Banco Espanol de Credito reports doubled full-year profit

10 January 2007

Banco Espanol de Credito (Banesto) has announced that its full year profit for 2006 has more than doubled, with net income rising over the year to €1.45 billion (£970 million).

The Spanish bank reported that net income for the year to the end of December 2006 rose significantly on the €570.4 million total for 2005, while net profit for the 12 months was up by €673 million.

Madrid-based Banesto sold its majority stake in Spanish real estate group Urbis in 2006 and witnessed a sharp increase in fourth quarter profit as a result, with performance also boosted by higher lending margins.

A retail unit of Spanish finance giant Santander Central Hispano run by Ana Patricia Botin, daughter of Santander chairman Emilio Botin, Banesto has seen profits for 2006 exceed analysts' expectations.

The sale of the company's controlling share in Urbis resulted in a one-off gain of €1.18 billion and charges incurred of €403 million. Return-on-equity (ROE) for 2006 reached 19.62 per cent, up from 19 per cent the previous year and above a target of 17 per cent.

Banesto is concentrating on attracting new business from small firms and consumers to drive growth and intends to open 150 new branches during 2007. The bank is also carrying out a cost-cutting programme that includes plans to reduce its workforce by six per cent through early retirements over the next three years.

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