El Pais

Spain's banks are set to announce bumper earnings for last year on the back of heady growth in mortgage lending due to an ongoing property boom, which has offset the impact of lower interest rates.

Emilio Botín, the chairman of Banco Santander Central Hispano, said Thursday that Spain's biggest bank will announce "another year of record earnings" when it unveils its results on February 25. SCH posted a net profit in the nine months to September of €3.16 billion, boosted by extraordinary gains. Excluding these, net earnings were up 21 percent at €2.33 billion. Santander's acquisition last year of Abbey National, Britain's second largest mortgage lender, made it the fourth biggest bank in Europe and the 10th in the world.

SCH unit Banesto Thursday was the first major bank to unveil earnings for full-year 2004. These were up 3.3 percent at €456.4 million, but excluding a charge of €70 million for severance payments, the bank's bottom line grew 19.1 percent. Banesto also had the advantage of counting on the contribution from its property firm unit Urbis.

Mortgage lending in Spain last year grew consistently at annual rates of over 20 percent, providing a much welcome source of income as low interest rates eat into revenues garnered from the difference between lending and deposit rates.

Medium-sized bank Bankinter is expected to report on Thursday of next week a net profit of around €157 million, a rise of 18 percent from a year earlier.

Analysts are also forecasting a very good year for Banco Bilbao Vizcaya Argentaria, which is currently embroiled in warding off an approach by construction group Sacyr to take a strategic stake in Spain's second biggest bank. BBVA is expected to post a rise in its net profit for 2004 of 17 to 19 percent, to over €2.6 billion