Santander's Profit Slips on Weaker Lending and Fee Income -- Update
April 27 2016 - 2:30AM
Dow Jones News
By Jeannette Neumann
MADRID-- Banco Santander SA on Wednesday reported a 5% decline
in first-quarter net profit to EUR1.63 billion ($1.84 billion) from
the year-earlier period on weaker lending and fee income.
Santander said net interest income--the difference between what
lenders pay clients for deposits and charge for loans--was EUR7.62
billion compared with EUR8.04 billion in the first quarter of 2015.
Both net profit and net interest income were roughly in line with
analysts' expectations, according to a poll by data provider
FactSet.
"We continue to deliver on all our commitments," Executive
Chairman Ana Botín said in a statement.
The decline in net profit, the bank said, was triggered by the
depreciation of various currencies against the euro. Santander has
units from Argentina to Poland.
A drop in the value of the Brazilian and Mexican currencies
against the euro, for instance, chipped away in the first quarter
at Santander's earnings, which are reported in euros.
Fees fell by 5% year-over-year to EUR2.4 billion. They were also
down compared with the fourth quarter.
Some analysts had anticipated a decline in commissions at
Santander and other Spanish banks due to market turbulence in the
first quarter.
"The negative surprise will come from the fee income line, which
has been impacted by weak capital markets and asset management,"
Francisco Riquel, an analyst with Madrid-based financial-services
firm N+1 Group, wrote in a report on Spanish banks before
Santander's results.
Santander reported a capital ratio of 10.27% as of March 31,
under international regulations known as "fully loaded" Basel III
criteria. The bank said it was on track for its capital ratio to
exceed 11% in 2018.
Investors and analysts have been keeping a close eye on the pace
at which Santander is able to generate capital. The lender's
financial cushion remains below that of its European banking
peers.
Santander's ratio of bad loans to total loans fell slightly to
4.33% in the first quarter of this year. Provisions for bad loans
also fell.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
April 27, 2016 02:15 ET (06:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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