Santander H1’16 results hit by UK uncertainty; Brazil positive surprise

The Spanish bank warns The SEC about the effects of BrexitSantander USA

Santander’s first half 2016 results were overall positive, underpinned by a reduction in the cost of risk across most of the bank’s divisions and a good performance on the costs and commissions side, Norbolsa says.

But net interest income was weak, as expected, falling 6.9% to 15.194 billion euros from a year earlier,  mainly as a result of the marketing strategy for Santander’s 123 account in Spain, Portugal and the UK, analyst Amaya Miñambres says.

In terms of Santander’s international business, Brazil produced a surprise on the upside, recording net profit of 429 million euros, well above the consensus for 347 million, Miñambres notes.

But the UK division’s performance was weak, hit by the exchange rate and regulatory charges. Santander UK posted net profit of 307 million euros vs the consensus for 431 million.

“The cost of risk at the UK division rose in the second quarter from the first (10 bp), and the uncertainty over the impact of Brexit on Santander’s UK business (lower loan growth and expected lower interest rates) will continue to weigh,” Miñambres says.