MADRID, Apr 28 (Reuters) – Spanish bank Santander beat forecasts for first-quarter results, sending a signal that the worst of the coronavirus crisis could have passed by failing to increase its provisions against the pandemic after posting a record profit in USA.
The second largest bank in the euro zone in terms of market value made a net profit of 1,608 million euros (1,940 million dollars), compared to 331 million euros in the same quarter of the previous year.
This is significantly higher than that predicted by analysts -according to a Reuters survey-, who expected the Spanish bank to obtain a profit of 1.38 billion euros, although it was still below the 1.84 billion registered in the same quarter. of 2019.
The results of the largest Spanish bank were in line with the strong figures of the British bank HSBC released the previous day.
“Commercial activity (will tend to) increase as vaccination progresses at different speeds,” Santander CEO José Antonio Álvarez said in a call with analysts.
Santander’s provisions against bad debts in the quarter were 1,990 million euros. The bank did not add provisions for possible losses related to the pandemic. In the same quarter of last year, the bank made provisions worth 3,910 million, almost half of them related to the pandemic.
At the end of March, the bank’s cost of risk – an indicator of potential future losses that calculates the ratio of total loan loss provisions to total customer loans – fell to 108 basis points, from 128 in the quarter previous.
Santander shares were down 0.7% at 0759 GMT, after rising 5% the Tuesday before its results, while Spain’s main benchmark index was down 0.17%.
Kepler Cheuvreux analysts said the results were strong and said the US and UK markets were the best performers. Kepler Cheuvreux added that huge public fiscal stimuli are helping the US market, where revenues have risen 8% from a year ago.
Santander’s ordinary profit in the United States soared to 616 million euros from 60 million a year ago, making it the market that contributed the most to the Spanish bank.
Santander said that in the United Kingdom, where ordinary profit rose to 294 million euros from 52 million in March 2020, it will replace its current CEO Nathan Bostock, who will remain in his position until a successor is named.
The good performance of Santander’s corporate and investment banking (CIB) business also helped, with a 64% increase in ordinary profit.
Excluding net restructuring expenses of € 530 million, primarily for planned operations in the UK and Portugal, the bank increased attributable profit by nearly 50% compared to the previous quarter, driven by higher growth in emerging economies like Brazil.
Santander’s diversification abroad, especially in Latin America, has helped it cope with difficult bank conditions in Europe since the financial crisis.
In Spain, where the bank’s net profit rose to 243 million euros from 90 million a year ago, the bank said António Simões, the bank’s regional head for Europe, would replace Rami Aboukhair at the head of the Spanish business.
In the group as a whole, the interest margin, a measure of earnings on loans less costs on deposits, fell by 6.3% compared to the same quarter of the previous year, to 7,956 million euros, in line with analyst estimates.
The bank ended the month of March with a CET-1 capital ratio (the main measure of solvency of banking entities, closely followed by the markets) of 11.89% according to the new accounting standards, unchanged from the previous quarter. and within its target of 11-12%. (1 dollar = 0.8282 euros)
(Information from Jesús Aguado, additional information from Emma Pinedo, edited by Jason Neely and Edmund Blair, translated by Tomás Cobos and Darío Fernández)