Profits at Banco Santander suffered in the three months to June as the drop in sterling, a fall in the Brazilian real and restructuring costs weighed on the eurozone’s largest bank by market capitalization.

Santander reported net income of €1.28bn in the second quarter, a 50 per cent drop year-on-year but just ahead of the €1.24bn forecasted by analysts in a Reuters poll, writes the FT’s Ian Mount.

It also reported an 8.6 per cent drop in net interest income — the difference between what the bank receives and pays in interest — to €7.57bn.

During the first half of the year, the UK, Brazil, and Spain were again the group’s most profitable markets. In the UK, net profits during the first 6 months of year fell 12 per cent to €843m, hit by a new bank tax, while in Brazil net profits rose 6 per cent to €788m. Santander’s overall net earnings for the first half of the year were €2.91bn, down 32 per cent from the same period in 2015.

“In a year in which the global macroeconomic outlook has deteriorated, Banco Santander improved the quality of its balance sheet, its solvency and its profitability,” the bank said in a statement. “This allows the Bank to reaffirm its commitment to end the year with an increase in earnings per share, while growing total dividend per share 5% and the cash dividend, approximately 10%.”

Like all Spanish banks, Santander has been had difficulties increasing the profitability in its highly competitive home market, where high costs and record low interest rates have dulled the effects of an ongoing economic recovery. Santander is also facing troubles in its US affiliate, Santander Consumer USA, which earlier this week appealed for more time to file its accounts, pushing back the release of its second quarter results.

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