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Banco Santander, Spain’s largest lender by market cap, notched up a 16.9 per cent rise in its net earnings at the start of the year helped along by a strong performance in its Brazil division.

Reporting its first quarter results, Santander said total net earnings climbed to €1.86bn in the three months to March, driven by a 36 per cent rise in profits in Brazil – a market which accounts for just over a quarter of its total earnings.

The bank has benefited from an gradual recovery in Latin America’s largest economy which is emerging from its worst recession in modern times.

Santander’s underlying profits also rose by 5.7 per cent to €1.87bn in the period from €1.6bn at the end of last year, ahead of an average forecast of €1.77bn.

The bank said it started the year operating in more “benign” economic conditions “with prospects of synchronised economic growth in different parts of the world for the first time in a long while”.

“Mature economies are growing faster and the latest indicators for developing ones point to an improved performance in Latin America, particularly Brazil and Argentina”, it said in a trading update on Wednesday.

Santander’s non-performing loans ratio fell to a 2011 low of to 3.74 per cent from 3.93 per cent – the best level since the eurozone crisis – while its common equity tier 1 ratio ( a measure of capital strength) crept higher to 10.66 per cent at the end of March from 10.55 per cent at the end of 2016.

Net interest income and fee income also rose, while the company’s efficiency plans tabled last year bore fruit to help keep down operating expenses.

Despite battling with a low global interest rate environment, Santander’s net interest income – the earnings its generates from its core lending activities – was up 3.8 per cent to €8.4bn.

As one of the world’s most diversified retail banks, Santander boasts operations in Brazil, the UK, US, Mexico, Poland and in its domestic market in Spain. In Europe, all its markets except Poland registered profit growth, with UK profits up 3 per cent and Spain growing 18 per cent.

Chairman Ana Botín said:

The economies of all our core markets are expected to grow this year and we are confident that our business model, combined with the consistent execution of our strategy, position us well to continue delivering for our customers and teams while growing profitably in the years ahead.

Santander’s shares are up over 60 per cent over the last 12 months.

Copyright The Financial Times Limited 2017. All rights reserved.
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