By Pietro Lombardi

Banco Santander SA (SAN.MC) said Tuesday that first-quarter net profit rose 10% boosted by the strong results at its Brazilian and Spanish operations.

The Spanish bank, one of Europe's largest lenders, said net profit rose 10% to 2.05 billion euros ($2.51 billion), slightly ahead of analysts' expectations for about EUR2.03 billion, according to a consensus forecast provided by FactSet.

Net interest income, the difference between what banks earn from loans and pay for deposits, was EUR8.45 billion, compared with EUR8.40 billion a year earlier. Net fee income rose 3.9% to EUR2.96 billion.

The results were buoyed by the bank's performance in Brazil and Spain, with net profit rising 7% to EUR677 million in Brazil, which accounts for more than a quarter of the bank's profits. In Spain, Santander posted a 26% increase in net profit to EUR455 million.

Santander's fully loaded CET1 ratio, a key measure of capital strength, notched up to 11% from 10.84% in December. However, Jefferies noted the "mixed outlook on capital," with the bank flagging some regulatory headwinds at Santander Consumer USA affecting 2Q capital.

Shares in Santander traded 2.3% lower at 0802GMT.

"The outlook for 2018 remains positive, and I am confident our teams will execute well so we reach our objectives this year, as well as delivering profitable and responsible growth going forward," Executive Chairman Ana Botin said, adding that the profit growth was driven by the bank's solid results in Brazil, Spain and Mexico, as well as improved performance in the U.S.

The integration of Banco Popular, which Santander bought last year, is on track, Santander said.

In a separate statement, Santander said that its board and that of Banco Popular Espanol SAU have agreed to the merger by absorption of Banco Popular by Banco Santander.

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

(END) Dow Jones Newswires

April 24, 2018 04:34 ET (08:34 GMT)

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