LONDON - The Spanish lender Banco Santander reported on Thursday that its profit more than doubled to 1.06 billion euros in the fourth quarter as it continued to benefit from declines in charges for bad loans. But the earnings still came in below analysts’ expectations.
Santander, one of Europe’s largest banks, wrote down billions of dollars of mortgages last year amid a weak economy in Spain, its home market. Provisions for delinquent and defaulted loans fell 27 percent, to €2.27 billion, or about $3.1 billion, in the fourth quarter, down from €3.13 billion in the same period a year earlier.
“After several years of strengthening the balance sheet and capital, Banco Santander is embarking on a period of strong profit growth in the coming years,†said Emilio BotÃn, Santander’s chairman.
Net interest income â€" the difference between revenue on the bank’s assets and expenses paid on its liabilities â€" declined 13.3 percent to €25.9 billion in 2013, down from €29.9 billion a year earlier. Santander has been shrinking its loan portfolio as it weeds out poor-performing loans.
The bank’s net income of €1.06 billion far exceeded the €423 million earned in the fourth quarter of 2012. Analysts surveyed by Bloomberg News expected the bank to earn €1.2 billion.
For all of 2013, profits more than doubled to €4.37 billion, up from €2.29 billion a year earlier.
Santander’s nonperforming loan rate was 5.64 percent, or 0.21 points higher than the previous quarter â€" the smallest increase of the year.
The Latin American and Polish operations accounted for more than half of the bank’s profits in 2013. But profits in Latin America declined 23.6 percent to €3.26 billion for the year, down from €4.26 billion in 2012.
The bank’s profit in Spain declined 44.6 percent to €479 million for the year. But, the bank, which was hit hard by a downturn in the Spanish real estate sector, has worked to improve its balance sheet and now has more deposits than outstanding loans in its home market.
In Britain, profits rose 3.1 percent to €1.15 billion.
The bank said its core Tier 1 capital ratio, a measure of a bank’s ability to weather financial disturbances, rose to 11.71 percent by the end of the fourth quarter under the industry regulations known as Basel II. The core capital level had been 10.33 percent through the end of 2012.
