Santander managed to increase the income it derived from traditional lending operations, unlike many other banks (GABRIEL BOUYS)

Madrid (AFP) – Santander, the largest bank in the eurozone by market capitalisation, said Tuesday its profits tumbled by nearly a fifth due to restructuring costs in Spain and Britain.

At 1.39 billion euros ($1.56 billion) euros, the second quarter net profit still beat the consensus of market analysts surveyed by Factset of 1.27 billion euros.

The drop in profit was primarily due to a charge of 706 million, most of which went to restructuring operations in Spain and Britain, and the rest for compensation for mis-selling insurance in Britain.

Santander is currently trying to cut about 10 percent of its workforce in Spain.

Without the provisions, net profit would have climbed by 5 percent to 2 billion euros, driven by credit growth in Latin America and increased profitability in North America.

Unlike many other banks that have seen a reduction in income from traditional lending operations given the ultra low interest rates still prevalent in much of the world, Santander managed a 4 percent increase in net interest income.

Shareholders at an extraordinary meeting on Tuesday approved a share capital increase, with the new shares to be offered to buy out minority shareholders in Santander’s Mexico unit. 

Shares in Santander rose 2.6 percent in morning trading in Madrid, while the IBEX-35 index was up 0.8 percent.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.