First quarter
earnings from leading European banks including Santander, Barclays
and Deutsche Bank confirm improving conditions as margins increase
and bad debts stabilise.
In particular, the UK’s largest
retail bank Lloyds Banking Group reported it had returned to the
black in the first quarter, sooner than forecast by the majority of
analysts.
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Santander also buoyed the market,
unveiling first quarter net profits of €2.21bn ($2.93bn), a 5.7%
increase on the corresponding period a year ago and ahead of
analyst forecasts.
The group’s retail banking unit
generated 84% of the operating areas’ total gross income and 70% of
attributable profit, up 14% year-on-year at €2.05bn.
The bank’s increasing reliance on
its Latin American and UK units was apparent from the first quarter
results.
Brazil contributed 21% of group
profits (€603m – up 38% from the corresponding period last year)
while UK profits of €480m were up 17%, contributing 16% of group
earnings.
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By GlobalDataOther UK highlights included
increases in market share, in particular the bank’s 20% share of
gross mortgages. UK product successes included the launch of the
Santander Zero account on 11 January, timed to coincide with the
rebranding of the group’s UK subsidiary brands Abbey and Bradford
and Bingley to Santander (see RBI
623).
Initially offered only to the
bank’s mortgage customer base of twom, 100,000 accounts Zero
accounts were opened in the first quarter.
Santander’s
previously troubled US-based subsidiary, Sovereign, posted a second
successive quarterly profit, €69m in the three months to 31 March,
compared with a loss of €20m a year earlier.
Group-wide, Santander grew deposits
13% while lending remained flat.
Barclaycard, European gloom
for Barclays
At first glance, Santander’s strong
UK retail performance was surpassed by Barclays, which posted a 20%
rise in first quarter retail profits before tax to £238m
($365m).
This figure however included a gain
of £71m on the acquisition of Standard Life Bank.
Across the group, Barclays’ retail
profits before tax fell 6% from a year ago to £403m, following
falls in profit of 34% and 32% at Barclaycard and the bank’s
Western European retail banking units respectively.
Barclays’ group profit before tax
for the three months to 31 March was £1.82bn, up 47% on the
corresponding period last year.
Barclays’ South African unit Absa increased profits before tax
by 114% to £167m, including one-off gains.
