Banco Santander Net Profit Up 14.3% in 1st Quarter -- Update

Banco Santander SA (SAN.MC) said Wednesday that net profit rose 14.3% in the first quarter from a year earlier, as the bank made progress boosting its capital ratio.

Santander, one of Europe's largest lenders, said net profit was EUR1.87 billion ($2.05 billion) in the quarter, compared with EUR1.63 billion a year ago. That beat analysts' estimates that the company would report a net profit of EUR1.75 billion in the latest period, according to a poll by data provider FactSet.

Fees were particularly strong in the first quarter, rising 18.6% to EUR2.84 billion year over year.

The Spanish lender said net interest income in the first quarter was EUR8.4 billion, compared with EUR7.62 billion a year earlier. That beat analysts' estimates for net interest income of EUR8.14 billion, according to FactSet.

Net interest income, a key profit driver for retail banks, is the difference between what lenders earn from loans and pay for deposits.

"While the environment continues to be challenging for the banking sector, the outlook for Santander is positive," Santander Executive Chairman Ana Botín said in a statement. "The economies of all our core markets are expected to grow this year."

Santander's capital ratio was 10.66% in March, compared with 10.55% in December, under international regulations known as "fully loaded" Basel III criteria. Santander has among the lowest ratios of major European banks and investors are closely watching how it builds capital.

In Brazil, where the bank generates around one-fourth of its earnings, net profit rose sharply to EUR634 million in the first quarter compared with EUR359 million a year ago on rising lending income and fees. Taxes and loan-loss provisions, on the other hand, increased from a year ago when calculated in euros.

In the U.K., where Santander generates around one-fifth of its profit, a year-over-year decline in lending income and fees triggered an 8.2% drop in net profit to EUR416 million when calculated in euros. Britain's impending exit from the European Union has pushed sterling down against the euro.

Santander's Spanish banking unit booked a 17.9% increase in first-quarter net profit from a year earlier, buoyed by higher fees and lower loan-loss provisions.

Write to Jeannette Neumann at jeannette.neumann@wsj.com

(END) Dow Jones Newswires

April 26, 2017 02:21 ET (06:21 GMT)