Banco Santander Could Still Yield 11%

LONDON -- Shares of Banco Santander (LSE: BNC  ) (NYSE: SAN  )  dropped 7 pence to 469 pence during early London trade this morning despite the bank saying it expected to maintain its dividend at 0.60 euros per share for 2013.

The planned payment would equal that paid by Santander every year since 2009 and would support a potential 11% yield at the current 1 pound: 1.18 euro exchange rate.

The dividend announcement accompanied Santander's first-quarter results, which showed revenues down 9% to 10.3 billion euros and pre-provision profits down 15% to 5.3 billion euros.

Provisions during January, February, and March came to 2.9 billion euros, some 6% less than that recorded during the first quarter of 2012 and the lowest level of write-offs seen since the fourth quarter of 2011.

The bank also noted that the quarter's net earnings of 1.2 billion euros represented 53% of the figure disclosed for the whole of 2012.

On a pre-provision basis, Santander's U.K. profits tumbled 24% to 486 million euros. However, the bank did say its 1|2|3 current account had attracted 1.7 million customers since the product's launch a year ago.

On the balance sheet, Santander's exposure to the fragile Spanish property market dropped 47% from March 2012 to less than 12 billion euros.

Emilio Botin, the chairman of Santander, said this morning:

Profit in 2013 will be significantly higher than the 2.295 billion euros registered in 2012. This comes after four years in which we set aside 60 billion euros for bad loans, added 30 billion euros to our capital and strengthened deposits by 22 billion euros.

Of course, whether Botin's profit optimism, that 11% yield and general prospects for European banks all combine to make Santander a buy right now is something only you can decide.

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