Spain’s Big Banks Lose €5.55 Bn Due To Coronavirus; Santander Posts Losses In Its Annual Results For The First Time

Spanish banks posted €12.779 Bn in 2Q21

Santander, BBVA, CaixaBank, Bankia, Sabadell and Bankinter posted combined losses of 5.55 billion euros last year, with their accounts badly damaged by the Coronavirus. This compares to the over €13.5 billion euros chalked up in 2019, Europa Press reported.

These negative figures are mainly due to the great losses suffered by Santander, 8.77 billion euros, the first in its history, and compared to the 6.51 billion it earned in 2019.

The rest of the banks ended the year with profits, which ranged from 2 million euros for Sabadell to 1.38 billion for CaixaBank. However, almost all of them were affected by the pandemic and the deterioration of their subsidiaries abroad.

The big financial institutions have responded to the restrictions with substantial provisions. That said, they consider the worst to be over and have already asked the European Central Bank for authorisation to remunerate shareholders against 2020 profits. This follows the lifting of the ECB’s veto in the midddle of the pandemic.

Santander’s 2020 losses of 8.77 billion euros came after increasing provisions for the Covid-19 crisis. There was also an impairment of 12.6 billion euros in the value of its subsidiaries in the UK, the US and Poland.

For its part, BBVA earned 1.30 billion euros last year, 62.9% less year-on-year. This was also due to provisions to face the pandemic and the deterioration in the value of its US subsidiary. The sale of this has generated excess capital that it will use to resume dividends and reduce costs, for example in Spain.

CaixaBank, however, has withstood the coronavirus challenge and earned 1.38 billion euros in the last financial year, down 19% from a year earlier, after provisioning 1.25 billion euros for the COVID-19. It also has managed to maintain the income derived from its banking business – interest income, commissions and insurance – with 8.31 billion euros (-0.1%), and has reduced its non-performing loan ratio by three tenths, to 3.3%.

Bankia finished 2020, its last year on its own before the merger with CaixaBank, with a profit of 230 million euros, 57.6 % less than in 2019, but beat market expectations.

As for Sabadell, it made a profit of 2 million euros in 2020, 99.7% less than the 768 million it achieved in 2019. This was due to provisions of 2.27 billion euros for the pandemic, staff adjustments and the sale of the last problematic portfolios related to CAM.

Finally, Bankinter reduced its profit by 42 % to 317 million euros, due to higher allocations to deal with the pandemic. It will focus this year on the IPO of its insurance company, Línea Directa, and earn more than 500 million euros in 3 years.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.