Banco Santander opens Europe's bank reporting season with a 4 percent rise in its 2016 net profit, as improved results in Brazil helped offset a weak performance in Britain. Ivor Bennett looks at whether the positive trend is likely to continue across Europe.
There aren't many bright spots in Europe's banking sector at the moment. But Santander seems to be one of them. The Spanish lender reporting a 4 percent rise in net profit last year to 6.2 billion euros. Without currency fluctuations, it would've been more. SOUNDBITE (English) PETER DIXON, GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, SAYING: "Altogether the business looks in reasonably robust shape but unfortunately two of its largest markets are suffering significant domestic problems which have hampered the overall results." One of them is the UK. The drop in sterling hit profits there by 15 percent. And if Mexico's peso hadn't sunk, earnings there would've been 17 percent higher. The growth was down to its largest market - Brazil - where net profits rose for a 4th straight quarter. The bank's shares hit a 17-month high on the results, despite the sector as a whole bracing for lows. SOUNDBITE (English) PETER DIXON, GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, SAYING: "The problems that quantitative easing is posing for the banking system is certainly an issue there, which is hampering profitability. We've got the regulation problems whether they're international or local, then Brexit is another potential problem." But Brexit wasn't the only bombshell of 2016. The other could impact too, if American banks see deregulation. SOUNDBITE (English) PETER DIXON, GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, SAYING: "It's further going to raise the competitive pressures on European banks which clearly seem to be lagging behind their US counterparts in recovering from the problems that hit them almost 10 years ago." In key markets at least, Santander's boss says business will be stronger in 2017. But she also warned of a volatile year ahead.