UK recovery boosts Santander revenues, but Spain lags

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A BUOYANT performance from its British business helped Spanish bank Santander to increase second-quarter revenues, offsetting a weaker home market and driving an 18 per cent rise in recurring net profit from a year earlier.

The stronger growth points to progress in chairwoman Ana Botin’s plan to improve profits by expanding lending rather than through acquisitions, as the bank tries to ride an economic recovery in Europe.

In Britain - now the group’s biggest profit engine ahead of Brazil - lending rose nearly 3 per cent from the end of April to June when measured in euros. Net interest income, a measure of earnings on loans minus deposit costs, grew more than 4 per cent quarter-on-quarter.

The UK arm’s results also benefited from a strong pound and a recent restructuring to focus more on commercial loans. A listing of this unit is still on the back-burner, however, and Santander said yesterday the long-mooted spin-off would not happen within the next two years.

Like many peers, Santander is focussing on adapting to new regulatory demands aimed at making banks more resilient in a crisis, while trying to improve profitability at the same time.

The group plans to invest 1 billion euros over the next three years to satisfy requirements from global regulators, including in Britain, where banks have to shield their retail banking business from riskier trading activities.

Ms Botin, who took over from her late father last September, has also made it a priority to fix a US division which failed a Federal Reserve health-check two years in a row.

The Spanish bank took over Bradford & Bingley’s savings accounts and branches following the financial crisis of 2008. It has 1,800 staff in Yorkshire.