Santander returned to profit in the third quarter following a historic loss, upgrading its full-year forecasts as customers began to recover from the initial impact of Covid-19.
Net profit at the Spanish lender trebled in the third quarter to €1.75bn compared to 2019, when Santander was hit by a large writedown in the value of its UK business.
Underlying profit rose 18 per cent compared to the second quarter, when the bank reported a record net loss of €11.1bn on writedowns related to the pandemic.
“The recovery of our business is progressing well, and the third quarter was significantly stronger than the second,” said executive chair Ana Botin.
Santander raised its underlying profit forecast to around €5bn for the full-year, citing positive trends in customer behaviour and higher efficiency gains.
The lender set aside €2.5bn to deal with expected loan losses in the third quarter – a 22 per cent increase on the same period last year, but a sharp slowdown compared to the first half of the year.
Santander said customers who took out loan repayment holidays earlier in the year had begun repayments sooner than expected, leading it to lower its full-year forecast for loan loss provisions as a proportion of its loan book to 1.3 per cent. The bank had previously forecast a rate of 1.4 to 1.5 per cent.
The Spanish lender said it was on track to meet its cost-cutting target of €1bn across its European business by the end of 2020, and is now aiming to cut an additional €1bn in the region over the next two years.