STD Banco Santander, S.A. Sponsored Adr (Spain)

(Adds further capital and earnings detail, CEO quote, share price, analyst comments.)

By Pietro Lombardi

Shares in Banco Santander SA (SAN.MC) trade higher early Wednesday after the bank's third-quarter net profit soared and its core Tier 1 ratio rose above the level targeted for the year.

Santander, one of Europe's largest bank, is the latest Spanish bank to report better-than-expected results for the quarter.

Net profit for the period was 1.99 billion euros ($2.26 billion), up roughly 36% from a year earlier when the bank reported EUR515 million in exceptional charges, including around EUR300 million related to the integration of Banco Popular.

Third-quarter gross income fell about 4% to EUR11.72 billion, as both net interest income--the difference between what banks earn on loans and what they pay clients for deposits--and net fee income came in lower.

Analysts had expected the bank to report a net profit of EUR1.93 billion on gross income of EUR11.48 billion, according to a consensus forecast provided by FactSet.

At 0912 GMT Santander shares traded 4% higher.

Santander saw "solid enough numbers" in the third quarter with a "step up in capital ratios also a boost," analysts at U.S. bank Jefferies said.

The bank generated 31 basis points in capital in the quarter, which boosted its common equity Tier 1 ratio, a key measure of balance-sheet strength, to 11.11% at the end of September, up from 10.80% in June. This is above the 11% the bank is targeting for 2018.

Capital ratios will be the main focus of the results, Renta 4 Banco analyst Nuria Alvarez said.

"In a quarter with strong market volatility, we made progress in achieving our goals, increasing attributable profit and improving our capital, efficiency and credit quality ratios," said Chief Executive Jose Antonio Alvarez.

Divisionally, analysts highlight the bank's performance in Spain and the U.K., which both posted better-than-expected results. Profit more than doubled at Santander's operations in Spain to EUR526 million.

The bank saw a "solid" performance in the U.K., Jefferies said, with "more-resilient-than-expected fees, coupled with lower loan-loss provisions."

Santander took a EUR169 million hit related to hyperinflation in Argentina.

The Spanish banking giant said it is on track to meet its 2018 targets, including an increase to the dividend from the previous year and double-digit growth in earnings per share.

"Overall the economic outlook remains positive in all our largest markets and we expect the group to benefit in the medium term from an improving interest rate environment, and ongoing recovery in Latin America," it said.

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

(END) Dow Jones Newswires

October 31, 2018 05:30 ET (09:30 GMT)

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