Banco Santander SA ADRSTD

Morningstar Rating

Stock Research and Analysis

by Maclovio Pina

In its 150-plus years of existence, Banco Santander has come a long way from being a trade bank in its namesake town in northern Spain to one of the world's largest financial institutions. Although we are not keen on growth for growth's sake, the firm Read more

Bulls Say

Santander is a well-diversified financial institution whose wide reach has helped it stay decently profitable during this downturn.

The bank has proved to be a good acquirer that has been able to control costs and maintain an acceptable efficiency ratio.

Santander has top positions in several promising Latin American markets, which should help profitability.

After going through numerous crises throughout its history, Santander has maintained sound credit standards and adequate reserves against probable loan losses, which have helped it remain relatively strong. Read more

Bears Say

Although Santander seems to have steered clear of problems in Spain and the U.K. so far, these countries' recessions could catch up with the bank, prompting additional loan losses.

The bank's nonperforming loan balances may not show the full picture, hiding potentially bad loans. If that were the case, loan losses could rise dramatically and hinder profitability for several quarters.

A drop in the euro directly affects Santander's fair value in U.S. dollars. For example, a 15% decline in the exchange rate entails a 15% fall in the ADR price without necessarily implying any modification to the bank's underlying businesses. Read more

Strategy

Santander wants to become a major retail bank in each of its markets. It has made major acquisitions in the United Kingdom and throughout Latin America. We think it is an effective procurer that is able Read more

Management

We think Santander's top brass has done a good job of expanding the bank's reach and controlling operating and credit costs. Santander has withstood several crises from which it has learned the indispensability of sound underwriting standards and diversification, Read more

Profile

With $1.6 trillion assets and close to 14,000 branches, Banco Santander is one of the world's largest financial institutions. Its main focus is retail banking (about 75% Read more

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