Banco Santander Affirms 2016 Guidance Amid Brexit Fallout

‘Brexit’ had an unprecedented adverse impact on banking stocks across the globe, leading to heightened investor concerns regarding the stability of the financial systems. While major global banks are trying to reassure investors by coming out with statements, Spain, Madrid-based Banco Santander (MC:SAN), S.A. (NYSE:SAN) has reiterated its 2016 guidance.

Banco Santander, in a regulatory filing, tried to alleviate investors’ anxiety by showing faith in its business model, which has been “proven resilient in the most adverse economic situations, like the recent political and economic crisis in Brazil”. Thus, the company was able to somewhat lessen investor concerns related to the fallout of Brexit on its financials.

Notably, Banco Santander dropped nearly 3.7% on NYSE as a result of a massive global selloff subsequent to the Brexit vote last week. Nonetheless, following the statement by the company, the stock gained roughly 2.7% in afterhours trading.

A Quick Recap of Financial Targets

Banco Santander does not expect Brexit to have a material impact on its financials in 2016, despite generating approximately 25% of its profits from the UK. The company re-affirmed its expectations of a year-over-year improvement in 2016 earnings.

As announced during its first-quarter 2016 conference call, Banco Santander still aims to fully offset the restructuring expenses by the end of this year. Additionally, the company plans a 10% increase in cash dividend.

Moreover, Banco Santander targets an annual rise of 40 basis points in capital to reach 11% by 2018.

Further, Banco Santander has completed “a cost efficiency exercise in the second quarter”. The cost associated with this plan was €500 million. However, this will be partially offset by the gains from the sale of its stake in Visa Inc. (NYSE:V) . Hence, the net charge during the quarter is expected to be €250 million.

Currently, Banco Santander carries a Zacks Rank #3 (Hold). A couple of better-ranked finance stocks include Canadian Imperial Bank of Commerce (TO:CM) and Bank of Montreal (TO:BMO) , both sporting a Zacks Rank #1 (Strong Buy).


BANK MONTREAL (BMO): Free Stock Analysis Report

CDN IMPL BK (CM): Free Stock Analysis Report

BANCO SANTAN SA (SAN): Free Stock Analysis Report

VISA INC-A (V): Free Stock Analysis Report

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