Santander Q1 Profit 331 Mn€, Down 82% Vs Previous Year; Provisions 1.646 Bn€

Banco Santander

Banco Santander reported attributable profit of €331 million in the first quarter of 2020, 82% less than a year earlier, after recording a net charge of € 1.646 billion.

This impact was mainly due to a provision of €1.600 billion for the expected deterioration in macroeconomic conditions resulting from the health crisis caused by the Covid-19 pandemic.

Excluding this net charge, which also includes 46 million euros of restructuring costs in Europe, ordinary attributable profit in the first quarter of 2020 rose 1% to 1.977 billion euros. This increase was driven by profit growth in most markets in the Americas, as well as by the rise in customer volumes. These were barely affected by the crisis that broke out at the end of the period.

Compared to the first quarter of 2019, the bank has performed well in constant euros, with customer revenues growing by 3%. Net interest income grew in seven of its ten largest markets and net fees rose 3%. Loans and deposits increased by 7% and 6%, respectively, in constant euros. In the Americas, lending and customer funds increased at a double-digit rate (approximately 15%), while in Europe this growth was slower.

Credit quality continued to improve in the quarter, with the NPL ratio falling by 37 basis points in the last 12 months to 3.25%. The cost of credit, i.e. what the bank provisions when it grants a loan, remained stable at 1%.

Santander’s CET1 capital ratio stood at 11.58% in the quarter, in line with the medium-term target of 11-12%. The capital generated by the cancellation of the final dividend in 2019 (+29 b.p.) largely offset non-recurrent impacts that were already foreseen, such as corporate operations (-19 b.p.) or regulatory and model impacts (-15 b.p.).

The tangible net value per share, a key measure of shareholder value, was 4.21 euros, compared to 4.30 euros in March 2019. Including the dividend per share, growth was 1.8% year-on-year, while the return on tangible ordinary capital was 11.1%.

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