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Banco Santander reported an 18% decline in net income in the second quarter as restructuring costs in Spain and the United Kingdom offset gains in Brazil and the United States.
The biggest Spanish bank said Tuesday that its net profit fell to 1.4 billion euros for the quarter at the end of June, against 1.7 billion euros in the same quarter of the previous year. Analysts surveyed by Bloomberg were forecasting a net profit of 1.3 billion euros for the quarter.
Excluding exceptional charges, second-quarter profits reached 2.1 billion euros, up 5% from the previous year. Previously, it was the best quarterly performance since 2011, the bank said.
"The bank posted its strongest quarterly underperformance in eight years, reflecting the progress we have made in our business and digital transformation," said Ana Botín, executive chairman, in a statement. "All of our businesses continued to deliver strong results, with particularly good growth in North America."
Net interest income, the profits a bank makes on its core lending business, rose 5.6% to 9 billion euros, compared with 8.5 billion in the second quarter 2018.
Santander's non-performing loan ratio decreased by 11 basis points in the quarter to 3.5%, and its fully loaded core capital ratio, or CET1, measures robustness. increased by seven basis points in the quarter to 11.3%. Its CET1 is 50 basis points higher than a year ago.
The bank recorded expenses of 708 million euros during the quarter, mainly related to the restructuring costs in Spain, where the bank integrates its acquisition of Banco Popular in 2017. At the time of the acquisition, Popular had been declared "failing or likely to fail" by the EU authorities and had € 37 billion of loans and toxic real estate on its balance sheet.
Santander employs it to reduce its operating costs in Europe by 10%, or about 1 billion euros a year.
Brazil and the United States were once again high-growth markets for the bank, with earnings before amortization in the first six months of the year, up 14% to 1.5 billion euros at the end of the year. Brazil and 30% to 465 million euros in the United States. The UK continued to be a difficult market for the bank, as increased competition in the mortgage market reduced earnings before amortization by 13%, reaching 582 million euros in the first half of the year. of 2019.
"A better than expected result, with good results from Brazil and a stronger contribution from the United States," said Daragh Quinn, a banking badyst at Keefe, Bruyette & Woods, quarterly results.
The financial report begins as the bank prepares for a legal battle with Andrea Orcel, the former director of the UBS investment bank, which Santander appointed his next managing director last year, before canceling his bid several months later.
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