The euro zone's second-largest bank by market value posted a net profit of 2.85 billion euros ($3.05 billion), versus the 2.87 billion expected by analysts.
Santander has relied on Latin America in the past to cope with adverse conditions, but banks across Europe have benefited from a sharp rise in rates since July 2022.
"We have had a very good start to the year, with 10% revenue growth while keeping costs flat versus previous quarters. With this, we achieved a return on tangible equity of 16.2% in the quarter (after annualizing the impact of the temporary bank levy in Spain)," Santander CEO Ana Botín said in a statement.
Its retail business leads earnings for the five global units, which the bank began accounting for as primary segments under a new business model starting in the first quarter. The regions are now counted as secondary segments.
The retail division, which accounts for about half of the group's earnings, as well as the wealth and payments units, posted a profit increase of more than 20%.
Profit in the Digital Consumer Bank division fell by 5%, while Corporate and Investment Banking also declined by 5%, despite record revenues of EUR 2.1 billion.
Overall, net interest income, or profit on loans less deposit costs, rose 17.7% to €11.98 billion, above the €11.5 billion expected by analysts.
Compared with the previous quarter, net interest income rose 7.7% as interest rates in the eurozone remained higher for longer than expected, helping its Spanish business, which has been charging more for loans while keeping a cap on rates paid to savers.
Against this backdrop, net profit in Spain rose 66% in the quarter, while net interest income was up 24%.
In the United Kingdom, net profit fell 23% due to a contraction in lending income in a competitive mortgage environment.
(Reporting by Jesús Aguado; editing by Inti Landauro; Spanish edition by Tomás Cobos)
