SCH profits hit by Latin America

MADRID, Spain -- Santander Central Hispano said on Monday its first-half profits fell due to volatile Latin American markets and warned that earnings would continue to be weak for the rest of 2002.

Spain's biggest bank said first-half profits dipped 13 percent to 1.20 billion euros ($1.19 billion) and that full-year earnings would total 2.25 billion euros, down 10 percent from the previous year, as plunging currencies and growing bad loan provisions cut into its bottom line.

SCH had previously forecast profits to grow by 10 percent for the full year.

"Earnings on financial operations fell... as a result of recent rises in interest rates in Latin America and their reflection in the fall in the value of holdings,'' the SCH said in a statement. The bank has about 10 percent share of the Latin American market.

Despite the lower overall profits, SCH said its first-half performance in Europe had shown a "marked recovery.''

SCH shares, which have lost about a quarter of their value so far this year, were up 3.6 percent to 7.21 euros in midday trading in Madrid on Monday.

Net interest income -- the amount made on loans, minus money paid out on deposits -- fell 2.3 percent to 5.04 billion euros.

In April, SCH said it was cutting 11,000 jobs or 10 percent of its workforce this year because of falling income. Of the total, 8,000 jobs will go in Latin America and 3,000 in Spain.

Last year, SCH laid off more than 14,500 employees, representing a 5.4 percent cut in Spain and a 16.3 percent cut in Latin America.

The bank has been reducing staff ever since 1999, when it was taken over by Santander of Banco Central Hispano.