Santander Profit Dented by Restructuring Costs

MADRID—Banco Santander SA said Wednesday that net profit fell in the second quarter from a year earlier as one of Europe's largest banks booked an anticipated restructuring charge due to branch closures and employee layoffs.

Santander said net profit was €1.278 billion ($1.41 billion) in the second quarter compared with €2.54 billion a year earlier.

Analysts had anticipated that lower lending income and the restructuring charge would lead Santander to report a net profit of €1.27 billion, according to a poll by data provider FactSet.

The Spanish lender, run by Executive Chairman Ana Botí n, said net interest income in the second quarter was €7.57 billion compared with €8.28 billion a year earlier.

Net interest income, a key profit driver for retail banks, is the difference between what lenders pay clients for deposits and charge for loans. Analysts had anticipated net interest income of €7.73 billion, according to FactSet.

The consequences of Britons' vote to leave the European Union, such as a drop in the pound, wasn't expected to take a major toll on Santander in the second quarter. Investors expect Brexit to slow Britain's economy and lessen the revenue Santander generates in its U.K. unit in coming quarters.

Santander had warned investors that it would book a roughly €500 million charge in the second quarter triggered by the closure of around 450 bank branches in Spain and the layoffs or reassignments of around 1,380 employees. Santander said at the end of June that those restructuring costs would be offset in part by the sale of a stake it holds in Visa.

Spain has among the greatest number of bank branches per person in Europe, and it is common for small, rural towns in the country to have several branches. Santander and other Spanish banks are on the hunt for revenue, and they are starting to cull their bank branches, which can be expensive to maintain.

Write to Jeannette Neumann at [e-mail]

(END) Dow Jones Newswires

July 27, 2016 02:05 ET (06:05 GMT)

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