Santander's Q3 underlying net profit rises despite drop in Brazil

Santander Q3 Net Profit Climbs 19% on UK, US Acquisitions Amid Brazil Drop

Q3 Financial Results and Market Performance

By Jesús Aguado

Strong Net Profit Growth Driven by Acquisitions

MADRID, Oct 28 (Reuters) - Spain's Santander reported a 19% rise in underlying third-quarter net profit on Wednesday, helped by contributions from recently acquired lenders in Britain and the US, although weaker earnings in Brazil weighed on the results.

Analyst Expectations and Revenue Highlights

The euro zone's largest bank by market value posted underlying net profit of €3.85 billion ($4.29 billion), just above analysts' average forecast of €3.75 billion, supported by strong performance in Spain and higher group revenues.

Impact of Impairment and Restructuring Charges

After impairment and restructuring charges of €416 million, mainly linked to the acquisition of US lender Webster, reported net profit attributable to shareholders fell 2% to €3.43 billion. That still topped analysts' forecast of €3.23 billion.

Geographic Diversification and Strategic Acquisitions

For decades, Santander's presence across 10 core markets has helped shield it from economic weakness in individual countries, but left it exposed to currency depreciations, particularly in Latin America.

The bank recently sought to strengthen its position in developed markets through the acquisitions of TSB and Webster, which it expects will help lift profits by more than 40% over the next three years to above €20 billion.

Executive Commentary

"At a time of heightened volatility, our combination of at-scale global businesses and diversification across Europe and the Americas is a distinctive source of strength," Executive Chair Ana Botin said in a statement.

Regional Performance Breakdown

Quarterly net profit rose 48% in the US and 40% in Britain, but fell 15% in Brazil, Santander's second-largest market, due to higher provisions.

Market Reactions and Analyst Insights

Santander shares fell 3% on Monday after Brazil's real suffered its steepest losses in years following the surprise re-election of President Luiz Inacio Lula da Silva.

Citi analysts said a likely higher-for-longer interest rate environment under Lula could delay Santander's bad-loan normalisation. In Brazil, the bank benefits from lower interest rates because funding costs are closely linked to benchmark rates.

Currency Exchange Rate

($1 = 0.8981 euros)

(Reporting by Jesús Aguado. Editing by David Latona and Mark Potter)