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Banco Santander Helps Spain Ride Out the Storm

Stocks in this article: SAN

Banco Santander reported that 24% of its net loans to customers are in Spain. Massive provisions were made against its domestic asset base to finance the percentage of nonperforming Spanish loans.

While Banco Santander continues to power its way ahead in the global markets, its performance in Spain has been muted by a mere 7% profit in 2013. Contrast that figure with 17% profit from the United Kingdom.

The bank's shareholders would likely enjoy increased earnings if the deterioration of Spanish loans was halted, and became as lucrative as the UK loans held by the bank.

Investors who have been following the performance of Banco Santander have been pleasantly surprised by the positive news emerging from Spain. For the most part, it has been the global operations of this massive banking corporation that have been responsible for its continued prosperity.

It is now expected -- given three quarters of positive GDP growth in Spain -- that Spanish economic performance will bolster the earnings already being enjoyed on a global scale.

Presently, Banco Santander's shares have provided investors with a dividend yield of 9%. The company certainly has a big part to play in the ongoing recovery in Spain and across Latin America.

Banco Santander Performance

The share price is markedly off the highs of October 2007. The precipitous drop came between July 2008 and March 2009.

Post-March 2009, Banco Santander shares rallied to $17.30 before continuing their sustained losses through June 2012 when the trend became bullish.

The stock is moving into its second year of growth which is certainly in line with the global economic recovery and the Spanish economic turnaround, too. The stock currently has a market cap of $103.1 billion.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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