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Opinions David Driscoll
Banco Santander SASANCOMMENTMar 13, 2017
David DriscollStock price when the opinion was issued
As of Jun 18, 2026. Market Open.
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Chris StuchberryChris Stuchberry
Rick StuchberryInterest rates will go up after the ECB changes chairs in June 2019. Each quarter they put up $2 billion+ of net income and are trading a hair above book value now, plus negative sentiment to Euro banks now. (3.3% dividend yield, Analysts' price target: $106.76)
Chris StuchberryHe doesn’t own this, but he owns comparable banks. The whole global banking sector is trading at very cheap multiples. They are all under pressure from the flattening yield curve, and they all pay hefty dividends. The bank’s poor performance is sector-driven more than driven by the political issues in the countries where it does business.
He owns this as a European bank holding in the portfolio. The flat yield curve is holding them back. He will continue to hold it for when the yield curve normalizes.
Rick Stuchberry
This hasn’t turned a corner yet. They are doing fine in Britain. Spain is still an issue. They are having problems in the US, Mexico and Brazil. This is emerging markets, and this is a common theme of many companies out there, especially the banks. You get a slowdown because of the rising US$. The net interest income growth is negative. Efficiency ratios are good and have their costs under control. The nonperforming loans are a little high, which has to do with Spain and Brazil. Trading at 12X earnings. He would be looking at Barclays (BCS-N) which wants to turn itself around and get its BBB credit rating back and are selling off assets in a big way. Tier 1 capital is starting to rise in a big way so it is becoming more profitable. There is also a Swedish bank, Svenska Handlesbanken (?) which has branches in Sweden, Norway, Finland, England, Lithuania, Latvia and Estonia. Their business model uses the steeple effect, where head office will give them the product, but it is up to the branch managers to climb to the top of the steeple and whatever they can see in 360° is their territory. They end up with having better margins and better efficiencies because the branch managers have to be accountable for their actions. Dividend has been growing at a 15% clip per year. A rise in interest rate will be beneficial for them.