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   By Pietro Lombardi

Banco Santander (SAN.MC) said Wednesday that its fourth-quarter net profit fell, with solid operating performance weighed down by exceptional items.

Net income declined 3.5% compared with the same period last year to 1.54 billion euros ($1.91 billion), according to Santander's quarterly report, with charges dragging the result lower, as analysts expected.

"The group took a further EUR752 million charge in the fourth quarter relating primarily to the impairment of goodwill for the group's investment in Santander Consumer USA," Santander said. In November, the Spanish lender had said it would recognize a goodwill impairment of about EUR500 million due to a decline in Santander Consumer USA's earnings relative to previous years.

On a net level, taking into account gains and provisions, Santander reported a EUR382 million net charge in the quarter. The sale of a stake in Allfunds Bank and a small gain related to the U.S. tax overhaul partially offset charges.

The full-year charge for capital gains and provisions was EUR897 million, more than double the 2016 figure. For the full year, net profit was EUR6.62 billion, up from EUR6.2 billion, while gross income grew 10% to EUR48.39 billion.

Fourth-quarter underlying profit, which strips out special items, rose to EUR1.92 billion, up about 9%. Gross income rose 6.9% to EUR12.06 billion, supported by higher net interest income and fee income.

"The Group continued to see positive trends across its businesses, with revenues increasing in eight of its ten core markets," Santander said.

Results include Banco Popular, which Santander bought last year. Popular's results were hit by a EUR300 million charge for planned integration costs in the third quarter and generated a loss of EUR37 million in 2017, Santander said.

"Santander continues to expect the acquisition to generate a return on investment of 13%‐14% in 2020," it said.

The bank's fully loaded common equity tier 1 ratio, a key measure of capital strength, notched up to 10.84% from 10.80% in September.

Santander also confirmed its targets for 2018.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

January 31, 2018 03:49 ET (08:49 GMT)

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