Santander to Lay Out New Plan in April -- 2nd Update

Adds Executive chairman comments, analysts comments, details, new plan announcement

--Banco Santander will present a new strategic plan in April

--The bank achieved its 2018 targets, including double-digit growth in EPS, and 4Q net profit beat expectations

--The results benefited from a strong performance in Brazil, Spain and Mexico, which offset some weaknesses in the U.K.

By Pietro Lombardi

Banco Santander SA (SAN.MC) will present a new plan in April after a better-than-expected fourth quarter helped the bank achieve its targets for 2018.

The profit beat failed to boost the stock, but may help the bank move on from its handling of former presumptive CEO Andrea Orcel. Earlier in January, Santander said it wouldn't proceed with the appointment of Mr. Orcel as new CEO--announced last year--over compensation issues.

The new strategy will be presented on April 3 at the bank's investor day in London, Executive Chairman Ana Botin said at the results' presentation Wednesday.

Santander will "continue with the same strategy," building on its strengths, such as diversification and scale, Ms. Botin said. She also confirmed that the bank plans to pay full-cash dividend for 2019.

The banking giant didn't disclose details of the new plan, but it said that it targets a return on tangible equity--a key measure of profitability--of 13% to 15% and a core tier 1 ratio of between 11% and 12% in the medium term.

The targets for 2018, which included a double-digit growth in EPS, a core tier 1 ratio above 11% and a RoTE above 11.5%, have been achieved.

In the last quarter of last year, net profit rose 34% on year to 2.07 billion euros ($2.37 billion).

Gross income, Santander's top line, rose 4% to EUR12.54 billion.

Analysts had expected a net profit of EUR1.94 billion on gross income of EUR12.17 billion, according to a consensus forecast provided by FactSet.

Santander reported "a decent set of numbers but dig deeper and the quality of the beat declines," Citi said.

At 1018 GMT Santander shares trade 0.2% lower at EUR4.28.

For the full year, the bank reported net profit of EUR7.81 billion on gross income of EUR48.42 billion, the latter being the highest on record, the bank said.

Last year's results benefited from the strong performance of the bank in Brazil, Spain and Mexico, which offset some weaknesses in the U.K.

Underlying profit grew 22% in Brazil, which remains the main contributor to the bank's bottom line, and 21% in Spain last year. Mexico also posted a significant growth. In the U.K. underlying profit fell 8% last year, as the competitive environment put pressure on revenue and investment in digital transformation pushed up operating costs.

"Latin America has remained an important engine for growth within the group, with especially strong progress in Brazil and Mexico," the executive chairman said.

"2018 has been an excellent year for the group. We have successfully completed our three-year strategic plan," she said.

Santander's core tier 1 ratio, a key measure of balance-sheet strength, rose to 11.3% at the end of December from 11.1% as of September. This is "in spite of external and regulatory headwinds," Ms. Botin said.

Write to Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

January 30, 2019 06:10 ET (11:10 GMT)

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