Santander recorded its first ever annual loss today, as €1.14bn restructuring costs overshadowed positive core banking results in the fourth quarter.
Net profit plunged 90 per cent to €277m in the quarter versus the same period a year earlier, below the €411m average forecast from analysts polled by Reuters.
The annual net loss was €8.77bn after €12.6bn in one-off charges booked in the second quarter, as the pandemic forced the group to write down acquisitions, mainly in Europe. Analysts had expected a net loss of €8.64bn.
Santander also said it intended to pay a cash dividend of €0.0275 per share, down from an original plan of €0.1, to bring its payout policy within the limits set by the European Central Bank (ECB) in December.
The bank added it intended to resume payments closer to previous levels in 2021, once the ECB removes its limitations, and restore a dividend of 40-50 per cent of underlying profit, in cash, in the medium term.
Banks across Europe are struggling to cope with record low interest rates, and the economic downturn sparked by the Covid-19 pandemic is forcing them to cut costs.
Santander chief executive Nathan Bostock said: “Although Covid-19 materially impacted our results, the decisive actions we have taken have helped to deliver a very resilient performance despite the difficult environment.
“We achieved strong lending growth, particularly in mortgages, grown customer deposits, delivered further efficiency savings and a notable improvement in income in the second half of the year.”
Income at the bank was down five per cent year-on-year, with ongoing pressure on fees and rates up, although income was up in the last two quarters.
Santander donated £7.5m for Covid-19 research, hardship funds and community activities and £300,000 to UK vaccine development programmes.