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Spain's biggest bank Santander braced for a continuing economic slump by increasing bad loan provisions in the first half, while reiterating its full-year net profit target for 8.88 billion euros.
Santander said on Wednesday that provisions for problem loans more than doubled to 4.626 billion euros in the first half from a year ago, as bad loans reached 2.82 percent of total loans by end-June, up from 2.49 percent at end-March.
But in line with the trend seen at other Spanish retail banks in the second quarter, Santander said the number of new bad loan entries fell 29 percent from the first.
Net profit fell 4.5 percent in the first half to 4.519 billion euros, beating analysts' forecasts for 4.337 billion euros, with Santander's European operations accounting for 50 percent of the total profits.
The euro zone's largest bank by market capitalization also said on Wednesday that it has expanded its consumer finance business in Poland through a joint venture with AIG.
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Sharon Lorimer |
Net interest income — the difference between interest earned on loans and that paid on deposits — rose 24.2 percent to 12.656 billion euros, but missed forecasts for 12.802 billion.
"Santander's results overall beat our forecasts. They are a solid set of figures," Renta 4's bank analyst Nuria Alvarez said.
Brazil Top Latam Division
Santander's operations in Latin America posted a 4 percent drop in net profit to 1.806 billion euros in the first half, while loans and deposits were up 7 percent.
The bank's Brazil business contributed 961 million euros to the region's earnings, up 12 percent from a year earlier, while its Mexican division saw a 29 percent drop, hit by the country's economic downturn and the impact of the H1N1 virus.
Earlier this month, Santander's Brazilian unit said it was considering selling new shares in an initial public offering, making it the latest in a raft of companies in Brazil to capitalise on improving market conditions.
Santander management were to host a conference call on first-half results at 9 am London time, where further details on the Brazil IPO are expected.
Shares in Santander closed 1.2 percent lower.
Data is a real-time snapshot *Data is delayed at least 15 minutes