By Jeannette Neumann

MADRID-- Banco Santander SA said fourth-quarter net profit was basically flat from a year earlier as lending grew in the bank's U.K. business, helping to counter weakness in Latin America, which has been hit by currency turmoil, and Spain.

Santander posted net profit of EUR1.46 billion ($1.59 billion) in the fourth quarter compared with EUR1.455 billion a year earlier. Analysts had forecast net profit of EUR1.29 billion, according to a poll by data provider FactSet.

Its net interest income that was also roughly in line with what it had reported a year earlier, rising slightly to EUR7.89 billion from EUR7.71 billion a year ago. Analysts had forecast EUR7.88 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.

Santander reported a "fully loaded" capital ratio of 10.05% compared with 9.85% as of September of last year. Investors and analysts will welcome that slight climb as they are closely watching the pace at which Santander is able to generate capital given concerns that the bank is one of the most weakly capitalized European lenders.

Fees fell slightly in the fourth quarter from a year earlier.

Net interest income in Santander's Spanish banking unit fell 16% in the fourth quarter from the year earlier and total loans fell. While Spain's economy is recovering after a deep recession, many individuals and businesses in the country are prioritizing paying off their existing debts rather than taking out new loans. Rock-bottom interest rates have also hurt profitability. Net profit in the Spanish unit fell to EUR94 million in the fourth quarter from EUR289 million a year earlier.

Net interest income grew in the bank's U.K. unit.

Lending income fell, meanwhile, in Brazil. The Latin American country posted an increase in net interest income in its local currency, but Brazil's currency had fallen 26% against the euro as of December 2015 from a year earlier. That chips away at Santander's revenue in the South American country when it is converted into euros on the lender's financial statements.

More individuals and businesses will struggle to pay their debts on time during Brazil's recession.

Francisco Riquel, an analyst with Madrid-based financial-services firm N+1 Group, estimates that Santander's nonperforming loans in Brazil will more than double by 2017 compared with 2014.

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

(END) Dow Jones Newswires

January 27, 2016 02:19 ET (07:19 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
Banco Santander (NYSE:STD)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Banco Santander Charts.
Banco Santander (NYSE:STD)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Banco Santander Charts.