Spanish banking giant Santander reported a 72 per cent rise in 2005 profit on Wednesday thanks to billions in profits from stake sales and better-than-targeted performance from new UK unit Abbey.
Santander said Abbey had cut its costs-to-income ratio to 60.6 per cent from 69.9 per cent and showed "clear signs of sustainable revenue growth". Net profit rose to €6.22 billion in 2005.
That beat consensus expectations in a poll of six analysts for a rise to €6.16 billion but was within the range of €6.06 billion to €6.29 billion.
That allowed the bank to announce its biggest dividend rise in 17 years at 25 per cent, it said.
Its shares were down 0.85 per cent to €11.70 at 8:19am in line with the DJ Stoxx banking index.
"Results were good, both in terms of net profit and operating profit (up 39 per cent), but they were already discounted in the share price, which had outperformed," said Javier Galan, fund manager at brokerage Renta 4.
"What we're waiting for now is the outlook for 2006 and forecasts for costs and revenues at Abbey," he added.
As expected, €658 million of that amount went to pay restructuring costs at Abbey, €608 million for early retirement payments and the remaining €1.01 billion given as part of profits.
Santander said net interest income, or its earnings on basic lending and borrowing, rose 38.3 per cent to €10.74 billion, beating all forecasts in the poll. Without Abbey the rise would have been 14 per cent.
Santander said three-quarters of its three-year savings targets at Abbey had been completed in the first year after the Spanish bank bought Abbey for over £8 billion ($14.1 billion) in 2004.
Trading profits at Abbey rose 34 per cent last year due to higher fee income.