Banks count cost of crisis

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Banks count cost of crisis

Banks count cost of crisis
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Quarterly reports from some of Europe’s top banks are showing how the eurozone crisis is biting.

First quarter net profit at Spain’s Santander dropped by 24 percent with big losses on Spanish property. It took a 3.1 billion euro provision to cover rising loan defaults.

Santander, the eurozone’s biggest bank, reported a first quarter profit fell to 1.6 billion euros. Profits fell in Spain and Portugal, both struggling with heavy debts and budget deficits, but also in Brazil, which generates more than a quarter of its profit, due to rising credit losses.

Barclays profit rose 22 percent but it warned of a “challenging and volatile” environment.

Barclays Chief Executive Bob Diamond said: “It’s still slow economic growth around the world. It’s still a zero interest rate policy in developed economies. This is not a robust environment.”

Deutsche Bank’s pretax profit fell to 1.9 billion euros, down from three billion a year ago.

The German lender’s corporate banking and securities division hit 6.2 billion euros, up over 80 percent from the fourth quarter, but down eight percent from a year ago.

“Against this backdrop financial markets remain cautious as we have seen in April, with investor risk appetite markedly lower,” Deutsche Chief Executive Josef Ackermann said.

Deutsche Bank’s bottom line was hit by litigation charges and a writedown on its investment in generic drug company Actavis.

Barclays and Deutsche Bank’s results showed investment banking income bounced back strongly after a torrid end to last year, the sickly eurozone economy continues to pressure the industry.