Spain’s Santander Q2 net profit down 4 pct

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 €2.42 billion ($3.44 billion), compared to €2.52 billion during the same period in 2008. In the first half, net profit fell 4 percent to €4.51 billion.

The company wrote off €2.46 billion, bringing its total non-performing loans to €21.75 billion at the end of the quarter compared with €9.68 billion a year earlier.

The bank said net interest income continued to be the main driver of the growth in revenues, increasing to €6.62 billion in the second quarter from €5.27 billion a year earlier. For the first half, it grew 24 percent to €12.66 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 €161 million in the first half — as well as five months of ownership of Sovereign, which registered an attributable loss of €26 million.

The bank said that in the second quarter Santander Brazil booked a capital gain of €262 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 €95 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 €8.88 billion registered in 2008.

Shares closed down 1.2 percent at €9.86 in Madrid.