Europe's second largest bank Santander reported a first-half net profit of 4.73 billion euros ($7.45 billion) on Tuesday, ahead of analysts' forecasts thanks to growth in Latin America and Britain.
Santander, which is on the acquisition trail again by buying British lender Alliance & Leicester, said net interest income rose 14.5 percent to 8.49 billion euros.
The average market forecast was for a net profit of 4.53 billion euros according to a Reuters poll of 10 analysts, with net interest income expected to be 8.30 billion euros.
Last year, net profit was boosted by asset sales.
"Results look good but in this market it's hard to tell how the stock will react," a Madrid-based trader said. "People will definitely be looking at asset deterioration."
Spain's economic and property slowdown is starting to hurt earnings and push up bad loan rates at rivals like Banco Popular and savings banks La Caixa and Caja Madrid but Santander's famed shopping habit has softened the blow.
The non-performing loans ratio for the Santander group stood at 1.34 percent in June, up from 0.83 percent a year ago.
At its Spanish arm, which includes its 88-percent stake in Banesto, bad loans were 1.08 percent of the total.
Santander's diversification and the fact it held no subprime assets have helped its shares outperform the DJ Stoxx European banks sector index by 19 percent so far this year.
The shares trade in line with the sector at 7.4 times forecast 2009 results, hampered by concerns it will make more acquisitions and the effect of slowdowns in major markets like Spain and Britain.
A breakdown of results showed that net profit in Europe dropped 2.6 percent to 2.39 billion euros, bruised by less business coming through Santander's wholesale banking unit.
Its Latin American unit made a net profit of 1.42 billion euros, up 4 percent on a year ago, while British arm Abbey also posted bottom line growth of 4 percent to 627 million euros.
Both sets of results were depressed by the stronger euro.
This month Santander unveiled a 1.7 billion-euro share deal to buy Abbey's rival A&L.
But that was not enough to silence speculators who market traders say still expect the Spanish bank to swoop again, possibly on a German retail bank or in a break-up bid along the lines of last year's ABN Amro deal in which Santander picked up Brazil's Banco Real.