Spain's fourth largest listed bank Banesto has revealed net profits increased by 16.7% in the first half of the year thanks to higher lending and greater cost discipline.

Total profits for Banesto, which is 89% owned by international banking giant Santander Central Hispano, were E345.7 million. Operating profit improved 15.7% to E582 million.

Increased lending was a key driver, up 22% on the previous year period. Mortgage lending alone was on track to grow by 20% for the full year, the bank said.

Meanwhile, net commissions and income from insurance improved in the H1 by 8.4% to E309 million.

Another importance factor to the positive first half result was cost efficiencies as cost-to-income ratio improved to 38.8% from 41.6%. This was achieved even though operating costs swelled by 3.9%. Bad debts were also reduced slightly over the six month period.