Santander profit leaps on lower loan provisions

Spanish bank Santander, the biggest in the euro zone by market value, said Tuesday its second-quarter net profit rose eightfold as provisions against loan losses fell sharply. Net profit climbed to 1.05 billion euros ($1.39 billion) from 123 million euros a year ago, when it booked 1.3 billion euros of one-time charges for Spanish real estate, the bank said in a statement. During the first half of 2013 the bank posted a net profit of 2.25 billion euros, a 29-percent increase over the same time last year and practically the same as the result for all of last year of 2.29 billion euros. \"Profits rose after more than two years of high levels of write-offs and reinforcement of capital. We are preparing for a new period of profit growth,\" Santander chairman Emilio Botin said in the statement. Spanish banks booked billions of euros of provisions against losses on soured real estate deals last year,which caused their profits to plunge. Santander wrote off nearly 19 billion euros for dodgy loans and property assets in Spain last year causing its net profit to drop by nearly 60 percent. Bad loans as a proportion of total lending rose to 5.18 percent at the end of the second quarter from 4.76 percent at the end of the first quarter. Net interest income -- excess revenue from interest earned on assets compared with payments to depositors -- fell 12 percent to 6.72 billion euros from a year earlier. A property market collapse in 2008 left Spain\'s banks awash with bad loans and destroyed millions of jobs. Spain\'s bad-loan ridden banks, which were thrown a 41.3-billion-euro European lifeline last year, are stronger but still face high risks from a weak economy, the International Monetary Fund warned in a report earlier this month.