicates that Santander believes prospects for the loans market in Britain have been picking up.
The same cannot be said for the situation in Spain, however. Santander’s full-year profits dropped by 8.5 per cent last year, because of Spain’s ongoing recession and collapsed property market, leaving something of a vacuum when it came to the sale and repayment of home loans. The 20 per cent unemployment rate has also caused many Spaniards to default on their unsecured personal loans as well.
The number of “non-performing” home and personal loans in Santander’s continental business increased to 4.3 per cent last year, compared to 3.6 per cent in 2009. This was also due to the Spanish central bank’s imposition of stricter accounting standards, it said.
The only reason it did as well as it did, according to reports, was due to a strong performance from its UK and South American markets – British profits stood at £2.3 billion, an 11 per cent improvement on the previous year. The number of non-performing home and personal loans in the UK stood at just 1.8 per cent, unchanged from the previous year.