* Q1 net profit 1.87 bln euros, ahead of forecasts
* Q1 profit in Brazil up 77 percent y/y
* Brazil's share of group's profits now at 26 pct
(Adds details from conference call, shares)
By Jesús Aguado and Angus Berwick
MADRID, April 26 Strong growth for Banco
Santander in its largest market Brazil drove a 14
percent jump in group profit in the first quarter, rewarding its
pivot towards Latin America in search of higher returns.
The euro zone's largest bank by market value reported on
Wednesday a net profit of almost 1.9 billion euros ($2.07
billion) in the first three months of the year, well ahead of
In Brazil, whose share of the bank's profits has jumped to
26 percent from 21 percent since the end of 2016, net profit
rose for the fifth quarter in a row, up by almost 80 percent on
underlying growth and the appreciation of the real.
Net interest income (NII), a measure of earnings on loans
minus deposit costs and a key part of the bank's returns,
improved for the fourth consecutive quarter in Brazil as its
economy recovers from its worst ever recession.
Santander CEO Jose Antonio Alvarez said a growing loan book
and falling non performing loans were among the key influences
on its performance in Brazil.
Its Latin American business has helped it through a squeeze
on lending margins in Europe that is pressuring its rivals and
to weather a slip in profit in its second-largest market Britain
due to the depreciation of sterling since the Brexit vote.
Profit in Latin America shot up almost 50 percent in the
quarter, compared to a 10 percent rise in continental Europe and
a 8 percent fall in Britain.
The bank expected growth in all of its principal markets
this year, Santander boss Ana Botin said, highlighting Latin
America, where its businesses in Chile and Mexico also saw
greater returns. The region now accounts for almost half of
"While the environment continues to be challenging for the
banking sector, the outlook for Santander is positive," Botin,
who chairs the group, said in a statement.
Santander's shares were little changed at 0910 GMT, trading
at close to a year-high after outperforming Europe's STOXX
banking index over the past year with a 35 percent rise.
Overall, Santander's NII improved for the third quarter in a
row, rising 10 percent to 8.4 billion euros. CEO Alvarez said
the bank expected interest rates to rise in the coming quarters,
which would boost NII further.
Analysts flagged stablising lending margins in Spain, its
third largest market, as a positive. Profit from its banking
activity in Spain rose 18 percent thanks to greater fees from
its high-yielding flagship 1-2-3 current account.
Santander said its profit in Britain would have risen by 3
percent without the currency swing.
In the U.S., where the bank has recently said it aims to
address risk controls and better comply with regulations, net
profit rose 16 percent in the first quarter.
Santander reaffirmed its 2018 targets such as boosting its
fully-loaded core capital ratio, a closely watched measure of a
bank's strength, to just above 11 percent, after it ended the
quarter with a ratio of 10.66 percent.
($1 = 0.9163 euros)
(Reporting by Jesus Aguado and Angus Berwick; Editing by
Stephen Coates/Keith Weir)