Despite profits in Brazil, Santander bank profits halved following write-downs
Profits at Spanish banking giant Santander have halved after it made more write-downs against unrecoverable loans secured against property. The bank, which is the Euro zone biggest, said first-half profits halved to 1.7bn Euros in the six months to the end of June.
Write-offs for Spanish property loans were 2.8bn Euros. It has written off 6bn Euros of the 8.8bn Euros that it has been told to write off this year. Profits in the UK rose by 41% to £466m.
The company said the rise profits at the UK's arm came after 2011's first half results were dented by provisions for payment protection insurance mis-selling claims.
Santander has a 13% share of the UK's mortgage market, and rates 80% of the loans as prime, saying it has no self-certified mortgages.
Santander's home market is one of the worst-hit in Europe, with a rising number of homeowners and businesses defaulting on debts.
The impact of the property crash, which started in 2008, has forced Spain to ask more than 100bn Euros in help for its banks.
In an attempt to clean up the banks' balance sheets the Spanish government has introduced reforms that require them to realise losses from the falling property market.
Santander says the 6bn Euros it has written off so far means it has already achieved 70% of the necessary adjustment.
Its chairman, Emilio Botin, said in a statement: The provisions we are making will allow us to put real estate write-offs in Spain behind us by the end of this year.
The bank is reducing its dependence on the weak home market and made 27% of its profits from fast-growing emerging market Brazil.