Full-year figures from Spanish banking giant Santander (SAN) - while far from robust - suggest that the lender is at last on the mend. True, group net interest income did fall 13 per cent in the year but, crucially, evidence is mounting that the worst of the bank’s credit quality crisis may now be behind it.
Significantly, Santander’s bad debt charge fell 14 per cent year-on-year to €10.9bn (£9bn) and, while non-performing loans as a proportion of the book did rise 21 basis points in the fourth quarter to 5.64 per cent, that was still the smallest quarterly rise of 2013. Certainly, that non-performing loan ratio remains high - the figure for UBS (UBSN), for example, is nearer 0.5 per cent. But it does suggest that the non-performing element of the bank’s book is bottoming out and that further hefty hits from Spain’s property market collapse is increasingly unlikely. This improvement should be supported by Spain’s gradual economic recovery - the Spanish government expects the economy to grow 0.7 per cent in 2014.
