MADRID (AP) — First-quarter profits at Banco Santander fell 24 percent as the amount of money it set aside to cover bad loans rose sharply, particularly in its recession-hit home market of Spain.
The eurozone's largest bank by market capitalization said its net profit in the January-March period was €1.6 billion ($2.1 billion). Revenue grew by more than 8 percent to €11.4 billion.
That increase in income, however, was offset by bigger loan losses — Santander set aside €3.1 billion in provisions, up 51 percent from the same quarter of 2011.
Spain's banking sector, which is still attempting to recover from the collapse of a real estate bubble in 2008, is a key source of worry that the fourth-largest economy of the 17-country eurozone might join Greece, Ireland and Portugal and ask for a bailout.
Some analysts say that big losses at Spanish banks could overwhelm the country's public finances. Those concerns, however, mostly relate to smaller, regional banks.
Banco Santander SA said non-performing loans amounted to 3.9 percent of its portfolio, an increase of 0.37 percentage points. In rececession-plagued Spain, the ratio rose 1.18 points to 5.75 percent.
Santander, which has diversified its business outside Spain and Europe, added that its capital buffers remained strong, with a core capital ratio — a key measure of a bank's ability to withstand financial and economic shocks — of 9.11 percent. European regulators had demanded banks bring this ratio above 9 percent by June.
In early afternoon trading, Santander shares were down 4.7 percent at €4.69 against a broader 2 percent fall in the country's IBEX stock market.
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