Profit at Spanish banking giant Santander drops five per cent in the first quarter on currency headwinds

Billy Bambrough
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Santander has been winning bank customers in the UK over recent years (Source: Getty)

The eurozone's largest bank and the UK challenger Banco Santander, has posted a 4.9 per cent fall in first-quarter net profit from a year earlier.

Santander reported net profit of €1.63bn (£1.84bn), beating a Reuters analyst poll of a 12.5 per cent decline.

The drop was put down to currency headwinds as a fall in the value of the Brazilian real and sterling took its toll on the group’s overseas operations.

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The bank’s earnings in the first three months of the year would have risen eight per cent if currency effects were stripped out.

A deepening recession in Brazil, the Spanish bank's second-biggest market, also proved to be a significant drag on profits.

Brazil accounted for 18 per cent of total net profit, with the UK contributing the largest share at 23 per cent. Net earnings from the bank’s Spanish operations fell to €307m in the first quarter, down 10 per cent.

Record low interest rates are also putting pressure on the lender.

Ana Botín, Santander’s executive chairman, said:

These results give us confidence that we will continue to deliver, including, as we announced, increasing the cash dividend per share by 10 per cent and total dividend by five per cent.

Santander announced earlier this month that it would shutter 450 smaller branches of a total 3,467 in Spain in a bid to cut costs. Spain is one of the most over branched countries in the world.

Read more: Santander invests £1.8m in London restaurant chain

High street banks are coming under pressure to cut costs due to the impending launch of cheaper to run digital-only banks.

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