Santander Profit Dented by Restructuring Costs -- Update
July 27 2016 - 2:40AM
Dow Jones News
By Jeannette Neumann
MADRID-- Banco Santander SA said Wednesday that net profit fell
in the second quarter from a year earlier as one of Europe's
largest banks booked an anticipated restructuring charge due to
branch closures and employee layoffs.
Santander said net profit was EUR1.278 billion ($1.41 billion)
in the second quarter, in line with analysts' estimates, compared
with EUR2.54 billion a year earlier.
Analysts had anticipated that lower lending income and the
restructuring charge would lead Santander to report a net profit of
EUR1.27 billion, according to a poll by data provider FactSet.
The Spanish lender, run by Executive Chairman Ana Botín, said
net interest income in the second quarter was EUR7.57 billion
compared with EUR8.28 billion a year earlier.
Net interest income, a key profit driver for retail banks, is
the difference between what lenders pay clients for deposits and
charge for loans. Analysts had anticipated net interest income of
EUR7.73 billion, according to FactSet.
Santander reported a capital ratio in the second quarter of
10.36% under international regulations known as "fully loaded"
Basel III criteria, up slightly from 10.27% in the first quarter.
Santander said that was in line to meet its target of 11% in
2018.
The consequences of Britons' vote to leave the European Union,
such as a drop in the pound, wasn't expected to take a major toll
on Santander in the second quarter. Investors expect Brexit to slow
Britain's economy and lessen the revenue Santander generates in its
U.K. unit in coming quarters.
Santander booked a EUR475 million charge in the second quarter
triggered by the closure of around 450 bank branches in Spain and
the layoffs or reassignments of around 1,380 employees. Santander
had indicated at the end of June that those restructuring costs
would be around EUR500 million and would be offset in part by the
sale of a stake it holds in Visa. That stake sale generated EUR227
million, Santander said Wednesday.
Spain has among the greatest number of bank branches per person
in Europe, and it is common for small, rural towns in the country
to have several branches. Santander and other Spanish banks are on
the hunt for revenue, and they are starting to cull their bank
branches, which can be expensive to maintain.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
(END) Dow Jones Newswires
July 27, 2016 02:25 ET (06:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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