Banco Santander, the euro zone's biggest bank, on Wednesday posted a 50 percent year-on-year fall in second-quarter net profit, hit by one-off charges linked to restructuring costs and payments into an EU bank resolution fund.

Santander, which faces challenges in its biggest markets of Britain and Brazil, reported net profit of 1.28 billion euros ($1.4 billion), just above analysts' forecasts in a Reuters poll.

The bank's bottom line was hit by one-off charges totalling 368 million euros due to restructuring costs and a contribution to the euro zone's resolution fund, set up to help wind down failed banks.

In Britain, the steep fall in the value of the pound after its vote to leave the European Union helped cause net profit, when converted into euros, to slip 14 percent from the first quarter to the second. There was also an impact from a new tax on banks.

Despite the uncertainty in Britain, whose share of Santander's business fell from 23 percent to 20 percent between the two quarters, the bank said its financial targets for 2016 were unchanged and it would maintain its dividend.

Profit in Brazil, which makes up 19 percent of its business, rose almost 20 percent from the first quarter on signs of a slight recovery after over a year of severe recession.

Low interest rates and aggressive pricing continue to pressure its margins in Spain, mirroring the experience of other Spanish banks. Net profit there was down almost a third against the previous three months.

Overall, its net interest income, a measure of earnings on loans minus deposit costs, was 7.6 billion euros for the second quarter, down close to 9 percent from a year ago.

For the first half of the year, net profit was 2.91 billion euros, falling 32 percent from the year before. (Reuters)

Source: www.businessworld.ie