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Santander profits surge as bank rides high on Spain's recovery

AFP · 29 Oct 2015, 15:11

Published: 29 Oct 2015 15:11 GMT+01:00

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The Spanish bank said net profit in the July-September period was €1.68 billion ($1.86 billion), in line with analysts' expectations of €1.7 billion, according to a survey by data provider FactSet.

Net interest income, the difference between what lenders pay clients for deposits and charge for loans, rose 6.8 percent to €7.98 billion.

Net profit in Spain jumped by 33.9 percent over the second quarter but was down in Brazil by 14.8 percent, though without taking into account currency fluctuations it would have fallen by just 1.4 percent, the bank said.

The Spanish economy emerged in 2013 from five years of on-off recession and Madrid forecasts it will grow by 3.3 percent this year.

But Brazil's economy, the world's seventh-largest, has slumped into its worst recession in nearly three decades.

Earlier this month the International Monetary Fund said that Brazil's economy will shrink about three percent this year and another one percent next year.

"The situation is complicated" in Brazil, Santander's chief executive Jose Antonio Alvarez told a conference call with analysts.

"We could feel a greater impact in the future," he added.

Soured debts as a percentage of total credit rose for the second consecutive quarter in Brazil to 5.3 percent in the July-September period.

Brazil accounts for about a fifth of Santander's earnings. 

During the first nine months of the year, profits rose by 17 percent to €5.1 billion.

Story continues below…

"We view the economic situation as improving in the majority of our core markets," said Santander's executive chairwoman Ana Botin.

Santander said it registered profits during the first nine months of the year in the ten core markets in which it operates, with the exception of Poland.

In Spain net profit jumped 64 percent during the period due to a rise in new lending and total customer deposits and a drop in bad loans.

In Britain, the bank's main market, net profit jumped 28 percent during the first nine months and in Brazil it rose by 22 percent.

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