Today's Technical View on Grupo Financiero Santander and Banco Santander: Outlook for Foreign Regional Banks

Feb 22, 2013, 08:00 ET from

LONDON, February 22, 2013 /PRNewswire/ --

Banks across the world are facing stricter regulatory environment. Although banks earlier this year got a relief after the Basel liquidity rule was loosened, they are still under pressure to strengthen their balance sheets. Meanwhile, low interest rate environment in most of the developed world is another major challenge facing the banking industry. However, foreign regional banks such as Grupo Financiero Santander Mexico SAB de CV (NYSE: BSMX) and Banco Santander SA (NYSE: BSBR), which operate in emerging markets of Mexico and Brazil, respectively, are in a relatively better position compared to other foreign banks, especially the ones in Europe. StockCall initiated free in-depth technical analysis on Grupo Financiero Santander and Banco Santander which are currently available upon sign up at

Low Interest Rate Environment in Developed Countries  

Banks in the developed world are operating in a low interest rate. From the Federal Reserve in the U.S., to the Bank of Japan, central banks across the developed world have implemented ultra-loose monetary policy in order to boost economic growth. While a low interest rate environment is beneficial to the economy, for banks it means low interest income.

One benefit of the record low interest environment for banks is that it has led to an increase in lending activity.

Banks Operating in Emerging Markets in a Better Position

While banks in the developed world are operating in a challenging environment, banks operating in emerging markets are in a better position due to relatively higher interest rates. While most developed economies are fighting slow growth and inflation, for emerging economies the biggest concern is high inflation. As a result, interest rates in most of these economies are expected to remain relatively high, boosting banks' interest income.

In Mexico, the country's central bank has kept the benchmark interest rate at 4.50% for a while now. Just last week, Agustin Carstens, Mexico's central bank governor, said that the inflation trend must consolidate before the central bank will slash interest rates.

In Brazil, the country's central bank kept the benchmark interest rate unchanged at 7.25% when it last met in January.

Basel Relief

Post-financial crisis of 2009, regulators across the world have been looking at ways to make the banking sector more robust. However, some of the measures that regulators have been planning to implement have been criticized by banks.

One of the measures that came under criticism was the liquidity coverage ratio (LCR). Last month, though, banks won a 4-year delay to fully implement LCR.

Grupo Financiero Santander Mexico SAB de CV Reports Q4 Results

Earlier this week, Grupo Financiero Santander Mexico SAB de CV reported its financial results for the fourth quarter ended December 31, 2012. The bank's comparable net income for the fourth quarter rose 16% on a year-over-year basis. Sign up for the free technical analysis on Grupo Financiero Santander S.A.B. de C.V. at  

Chairman and CEO Marcos Martinez said that the bank reported a solid operating performance in the fourth quarter, balancing robust growth with strong asset quality and operational efficiency.

Banco Santander's Q4 Results Beat Estimates

Last month, Banco Santander (Brasil) SA reported better-than-expected fourth quarter profit, driven by an aggressive cut in bad-loan provisions. The bank reported fourth quarter net income of R$1.598 billion ($803 million). Download the free report on Banco Santander (Brasil) S.A. by registering at  

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