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MADRID — Spain's Santander, the euro zone's largest bank, said Wednesday that net profit fell 4 percent in the second quarter as an increase in revenues was wiped out by a surge in bad loans amid the economic crisis.
Santander said net profit was euro2.42 billion ($3.44 billion), compared to euro2.52 billion during the same period in 2008. In the first half, net profit fell 4 percent to euro4.51 billion.
The company wrote off euro2.46 billion, bringing its total non-performing loans to euro21.75 billion at the end of the quarter compared with euro9.68 billion a year earlier.
The bank said net interest income continued to be the main driver of the growth in revenues, increasing to euro6.62 billion in the second quarter from euro5.27 billion a year earlier. For the first half, it grew 24 percent to euro12.66 billion.
Santander said year-on-year comparisons were affected by the integration of Alliance & Leicester and the deposits and distribution channels of Bradford and Bingley in Britain — which contributed euro161 million in the first half — as well as five months of ownership of Sovereign, which registered an attributable loss of euro26 million.
The bank said that in the second quarter Santander Brazil booked a capital gain of euro262 million from the sale of a 5.67 percent stake in Visanet Brazil. It said that Santander Brazil also sold an additional 2 percent holding in July with a capital gain of around euro95 million to be used for provisions.
"The depreciation of the pound sterling and of the currencies in the main Latin American countries where the Bank operates has an impact of between six and seven percentage points in profit growth in euros," Santander said.
It said that excluding these effects, the group's first half net profit would have been practically the same as in the first half of 2008.
Santander said it expected to match in 2009 the ordinary net profit of euro8.88 billion registered in 2008.
Shares closed down 1.2 percent at euro9.86 in Madrid.
