The UK's state-supported lenders may still be struggling, but it's a different story for Banco Santander, Spain's biggest lender and owner of Alliance & Leicester, Abbey and Bradford & Bingley. Earlier this month it reported that net profits had risen slightly to €8.94bn (£7.9bn) from last year's €8.8bn. That's in stark contrast to UK lenders such as RoyalBank of Scotland (RBS) and Lloyds, where losses remain on the cards when they announce their figures in a few weeks.
But with the Spanish economy still in recession and unemployment at 20 per cent, it's not Spain that's driving Santander's relative outperformance. Indeed, the group's overall bad debt charge soared 44 per cent in 2009 to €9.5bn, and non-performing loans in Spain represent 3.41 per cent of its book there.
It's Santander's international diversification that explains the solid results. In Latin America, for instance, Santander grew profits 11 per cent to $5.3bn (£3.4bn), and in the UK profits grew 55 per cent to £1.54bn. The bank's UK net mortgage lending reached £7.6bn in 2009 - that's roughly half of all mortgage loans made last year, and well above its 13 cent historic market share.
What's more, Santander looks keen to target the UK for more growth. Chief operating officer, Alfredo Saenz told analysts in Madrid last week that Santander would "study takeover opportunities in the UK". The group is widely expected to try for the 318 branches that RBS is being forced by competition regulators to sell, or even the 600 branches that Lloyds must divest.
And, after Santander booked €1.5bn of profits from a partial-IPO of its Brazilian business last year, it has even been rumoured that Santander might fund deals by floating its UK operations - estimated by analysts to be worth £15bn - in London. But investors shouldn't hold their breath. With UK retail bank operations unlikely to deliver decent valuations for quite a while, the timing doesn't yet look right.
Santander has come out of the downturn in fine shape; its tier-one capital ratio is 10.1 per cent, although bad debts could yet eat into that. Few other UK high-street banks can boast growth and capital metrics like these. If the UK operations are floated, they could be an attractive investment. In the meantime, the Madrid shares, at €10.04, trade on just eight times Evolution Securities' 2010 adjusted earnings estimate - and the broker also expects earnings to rise 11 per cent during 2010. Good value for the internationally-minded.