MADRID: Santander (SAN.MC), the euro zone's biggest bank, posted a near 5 percent rise in net profit in the third quarter from a year ago, though it said depreciating currencies in key markets such as Brazil were dragging on earnings.
Santander relies on Brazil for about a fifth of its earnings, but the country has slumped into its worst recession in nearly three decades.
Its contribution to the bank's profits has dwindled below that of the UK, at a time when boss Ana Botin is looking to ramp up profits and returns at Santander, as well as lift dividend payouts.
Soured debts as a percentage of total credit rose in Brazil from June to September, and sharp falls in the Brazilian real have also hurt Santander's earnings there when converted into euros.
Net profit from the country fell nearly 15 percent from the second quarter to the third, though without taking into account currency fluctuations, it would have fallen by a more moderate 1.4 percent, Santander said.
Overall at the group, net profit was in line with forecasts, coming in at 1.7 billion euros (1.2 billion pounds) in the July-September period. That was higher than a year ago, though net profit was down 1.7 percent from the April-June quarter.
The bank's net interest income (NII), or earnings on loans minus deposit costs, stood at 8 billion euros, nearly 7 percent up from a year earlier, though it fell compared by close to 4 percent from the second quarter of 2015.
Strong competition to lend in Santander's Spanish home has eaten into margins - a trend noted by rivals - and even in its UK unit, now the bank's biggest contributor to profits, combined earnings from fees and NII were down slightly quarter on quarter. ($1 = 0.9146 euros)
Reuters
