Santander Profit Rises

By Patricia Kowsmann 

MADRID-- Banco Santander SA said Thursday that second-quarter net profit rose to EUR1.71 billion ($1.88 billion) from EUR1.45 billion reported a year earlier.

The Spanish lender, the euro-zone's largest by market value, said net interest income was EUR8.28 billion, up from the EUR7.37 billion reported a year earlier. Analysts had put the figure at EUR8.17 billion.

Net interest income, a key driver of profit for retail banks such as Santander, is the difference between what lenders pay clients for deposits and charge for loans.

Santander Executive Chairman Ana Botín has stepped up her focus on the bank's problem-plagued U.S. holding company in the second quarter.

The holding company, which includes a retail bank and a consumer finance firm focused on car loans, failed the Federal Reserve's balance-sheet tests in 2014 and 2015 for what the regulator had said were "widespread and critical deficiencies" in governance and its inability to identify and plan for potential risks."

Ms. Botín took over the bank from her father when he died suddenly in November of last year. Since then, she has tried to put to work in the U.S. the skills she honed during four years as head of Santander's large unit in the U.K., where she tackled issues and new requirements raised by British regulators.

In that vein, Ms. Botín has revamped the U.S. holding company's management and board members.

"I cannot fix the U.S. without the right team," Ms. Botín told The Wall Street Journal in early June.

The new team has an uphill battle.

In July, the Fed issued a stinging lecture to Santander, faulting the U.S. unit for failing to meet regulators' standards on a range of basic operations. Many of the regulator's concerns echoed those it had already raised when Santander failed the stress tests.

Santander has said it is working to meet its own standards and those of its regulator.

Write to Patricia Kowsmann at [e-mail]

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