Santander's profit up as Spanish set-aside drops

Published: Oct 24, 2013 3:08 a.m. ET

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MADRID--Banco Santander (SAN.MC) Thursday reported a sharp rise in third-quarter net profit as the bank set aside less cash to cover souring losses in its Spanish home market, but its performance in Latin America weakened.

Net profit rose to 1.06 billion euros ($1.46 billion), roughly in line with the second quarter but sharply higher than the EUR122 million it reported a year earlier. Analysts were expecting profit of EUR1.01 billion.

The euro zone's largest bank by market value saw its profits squeezed last year when Spain's government forced all the country's lenders to cover losses on their vast property portfolios. This year the provisioning effort is smaller, but still considerable, because banks were recently told by their regulator to set aside more money to cover losses on debts they had previously refinanced.

Santander said it had set aside EUR2.6 billion to cover bad debts, down from EUR2.99 billion a year earlier. In the year-earlier period it also recorded a EUR1.14 billion property-related writedown.

Santander's net profit in the first nine months of the year rose 77% to EUR3.31 billion.

"After several years of high levels of write-offs and reinforcement of capital, Banco Santander is preparing for a new period of increased profitability," Chairman Emilio Botin said in a press release.

Latin America remained the biggest contributor to nine-month results, even as profit from the region fell 15% to EUR2.59 billion.

In Continental Europe, the bank swung back to a profit, thanks in part to the lower provisioning needs in Spain. Profit from the region totaled EUR833 million, compared with a EUR2.26 billion loss in the first nine months of 2012.

In the U.K., Santander's earnings rose 17% on the year in the three quarters, to 687 million pounds ($1.11 billion).

Write to Christopher Bjork at

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