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Analysis before buying or selling Santander shares

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Santander's revenue and market capitalization

08/11/2021 - 09h38

The Spanish banking giant, Banco Santander, had a difficult year in 2020. For the year as a whole, the bank recorded huge losses due to the impact of the coronavirus pandemic.

Elements to consider before selling or buying Santander shares

Analysis N°1

We would pay careful attention to the development of the micro financing sector. Santander in fact tends to develop these services by offering adaptable financing to its lower income clients.

Analysis N°2

Of course, all the mergers and acquisitions completed by Santander should be followed. This particularly concerns company acquisitions of which the headquarters is situated abroad and which could assist in the geographical development of this company.

Analysis N°3

Banking activity is also directly linked to the world economic growth and this particularly concerns banks such as Santander, Therefore, when completing your fundamental analysis we recommend you carefully follow all the economic and financial data of the Euro zone as well as the countries or geographical zones where Santander is well established. 

Analysis N°4

The banking activity sector is also one of the most competitive. It is therefore primordial to integrate a complete study of the competition including the major competitors with your fundamental analysis, as detailed above, with financial information on each of them and their respective stock market situations in this sector.

Analysis N°5

Finally, you should of course monitor the movements of the interest rate for the Euro zone which remains one of the major threats as much for industry as for the banking sector. This threat has become more apparent since the recent Brexit problem. It is therefore important to closely monitor announcements and major publications by the ECB that you will find on the economic calendar of your online broker.

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General presentation of Santander

A good knowledge of Santander is of course essential if you want to make a good analysis of this stock on the stock market before buying or selling. Indeed, by learning how this banking group generates its revenues and profits as well as the markets in which it is present, you will be able to better anticipate its future reactions to the challenges of the future. We will now take a closer look at this company and its main activities and sources of income.

The Banco Santander SA group is a Spanish company operating in the banking sector. More specifically, it is the leading banking group in Spain at present in terms of both market capitalisation and assets under management.

The Santander Group's activities can be divided into three main areas of activity:

  • The commercial banking division, which brings together retail banking and specialised financial services such as consumer credit and mortgage lending.
  • The investment banking, corporate and market division, which brings together traditional and specialised financing activities, including acquisition and project financing, as well as financial engineering such as merger and acquisition advice, equity and other transactions, and interventions in the equity, interest rate and foreign exchange markets.
  • The asset management and private banking division. Here, the group is also developing a bancassurance business through its subsidiaries Santander Seguros and Banesto Seguros.

Currently, the Banco Santander Group manages more than 849.3 million euros of outstanding deposits and 916.2 billion euros of outstanding loans.

To market its various products and services, Banco Santander has a network of more than 11,236 branches around the world.

Analysis before buying or selling Santander shares
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The major competitors of Santander

Of course, the Banco Santander banking group has several major competitors in the market so you must know its main adversaries and follow their news in order to detect any interesting movements in its price. Here are its biggest competitors:

BNP Paribas 

First of all, the French banking group BNP Paribas is a major competitor of Banco Santander. It's one of the leaders in this sector in Europe and throughout the world, which operates in more than 71 countries. This bank is listed on the Euronext Paris stock exchange and is part of the French benchmark CAC 40 stock market index. It's the result of the merger of the Banque Nationale de Paris and Paribas in 2000.

BPCE

Another banking group in direct competition with Banco Santander is the BPCE group. This is the joint body of the Banque Populaire and the French Caisse d'Epargne. It's the result of the merger of the Caisse nationale des caisses d’épargne and the Banque Fédérale des banques populaires. This group is also the second largest cooperative banking institution in the world after Crédit Agricole.

Banco Bilbao Vizcaya Argentina or BBVA

This other competitor is a Spanish multinational banking group based in Madrid and Bilbao. It is one of the leaders of financial institutions around the world. This company operates mainly in Spain, Mexico, South America, the United States and Turkey. BBVA currently has nearly 35 million clients, one million shareholders, a network of 7,410 branches and employs over 95,000 people. BBVA is also one of the 100 largest companies in the world today and is listed on nearly 9 stock exchanges and is part of the composition of the benchmark stock index Ibex 35. It is also a leader in this sector in Mexico.

Banco Sadabell 

This Company is the 5th largest private equity banking group in Spain. It is made up of different banks, brands, subsidiaries and companies in which it owns part of the capital and which affect all areas of finance. Specializing in the field of commercial banking, the group quickly penetrated the market for companies and individuals with medium or high incomes. The group owns and operates a network of more than 1,300 branches and employs more than 10,699 people. It is also listed on the Madrid Stock Exchange and is part of the Ibex 35 stock market index.

Bankia 

Finally, another direct competitor of Banco Santander is undoubtedly the Bankia group which is a Spanish banking conglomerate created in 2010 following the consolidation of the activities of 7 regional savings banks and after the outbreak of the real estate crisis from 2008. At that time, the State temporarily became a majority shareholder at 45%. With assets totalling 328 billion euros, this bank is one of the largest in the world.


The major partners of Santander

To conclude here is a summary of the major partnerships implemented by the Santander Group during recent years.

CNP Assurances

In 2014 the CNP Assurances group announced the signature of an exclusive long term distribution agreement with Santander Consumer Finance (Groupe Banco Santander) as well as the 51% acquisition of its life and other insurance subsidiaries.

PSA Bank

A partnership between the PSA financial bank and Santander Consumer Finance was signed in 2013 and the joint venture in Poland started its activities on 3rd October 2016. This company has been responsible since then for the financing of the automobile concessions for Peugeot, Citroen and DS.

Attijariwafa

The largest bank in Morocco, Attijariwafa, and the largest Spanish bank, Santander, signed an agreement in 2016 to facilitate their clients’ procedures.

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Positive factors for Santander shares
The factors in favour of a rise in the Santander share price:

To implement a long term strategy on the purchase of Santander shares it is of course necessary to understand and appreciate the abilities of this banking sector company to develop its growth and respond to future challenges. To assist you in analysing these aspects here is a detailed summary of the advantages of this group and its major strengths that could influence a rise in its share price.

Firstly, the Santander banking group is one of the major financial companies worldwide and shows consistently positive results from a financial perspective. We note a conspicuous increase in the turnover of this company over recent years, particularly since 2015. This company also benefits from an advantageous position on the world financial markets as it was classified 23rd in the Forbes Global list of the largest international companies of 2000.

The worldwide reputation of this banking group is another strong point for Santander. This bank is in fact well known throughout the world and boasts a positive brand reputation which is fairly rare for a business in this sector. This aspect is also highly reassuring for investors.  

The distribution of the group’s activities from a geographical standpoint is also an asset. The Santander banking group is in fact particularly well established in Europe and highly present on the markets in Portugal, Germany, Poland and Great Britain. It is also developing strongly into the United States and Brazil. Santander is equally one of the largest banking groups in South America. 

Another strength of the Santander Group lies in its capacity to ally itself with other large companies in this sector on an international level. These strong and strategic mergers and associations relate to companies that are renowned worldwide such as the Abu Dhabi Commercial Bank, the Polish bank Zachnodi WBK and Hutch Essar.

Finally, Santander boasts an excellent public image as it proposes a large range of quality services and products. In fact, due to this optimised service range Santander displays the importance it places on premier quality services and a healthy and trusting relationship with its clients. This is one of the major reasons for its success.

Negative factors for Santander shares
The factors in favour of a drop in the Santander share price:

We have just reviewed the factual elements that influence the increase of the Santander share price on the stock market with the different advantages offered by this banking group. However, it would be remiss to ignore the negative aspects and weaknesses of this company. Here therefore are the major weak points of this group and the possible setbacks to this group’s progress.

Firstly, and despite the positive rise in the financial accounts of 2015 and 2016, we note that the 2017 objectives were not truly attained and the growth of this company’s activities in fact show signs of slowing down which is worrying for investors and shareholders and which weigh currently on the stock market.

On the other hand, the Santander Group still depends greatly on policy decisions taken by the Euro zone. The group still maintains its headquarters in Spain and achieves the vast majority of its income from within the European Union. It is therefore highly influenced by decisions taken by the Euro zone as by decisions taken by the Central European Bank.

We also regret, despite the consequential international development efforts, the fact that the Santander Group is not well positioned on the emerging markets. Its position, particularly in Asia, remains very weak compared to its major competitors who have in fact prioritised this market. The best implanted banks in this highly promising sector of countries such as India are currently Standard Chartered Bank, Barclays Bank and the RBS.

Finally, and as with other European banks, the Santander Group is subject to all the European restrictions and regulations in terms of financial asset management and is therefore required to restrict its debt to a minimum in order to reassure its investors and shareholders in general.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

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