Santander Q1 profit drops as exchange rates bite

Spain's Santander, the eurozone's biggest bank, said Wednesday it first quarter profit fell 5 percent to 1.63 billion euros ($1.84 billion) as the currencies of most countries where it operates depreciated against the euro.

Without this negative exchange rate impact -- which did not affect the dollar -- profit in the first three months of the year would have risen 8 percent, it said.

Shares in the group rose 1.63 percent to 4.60 euros mid-afternoon against a downward trend for all other banks on Spain's Ibex 35, as the first quarter profits came in above expectations.

"In a year marked by a complex international economic context, with historically low interest rates in currencies key for the group such as the euro and the pound, Banco Santander performed well," it said in a statement.

Britain contributed most to the group's net profit, ahead of Brazil -- where a recession rages and President Dilma Rousseff faces impeachment -- and Spain which is emerging from a severe economic crisis.

Like many of its peers, Santander is also dealing with a shift to online and mobile-based banking as well as a threat of nascent "fintech" rivals who use computer and Internet technology to develop innovative financial services and applications.

As a result, it announced earlier this month that it was slashing hundreds of jobs in its Spanish home market.

The bank, which employs some 25,000 people in Spain, unveiled plans to close 450 branches -- about 13 percent of its network -- in the country.