Today I am looking at why I believe Banco Santander (LSE: BNC) (NYSE: SAN.US) is an excellent place for investors to deposit their investment funds.
Lucrative Latin regions to bolster growth
If you are looking for a stock primed to reap rich rewards from the emerging geographies of Latin America, in my opinion Banco Santander fits the bill perfectly. The bank generates more than 50% of total profit from this region, and in particular has substantial exposure to continental heavyweights Mexico and Brazil. Indeed, Banco Santander attains more than a quarter of profits from the latter country alone.
Although recent economic pressure in Brazil contributed heavily to a 10% fall in pre-provision operating profits in January-June, the banking giant is betting big that Latin America will be a strong growth driver in future years.
Santander Brasil CEO Jesús Zabalza told Reuters that the firm is on the acquisition hunt to bolster its real estate and payroll-deductible loan portfolios in Brazil. And plans to roll out its Santander Select package, which will be aimed at more affluent clients in the country, illustrates the bank’s view that Latin America is a rising financial power with gold-lined growth prospects.
Earnings bounce-back presents stunning value for money
After many years of consistent earnings pressure following the 2008/2009 banking crisis, City analysts expect Banco Santander’s restructuring strategy and aforementioned activity in developing regions to deliver stunning earnings growth both this year and next. Earnings per share are anticipated to rise 88% and 25% in 2013 and 2014 respectively, to 43 euro cents and 54 euro cents.
These projections leave the business trading on a bargain basement P/E rating of 12.6 for this year, and which is expected to fall to just above the value benchmark of 10 next year, at 10.1. As well, a price to earnings to growth (PEG) reading of 0.1 and 0.4 for these years, camped well within the marker of 1 which represents staggering growth prospects at current prices.
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And for those seeking access to stocks with increasingly appetising dividend prospects, investors could do a lot worse than opting to park their cash in the banking giant. Indeed, the company currently provides a dividend yield of 11.1% for 2013 and 9.9% for 2014.
This is comfortably above an average prospective yield of 4.1% for the wider banking sector and forward reading of 3.2% for the FTSE 100. But whether or not you choose to plonk your cash into Banco Santander, I reckon that you should check out this brand new and exclusive report which singles out even more FTSE 100 winners to really jump start your investment income.
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> Royston does not own shares in Banco Santander.