Santander Bank announces record profits in 2009

The Santander Group made 0.7% in 2009 despite recession

According to information released to the National Stock Market Commission (CNMV) the Santander Group made a net profit of 8,943 million euros in 2009 which is 0.7% more than in 2008 when it made 8,876 million euros.

These results mean that the bank fulfilled its promise to shareholders with regards to its profits and the money destined for dividends which has gone up by 2% compared to 2008 and now stands at 4,919 million euros.

According to the Chairman of the Santander Group, Emilio Botín, these are ‘the best results in the history of the bank taking into account the difficulties of the current economic climate placing the bank at the top of the league for the second year in a row’.

The rate of defaulting on loans was calculated to be 3.24% at the end of 2009 compared to a rate of 2.04% at the end of 2008. At the end of 2009 the Santander Group had conceded 682,551 million euros in loans which is 8.9% more than in 2008. The banking group also managed 900,057 million euros for its clients which also represents an increase of 8.9%.

Profits in Latin America were 3,833 million euros (+6%) at the end of 2009. Profits for the United Kingdom grew by 38% to 1,726 million euros with an increase of 5% in credits and 8% in deposits in pounds.

The net margin obtained by the banking group from all of its businesses centred in a dozen markets around the world was 22,960 million euros - 19.3% more than in 2008.

The Santander Group closed 2009 with 79,704 million euros in capital, 34,769 million euros more than the minimum required by regulations which meant that at the end of 2009 the banking group had a core capital and reserves of 8.6% compared to 7.5% for 2008.

These figures make the Santander Bank, one of the few banks not to have received any public aid in any of the markets where it operates, one of the most solvent world banks.

Finally the payment of 0.22 euros per share on 1st May 2010 was approved by the Board of Directors which means that the total dividend is 0.60 euros per share. This is 7.8% less than in 2008 following the increase in its capital by increasing the number of shareholders by 32%. The total quantity which is to be paid out in dividends by the banking group has gone up by 2%.

Mortgage lending in Spain rises

Mortgage lending rises for the first time in two years

According to the National Institute for Statistics (INE) 52,043 mortgages for the purpose of buying a house or flat were conceded by banks and building societies in November 2009. This constitutes an increase of 1.8% compared to November 2008.

This is the first time in two years that mortgage lending on houses or flats has increased following 28 consecutive months in which year on year decreases were registered. Mortgage lending has fallen almost continually since January 2008 with falls of up to 20%.

The number of mortgages in November fell by 0.7% while the fall in mortgages has reduced to just 23.3% compared to last year. According to figures published by INE the average price of a mortgage fell by 11.7% in October 2009 compared to October 2008 and is now 115,492 euros.

Building societies conceded the highest number of mortgages in November accounting for 52.5% of the total, banks accounted for 36.6% followed by other financial entities which accounted for 10.9%. As far as the amount of capital lent building societies lent 45.3% of the total, banks 43% and other financial institutions 11.7%.

The average interest rate for mortgages taken out in November 2009 was 4.09% which is 26.7% lower than a year ago and 2.4% lower than October 2009.

The average interest rate conceded by building societies was 4.25% and the average terms were 23 years while the average interest rate conceded by banks was 4.03% repayable over 21 years.

Most mortgages taken out in November (95.2%) were on variable interest rates while only 4.8% used fixed rates. The Euríbor was the most popular interest rate and was used for 88.7% of new mortgages.

The number of mortgages per 100,000 inhabitants was highest in Cantabria (324) and La Rioja (295). Madrid and the Balearic Islands presented the best variable rates with increases of 28.4% and 26.6%, respectively while the worst results were seen in La Rioja (- 40.3%) and Murcia (-16.2%).

The highest priced mortgages in November were in Catalonia (179,984 euros) and in Madrid (179,959 euros).

Lastly the highest number of mortgage holders who changed the conditions of their mortgages per 100,000 inhabitants were in the Comunidad Valenciana (234) and La Rioja (171), while Murcia and the Comunidad Valenciana registered the highest number of cancellations in mortgages per 100,000 inhabitants (173 and 174 respectively).

Fall in Spanish property market slows

Lowest fall in housing sales since crash in property market

House sales are still at very low levels compared to those registered before the crash in the property market at the end of 2007. According to figures published today by the Spanish National Institute of Statistics (INE) housing sales were down by 20.3% compared to the same month a year ago. However, this is the lowest fall since housing sales began to decline at the beginning of 2008. In addition over 37.000 transactions were registered, which is only the second time sales have reached this figure since January this year.

Out of all the 37.000 transactions registered 50.5% were for new housing and 49.5% were for used housing. As usual the biggest drop in sales has been registered in used housing with a fall of 20.5% compared to a year ago (18,351 transactions).
New housing sales have fallen by 20.1% to 18,688 transactions. This fall is higher than that registered in June when new housing sales fell by only 18.1% compared to the same period last year.

When comparing figures for July with those for June it can be seen that housing sales have increased by 4.7% for the third month in a row while during the first 7 months of the year housing sales have fallen overall by 33.1%.

The figures for July are encouraging because only in April 2008 housing sales registered a fall of less than 20.3% as seen in July this year. However, this could also be down to the fact that the figures for April 2008 were based on comparing those for April 2007 which had fewer working days in the month due to the fact that it coincided with Easter week.

Property sales fall 31% in first quarter of 2009

According to figures published by the Ministry for Housing during the first 6 months of this year 217,589 houses and flats were sold in Spain – 31.16% less than during the first quarter of 2008 (316.096 houses and flats were sold during this period).

These are the worst figures for the housing market since 2004 when records on the number of property sales began. The fall of 31% in housing sales is the same as the fall registered for the same period in 2008 compared to the previous year.

During the second quarter of 2009 112,886 housing sales were recorded which is a fall of 29% compared to the same period for 2008 although it is an increase of 7.8% compared to the first 3 months of 2009.

The price of private housing fell by 8.9% in August compared to August 2008 which means that the year to year fall in prices is lessening.

According to the index of Mercados Inmobiliarios Españoles (IMIE) published today by the property evaluators Tasaciones Inmobiliarias (TINSA) house prices have fallen by 14% compared to figures for 2007 when housing prices reached their peak in Spain.

Rental prices in Spain fall

Slump in housing market also affects rental market with falls of up to 30% in cost of renting

According to figures released today by the government, there has never been a better time to rent a property in Spain. And whereas renting has never been a particularly attractive option for young Spaniards who have always tended to stay at home until they have enough money to put a payment down on a property and get a mortgage, with the current fall in the value of property in Spain, more and more people are considering the option of renting. And, luckily for them, rental prices are currently lower in many capitals of provinces than 12 months ago.

According to the Ministry for Housing the cost of private housing has fallen by 8.2% compared to the first quarter of 2008. A recent study by Idealista shows that during the first 6 months of 2009 rental prices fell compared to a year ago with rental prices in Madrid 8.4% cheaper, 11.7% cheaper in Barcelona and almost 30% cheaper in Zaragoza.

The study by Idealista suggests that the ‘rental market reacts more quickly and better than the housing market to changes in the cycle’ and that the fall in the price of buying a property is countered by property owners who are less likely to drop prices or sell during a slump in the housing market. However this is not the case for the rental market as property owners do not mind dropping prices as they know they are going to maintain ownership of their property.

Furthermore rental prices are more likely to fall because they are more affected by household income, and unemployment in Spain currently standing at 1.5 million, there is more need for prices to adjust to demand.

Advice on renting property in Spain

Mortgages in Spain fall by up to 50 percent

Mortgages go down by up to 50% following record fall in Euribor

Those people who are due to review their mortgage repayments will be very pleased with the latest figures for the Euribor (Euro Interbank Offered Rate) interest rate. The Euribor will close this month at 1.412% following the largest interannual fall ever in its history. This means that long term mortgages in Spain could go down by as much as 50%. In addition analysts believe that the Euro rate has not reached its lowest levels yet and could go down even further to 1.20%.

Just one year ago mortgage repayments were going up with the Euribor at almost 5.4% in July 2008 which is nearly 4 points higher than its current level. This increase meant that average mortgage repayments went up by as much as 900 euros in some cases. However, those that need to review their mortgage repayments this year are in for a pleasant surprise. The monthly quota for an average mortgage worth 150,000 euros over 25 years will go down from 957 euros to 629 euros which is 327 euros less – this translates as a saving of approximately 4000 euros a year.

Those who will benefit most from the fall in the Euribor are those paying long term mortgages. For example for those on 30 year mortgages will see their repayments drop by 38.4% - 341 euros a month less, those on 40 year mortgages will see their repayments fall by 45.1% - 367 euros a month less and those on 50 year mortgages will see their monthly quota fall by 50.1% - 389 euros a month less. The main benefactors from the fall in the euribor will be those who have bought their properties over the last few years. Those wanting to buy now still face difficulties in finding a mortgage lender and more expensive credit arrangements which mean that they will end up paying more than 1.5% interest.

However, estate agents and construction companies are still looking for ways of attracting new customers in a desperate bid to get rid of the ever growing surplus stock of houses and flats. For example, yesterday the Comunidad de Madrid and the association of property promoters of Madrid agreed to reduce prices from between 10% and 50% in exchange for banks and building societies conceding 100% mortgages. Currently Santander bank, BBVA, Caja Madrid, La Caixa, Banco Popular, Banesto BBK, ING Direct and Bancaja have agreed to take part in the scheme.

La Caixa, also reached another agreement with the Spanish Association of Property Promoters to finance properties by 100% if estate agents cut prices by at least 20%. The association also signed a similar agreement with Santander bank last March.
Santiago Carbó, a professor in the University of Granada and a consultant for the Federal Reserve told El País that there will be another fall in interest rates this year. He believes that ‘so far there are not any signs of a solid recovery in the EU although market conditions are improving slightly’. However, he does not believe that there are ‘risks of inflationary tendencies’ either.

Nevertheless there are those that believe that the Euríbor could continue its downward trend given that it is always above official interest rates. The lowest level experts believe it could fall to oscillate from between 1.20% and 1.30%.
It is still not clear how long it will remain at such a low level. The Chief Economist for Intermoney, José Carlos Díez, told El País that the European Central Bank could raise interest rates next year to around 2% to see how the market reacts

Property surplus in Spain

Surplus stock of flats will take between two and five years to be absorbed into housing market

Following a decade of boom in the construction industry large areas of the Spanish coastline now appear to be a concrete cemetery. Town halls and property developers are both responsible for the thousands of houses and flats that now lie empty all along the Spanish Mediterranean coastline.

Given the number of surplus properties it is now estimated that construction companies have built up to three times the number of houses and flats needed to fulfil demand. At the end of 2008 there were 997,652 unsold houses and flats in Spain. According to the Ministry for Housing 47.2% of these properties (almost half a million properties) are concentrated in Mediterranean provinces.

It is predicted that it could take 2.2 years for the surplus stock to be absorbed if 350,000 and 400,000 flats are sold each year – a very optimistic figure which is based on a forecast by the Professor for Applied Economics, José García Montalvo, for the Pompeu Fabra University. Although he has also said that it could take up to 3 years for this to occur.

However, few people are willing to predict how the housing market will evolve from its current crisis. On the one hand if sales take place at the rhythm of sales seen in 2007 when the market slowed down significantly it will take just 1.3 years to absorb the surplus stock. However, on the other hand it could take up to 4.8 years for this surplus to disappear as indicated by figures published by the National Institute for Statistics.

Furthermore, in Catalonia, the Balearic Islands, the Comunidad Valenciana, Murcia and Andalucía building work on new housing developments has stopped all together. As a result there are many half finished neighbourhoods which have been nicknamed ‘ghost towns’.

However, the Mediterranean coastline is not the only area affected by the crisis in the housing market. Many cities are also suffering the effects of the crash in the property market too with many property developers having gone into administration. According to the consultancy agency CB Richard Ellis in Madrid 9.29% of the total office space in the Spanish capital is now unoccupied. In terms of square metres this represents 1.07 million m2 and it is forecast that this figure will go up by 290,000 m2 over the next few years.

In Barcelona, which has half the amount of m2 dedicated to office space the figure for unoccupied office space is 8.39% with 434,000 m2 currently available. It is also predicted that new projects will add 182,000 m2 to this figure.

Data taken from El Pais