Banco Santander was able to offset emerging market currency volatility and a slowdown in U.K. during its second quarter, reporting net income that surpassed Wall Street views.
According to a report in Bloomberg, citing the Spanish bank, Santander posted net income of $2 billion for the June ending quarter, surpassing Wall Street views, with earnings in Brazil decreasing despite a drop in the real.
“Strikes in Brazil have had a negative impact on GDP, but aren’t impacting their results or performance,” Daragh Quinn, an analyst at Keefe, Bruyette & Woods said in the Bloomberg report. He noted that higher net interest income in Spain “shows things have bottomed out in terms of margin pressure.” With Brazil, the largest market for Santander has been relying on that for growth.
During the second quarter, Santander’s CET1 capital ratio, which determines the financial strength of a financial institution, declined to 10.8 percent, with the bank blaming its interests in Santander Consumer USA and the restructuring of Banco Popular. Meanwhile, in Spain, net interest income increased by one-quarter, while fees increased 19 percent to 671 million euros. The report also noted that loan growth was up 1 percent in Spain and the U.K., compared to the first quarter of this year. In the U.S., it was up 4 percent, while in Brazil it rose 3 percent in constant euros.
Quarterly earnings results came in just a few days after Santander announced it created a digital investment unit that will be headed by John Whelan, who is currently in charge of the bank’s blockchain unit. According to a report in Fintech Futures, the new unit will focus on making sure the bank is using the latest technology to improve efficiencies, while at the same time exploring the use of tokenized securities in the capital markets, derivatives and with other financial products.
“The wave of digitalization that is occurring in the financial industry is accelerating,” said José M. Linares, Santander’s senior executive vice president and global head of corporate and investment banking. “Our clients expect this to result in better solutions, lower costs and new categories of products and services that enable them to access capital markets more efficiently than ever before. We want to offer our clients what they expect from us.”