LONDON - The Spanish lender Banco Santander reported on Tuesday that its profit rose 8 percent to 1.3 billion euros in the first quarter as the bank benefited from an improving economic environment and declining charges for bad loans.
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. In the first quarter, provisions for delinquent and defaulted loans declined 14.2 percent to €2.69 billion, or about $3.73 billion, from €3.14 billion in the prior-year period.
“2014 has started out with higher revenues, lower costs and provisions and more satisfied customers, which results in more profits,†Emilio BotÃn, the Santander chairman, said in a statement.
Separately, Santander announced plans Tuesday to acquire the 25 percent of its Brazilian unit, Banco Santander Brasil, that it doesn’t already own for €4.69 billion. Santander would exchange its shares for shares in the Brazilian unit, paying a 20 percent premium over the last closing price.
The bank’s net income of €1.3 billion outpaced the €1.21 billion earned in the first quarter of 2012. Analysts surveyed by Reuters expected the bank to earn €1.36 billion.
But, the company’s results were hit by negative currency exchange rates. Excluding the impact of currencies, profit in the quarter was up 26 percent, Santander said.
Net interest income - the difference between revenue on the bank’s assets and expense paid on its liabilities - declined 3 percent in the fourth quarter, to €6.99 billion, from €7.21 billion a year earlier. Santander has been reducing its loan portfolio as it eliminates poor-performing loans.
Santander’s nonperforming loan rate was 5.52 percent, or almost 0.1 of a percentage point lower than the previous quarter. This is the first quarter the rate fell since 2007.
The bank’s profit in Spain rose 24 percent, to €251 million, as Santander benefited from that country’s ongoing recovery.
In Britain, the bank’s annual profit rose 63 percent to €376 million.
Profit fell 26.6 percent in the bank’s Latin American operations, to €712 million, driven in part by negative currency rates. Profit was down 11.5 percent in the quarter excluding the impact of exchange rates.
Santander said its core Tier 1 capital ratio, a measure of a bank’s ability to weather financial disturbances, rose to 10.8 percent by the end of the first quarter under the industry regulations known as Basel II. It stood at 10.7 percent at the end of the first quarter 2013.
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