LONDON (ShareCast) - (Sharecast News) - Spain's Banco Santander said second quarter profits fell 18% due to restructuring at its Banco Popular unit and the mortgage price war in the UK.


Net profit for the three months to June 30 came to €1.4bn, while underlying profit at the Madrid-based lender rose 5% to €2.1bn.

The bank wrote down an extra €706m in charges with €600m attributable to Spain and the Popular takeover. It agreed a deal with Spanish unions to close 1,150 branches and more than 3,000 job cuts.

Britain accounted for €26m in restructuring costs and €80m for compensation as part of the payment protection insurance scandal. Underlying UK profits fell by 13% to €582m in the first six months.

The job reductions are part of a global plan to reduce annual costs by €1.2bn, or 10% of the annual cost base in Europe. The cuts will affect Europe the most as Santander tries to counter persistently low interest rates that are hurting revenue for lenders throughout the continent.

Santander's interest margin increased by 4%, while credit and client resources increased by 4% and 6%, respectively. Gross margin and net margin grew 1% in the semester, to €24.4bn and €12.8bn, respectively.

Profits in Brazil rose 18% to €1.4bn, with the company looking to diversify into South and Latin America as a way of offsetting European markets still struggling with the aftermath of the 2008 financial crash caused by US and UK banks.

(Writing by Frank Prenesti. Editing by Frank Prenesti and Michele Maatouk)

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