LONDON — The Spanish lender Banco Santander reported on Thursday that its second-quarter profit rose 38 percent as the bank benefited from an improving economic environment and from declining charges for bad loans.
Santander, one of Europe’s largest banks, wrote down billions of dollars of mortgages last year amid a weak economy in Spain, its home market. In the second quarter, provisions set aside for delinquent and defaulted loans fell 22 percent, to 2.64 billion euros, or about $3.5 billion, from the period a year earlier.
The bank’s net income of €1.45 billion exceeded analysts’ expectations and outpaced the €1.05 billion earned in the second quarter of 2013.
“Performance in the first half of 2014 proves that Santander is on track to return to pre-crisis profit levels,” Emilio Botín, Santander’s chairman, said in a statement on Thursday. “The group’s geographic diversification has played a key role.”
Net interest income – the measure of what a bank earns on its lending after deducting what it pays out on deposits and other liabilities – rose slightly in the second quarter, to €7.37 billion from €7.34 billion in the period a year earlier. Santander has been reducing its loan portfolio as it eliminates poorly performing loans.
Santander’s nonperforming loan rate was 5.45 percent, or 0.7 of a percentage point lower than in the first quarter.
Santander’s profit in Spain more than doubled to €261 million in the second quarter, as the bank benefited from the continuing recovery there and from what the bank described as a more “normal” quarter.
In Britain, the bank’s profit rose 52 percent, to €399 million. Profit fell 8 percent, to €800 million, in the bank’s Latin American operations. Depreciation of Latin American currencies eased in the quarter, but still put pressure on the bank’s results.
Santander said its core Tier 1 capital ratio, a measure of a bank’s ability to weather financial disturbances, was 10.1 percent by the end of the second quarter. Its total capital ratio was 12.1 percent, well above the 8 percent figure the bank says it is required to maintain.
For the first six months of 2014, profit rose 22 percent to €2.76 billion. Net income would have risen 40 percent in the first half if not for the impact of weak currencies, the bank said.