* Santander reports earnings before Madrid market open
* 2013 profit seen up 98 pct at 4.54 bln eur - poll
* Q4 2013 profit seen tripling to 1.23 bln eur- poll
* Q4 NII seen up 1 pct vs prior 3 mnths at 6.34 bln eur
* High dividend payouts under scrutiny
By Sarah White
MADRID, Jan 30 Spain's Santander, the
euro zone's biggest bank, is expected on Thursday to report
improved income from lending in the fourth quarter, as investors
scan earnings for signs of a turnaround in its home market and
its Brazilian business.
Profits at Santander, which has weathered Spain's
five-year-old property market slump thanks to profits from
overseas units, were helped last year by lower provisions on
real estate losses compared with 2012.
Net profit for 2013 is forecast to nearly double to 4.54
billion euros ($6.2 billion), according to the average of
estimates from analysts polled by Reuters, while fourth-quarter
net is seen tripling to 1.23 billion, partly due to a gain on
the sale of half its asset management business.
Like other Spanish banks, Santander is benefiting as the
domestic economy emerges from a prolonged recession. Although
bad debts are still rising, the pace is slower than in early
2013 for most banks.
Equally, net lending income (NII) - a measure of earnings
from loans minus funding costs - is seen improving at many
Spanish lenders in the fourth quarter compared with the third,
as deposit rates fall.
At a group level, Santander's fourth-quarter NII is expected
to grow around 1 percent from the previous three months to 6.34
For Brazil, which contributes about a quarter of Santander's
earnings, analysts have also been eyeing signs that loan
defaults are on the wane.
Santander Brasil's fourth-quarter recurring
profit was expected to slip 5.6 percent to 1.33 billion reais on
a quarterly basis, a Reuters poll showed.
Shareholders will also be bracing for an update on
Santander's dividend policy.
While many global banks cut payouts after the 2008 financial
crisis, Santander kept its dividends. But its payouts as a
percentage of profits hit around 276 percent in 2012 and many
analysts believe payouts are still unsustainably high.
Santander shares, which closed little changed at 6.385 euros
on Wednesday, are up 8.2 percent through the past 12 months
against a 14.5 percent rise in Spain's blue-chip Ibex index
($1 = 0.7319 euros)
(Editing by Sonya Dowsett and David Holmes)