Banco Santander - An unusual high dividend yield banking stock

(11-09-2013, 06:31 PM)investingsgx Wrote: It has no cash on hands, but debts. Can it sustain?

and 2012 net profit after tax was down 2 times from 2011. Nevertheless dividends are high.

Oh, how did you find out it has no cash on hands?

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Btw, may I know how do you add signature to your reply thread? I find no way to specific my signature in User cp.

Investments in banks is more about faith. If you believe Spain will stay in recession for ever, by all means, don't invest in banks in Spain. If any recovery from recession in Spain, banks will be the first to recover. In general, no industry can make money until banks do.

Banco Santander's main problem in Spain is provision, the same as what happened to us banks in subprime crisis.

Banco Santander also has substantial emerging Latin America exposure. But if you believe in the long term growth of emerging markets, Banco Santander gives good exposure.

(11-09-2013, 06:35 PM)yccheok Wrote:

(11-09-2013, 06:31 PM)investingsgx Wrote: It has no cash on hands, but debts. Can it sustain?

and 2012 net profit after tax was down 2 times from 2011. Nevertheless dividends are high.

Oh, how did you find out it has no cash on hands?

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Btw, may I know how do you add signature to your reply thread? I find no way to specific my signature in User cp.

Balance sheet on google finance.

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(11-09-2013, 06:43 PM)freedom Wrote: Investments in banks is more about faith. If you believe Spain will stay in recession for ever, by all means, don't invest in banks in Spain. If any recovery from recession in Spain, banks will be the first to recover. In general, no industry can make money until banks do.

Banco Santander's main problem in Spain is provision, the same as what happened to us banks in subprime crisis.

Banco Santander also has substantial emerging Latin America exposure. But if you believe in the long term growth of emerging markets, Banco Santander gives good exposure.

What you say here make sense. But i believe this stock needs to go down to 5.50-6 to make it attractive since their earnings were so badly affected.

Anything can happen in the investment field. Speculation can bring up the prices as well. Unless they strengthened their financial position, will keep this in my watch list. Thanks for sharing yccheok

Attached is the geographical segment data acquired from bloomberg.

53% Latin America
30% Continental Europe
12% UK
5% US

I been watching this one for a while too. The main drawback is the provisions are murkier; while they have stressed that they will maintain the dividend, nobody knows the extent of the writedowns or if they have additional ones coming up. Spanish banks tend to have this hidden better than the rest it seems. BBVA also can take a look, but same issue with unknown amount of provisions if any. If they manage to stay up (i.e. the NPLs from Mexico and Brazil aren't too bad) then they'll just spread the damage out over the years without anyone knowing.

(13-09-2013, 12:13 AM)Ashrigo Wrote: I been watching this one for a while too. The main drawback is the provisions are murkier; while they have stressed that they will maintain the dividend, nobody knows the extent of the writedowns or if they have additional ones coming up. Spanish banks tend to have this hidden better than the rest it seems. BBVA also can take a look, but same issue with unknown amount of provisions if any. If they manage to stay up (i.e. the NPLs from Mexico and Brazil aren't too bad) then they'll just spread the damage out over the years without anyone knowing.

Europe crisis started since late 2009. 4 years had passed. I expect worst thing should over. Yet. Spain unemployment rate is still pretty scary :

https://www.google.com/search?q=spain+unemployment+rate

(13-09-2013, 04:41 AM)yccheok Wrote:

(13-09-2013, 12:13 AM)Ashrigo Wrote: I been watching this one for a while too. The main drawback is the provisions are murkier; while they have stressed that they will maintain the dividend, nobody knows the extent of the writedowns or if they have additional ones coming up. Spanish banks tend to have this hidden better than the rest it seems. BBVA also can take a look, but same issue with unknown amount of provisions if any. If they manage to stay up (i.e. the NPLs from Mexico and Brazil aren't too bad) then they'll just spread the damage out over the years without anyone knowing.

Europe crisis started since late 2009. 4 years had passed. I expect worst thing should over. Yet. Spain unemployment rate is still pretty scary :

https://www.google.com/search?q=spain+unemployment+rate

Although the bank recover a bit, but it is still very insignificant to the good earnings from 2007-2010.

Yes, if you are looking at the bottom line only, the profit of Banco Santander decreases greatly since 2007. But looking deep into it, you will realize that most of the decrease come from real estate provision. Still remember the significant writedown/provision of US banks during subprime crisis? Where is those writedown/provision now? They are slowly reversed/released as housing improves. The same will happen in Spain, maybe slower and later but surely.

On the other hand, the underlying profit driver(net interest income and fee income) has growed quite a bit since 2007. Santander develops a great franchise in UK(Santander UK) during the whole crisis period. And now Santander UK is one of the best capitalized banks in UK(better than Barclays/RBS/Lloyds) though some of them have been recapitalized by the government.

In US, Santander Consumer Finance grows a lot since Santander acquired Drive Financial. SCUSA also bought auto loan portfolio from HSBC and got a deal with Chrysler with its dealers. Also, Santander acquired Sovereign Bank, a regional bank active in wealthy northeast during the crisis.

In Latam, Santander is the number one in Chile and among the top 3 of private-owned banks in Mexico and Brazil.

(11-09-2013, 11:38 AM)freedom Wrote: If you take scrip or selling scrip share for cash, you won't incur withholding tax. of course you must hold ADR of Banco Santander and JP Morgan always offers 3 options.

1. scrip, no withholding tax
2. sell share for cash, no withholding tax, but depends on market price.
3. cash, with 21% withholding tax.

both 1 & 2 don't have withholding tax.

HI bro

If i buy through philip securities, how do I decide if I want to receive script divdend?

(16-09-2013, 07:32 PM)neoscan Wrote:

(11-09-2013, 11:38 AM)freedom Wrote: If you take scrip or selling scrip share for cash, you won't incur withholding tax. of course you must hold ADR of Banco Santander and JP Morgan always offers 3 options.

1. scrip, no withholding tax
2. sell share for cash, no withholding tax, but depends on market price.
3. cash, with 21% withholding tax.

both 1 & 2 don't have withholding tax.

HI bro

If i buy through philip securities, how do I decide if I want to receive script divdend?

call your broker. he should give your the above 3 options if you are buying the underlying shares instead of derivatives of the underlying shares meaning that the brokerage did not buy the shares for you but bet against you.