MADRID—Banco Santander SA on Thursday reported a near 18% rise
in second-quarter net profit lifted by higher fees and stronger
lending.
The Spanish lender, the eurozone's largest by market value, said
net profit for the period rose to €1.71 billion ($1.88 billion)
from €1.45 billion reported in the same period last year.
Net interest income came in at €8.28 billion, up from the €7.37
billion last year, and beating analysts' forecasts of €8.17
billion.
Net interest income, a key driver of profit for retail banks
such as Santander, is the difference between what lenders pay
clients for deposits and charge for loans.
The bank set aside fewer funds to cover souring loans,
reflecting the continuing improvement of the Spanish and U.K.
economies. Bad loans as a proportion of total lending fell to 4.64%
from 4.85% in the first quarter.
Net loans to customers were up 13% in the second quarter,
bolstered by lending at Santander's Latin American units, Poland,
the U.K. and the U.S.
Santander touts its geographical diversity as a competitive
advantage that allows strong growth in some countries to
counterbalance weakness in others where the bank has major
units.
One of the main headaches for new Santander Executive Chairman
Ana Botí n has been the bank's problem-plagued U.S. holding
company.
The holding company, which includes a retail bank and a consumer
finance firm focused on car loans, failed the Federal Reserve's
balance-sheet tests in 2014 and 2015 for what the regulator had
said were "widespread and critical deficiencies" in governance and
its inability to identify and plan for potential risks."
Ms. Botí n took over the bank from her father when he died
suddenly in November of last year. Since then, she has tried to put
to work in the U.S. the skills she honed during four years as head
of Santander's large unit in the U.K., where she tackled issues and
new requirements raised by British regulators.
In that vein, Ms. Botí n has revamped the U.S. holding company's
management and board members.
"I cannot fix the U.S. without the right team," Ms. Botí n told
The Wall Street Journal in early June.
The new team faces an uphill battle.
In July, the Fed issued a stinging lecture to Santander,
faulting the U.S. unit for failing to meet regulators' standards on
a range of basic operations. Many of the regulator's concerns
echoed those it had already raised when Santander failed the stress
tests.
Santander has said it is working to meet its own standards and
those of its regulator.
Write to Patricia Kowsmann at patricia.kowsmann@wsj.com
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