MADRID-- Banco Santander SA said Tuesday that first-quarter net
profit rose to EUR1.72 billion ($1.87 billion) from EUR1.3 billion
reported a year earlier, compared with EUR1.69 billion forecast by
analysts in a FactSet poll.
The Spanish lender, the eurozone's largest by market value, said
net interest income was EUR8.04 billion, up from the EUR6.99
billion reported a year earlier. Analysts had put the figure at
EUR7.83 billion.
Net interest income, a key driver of profit for retail banks
such as Santander, is the difference between what lenders pay
clients for deposits and charge for loans.
A strengthening Spanish economic recovery has helped to buoy
revenue growth in Santander's home market in recent quarters. The
Spanish Prime Minister Mariano Rajoy said Monday that the
government expects the country's economy to expand by 2.9% this
year, up from the previous target of 2.4%.
Despite the economic recovery, many individuals and businesses
in Spain remain focused on paying down existing loans, eschewing
new loans. The deleveraging process is an uphill battle for
Executive Chairman Ana Botín as she seeks to grow Santander's loan
book in Spain to further boost profitability.
Ms. Botín, who took the helm at Santander following her father's
death in September, must also address investor and analysts"
concerns about weak growth in Brazil, which generates around
one-fifth of Santander's net profit.
Institutional investors in January welcomed Santander's sale of
EUR7.5 billion in new shares, a move meant to quiet perennial
concerns that the lender's balance sheet was weaker than its
peers.
The bank should strengthen its capital cushion even more,
Barclays PLC analysts wrote in a research report last month.
"Although Santander's capital position is now much improved, we
don't think it is yet in quite the right place," the analysts
wrote.
Write to Jeannette Neumann at jeannette.neumann@wsj.com
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