Spain’s Banco Santander beats forecast despite Brexit hit

MADRID — Spanish banking giant Banco Santander reported on Wednesday better-than-expected earnings last year despite Brexit uncertainties leading to a massive 1.5 billion euros hit on ($1.65 billion) on its British business, slashing 2019 net profit by 17 per cent.

The bank said net profit for last year came in at 6.5 billion euros — but that beat the consensus analyst forecasts of 6.27 billion euros and allowed it to reaffirm its earnings growth estimates.

Banco Santander shares got a sharp boost as a result, rising some 3.41 per cent in early trade in a broader market up about half a per cent.

The bank said it took charges last year of 1.7 billion euros, with 1.5 billion euros accounted for by its British business.

The rest was due to restructuring in several markets, including in Spain where the bank is shedding 3,200 jobs.

Banco Santander, the largest eurozone bank by market capitalisation, said in September that the charges in Britain “reflected the impact of the uncertainty caused by Brexit” combined with banking sector reforms requiring lenders to separate their retail and investment bank operations.

Earnings in Britain have been on the slide since the country voted in 2016 to quit the EU, contributing only 11 per cent of the total compared with Brazil, now the largest single component, at 28 per cent.

Net banking income — broadly the difference between interest earned on loans and interest paid on deposits — was up 2.7 per cent to 35.3 billion euros last year.

For the fourth quarter to December alone, net profit jumped 35 per cent to 2.8 billion euros, helped by disposal gains of nearly 700 million euros.