Tuesday 28 April 2020 7:31 am

Santander first quarter profit plunges 82 per cent on coronavirus

Spain’s Santander bank posted an 82 per cent year-on-year slump in quarterly net profit todayas it booked higher provisions for expected credit losses from the coronavirus outbreak.

The Eurozone’s second-largest bank by market value reported a profit of €331m (£288.5m) for the first quarter ended in March.

Overall loan-loss provisions rose 80 per cent after the bank set aside €1.6bn to offset the impact from Covid-19 based on the expected deterioration of the macroeconomic conditions arising from the health crisis.

The respiratory disease caused by the new coronavirus has so far killed 23,521 people in Spain.

“We will review our strategic targets once we have a more complete understanding of the full impact of the crisis,” Santander chairman Ana Botin said in a statement.

Excluding extraordinary provisions, which included €46m of restructuring costs in Europe, Santander’s underlying quarterly profit rose one per cent to €1.98bn.

That was slightly better than an average analyst estimate of €1.8bn drawn from a Reuters poll.

Banks worldwide have been taking measures to offset risk amid the crisis.

US lenders have set aside billions of dollars to cover potential loan defaults, while European players such as Credit Suisse and Deutsche Bank have been doing likewise.

Santander too has boosted its lending capacity partly by scrapping its final 2019 dividend, after a regulatory directive to do so to support an economy hamstrung by curbs.

As of end-March, Santander had a core tier-1 capital ratio – the strictest measures of solvency – of 11.58 per cent compared to 11.65 per cent at end-December.

Including the full implementation of new accounting standard IFRS-9, with an impact of 25 basis points, Santander’s capital ratio stood at 11.33 per cent.