source: http://www.nytimes.com/2015/07/31/business/dealbook/banco-santander-earnings-q2.html?ref=topics
The entire text below was written by CHAD BRAY
“LONDON — Banco Santander of Spain said on Thursday that its second-quarter profit rose 18 percent, driven by gains in its three largest markets: Brazil, Britain and Spain.
For the three months ended June 30, Santander reported a profit of 1.71 billion euros, or about $1.89 billion, from a profit of €1.45 billion in the prior-year period.
Santander, one of Europe’s largest banks, wrote down billions of euros in mortgages in 2013 amid a weak economy in Spain. But an improving economic outlook for the country and internal efforts to better manage risk have allowed the bank to decrease its provisions for bad loans in the past year.
Provisions for delinquent and defaulted loans declined 5 percent to €2.51 billion in the second quarter, from €2.64 billion in the same period a year earlier.
Gross loans increased nearly 13 percent to €827 billion in the quarter, from €734 billion in the second quarter of 2014.
“The first half results show the soundness and consistency of Banco Santander’s business model,” Ana Botín, the bank’s executive chairwoman, said in a news release. “Profit grew in our ten core markets. Return, operational excellence and credit quality also improved.”
Net interest income, or what a bank earns on its lending after deducting what it pays out on deposits and other liabilities, rose 12 percent to €8.28 billion in the second quarter, from €7.37 billion in the prior-year period.
Santander’s nonperforming loan rate, which measures loans in default, was 4.64 percent, about 0.21 of a percentage point lower than in the first quarter.
Operating expenses rose 11 percent to €5.43 billion in the quarter, up from €4.91 billion in the second quarter of 2014.
Santander’s earnings in Spain rose 58 percent to €413 million in the second quarter, from €261 million in the prior-year period.
In Britain, the bank’s profit increased 38 percent to €551 million in the quarter, from €399 million in the second quarter of 2014.
In Santander’s operations in Latin America, profit rose 17 percent to €939 million in the second quarter, from €800 million in the same period a year earlier.
In Brazil, profit rose 24 percent to €491 million. Brazil accounted for about 20 percent of the bank’s profit in the first half of 2015.
In the United States, profit fell more than 12 percent to $238 million in the quarter, from $272 million in the second quarter of 2014. Thanks to the weakness of the euro against the dollar in the quarter, profit in the United States increased 9 percent to €216 million on a reported basis.
Santander has undertaken a broad overhaul of its operations in the United States this year, including the appointment of a former JPMorgan Chase banker, Scott Powell, as the chief executive of Santander Holdings USA, its United States holding company.
The United States accounted for about 9 percent of the lender’s profit in the first half of 2015.
Santander Consumer USA, the bank’s subprime auto lender in the United States, also has faced questions this year about its oversight after it was rebuked by the Federal Reserve for making an unauthorized dividend payment and investigated for its packaging and selling of auto loans.
The unit’s chief executive, Thomas Dundon, resigned this month, and Blythe Masters, a former longtime executive at JPMorgan Chase, was named chairwoman of the Santander Consumer business”.
