Santander Bank lost 8,771 million euros in 2020. A figure highly impacted by the adjustments to the goodwill of its historical investments and deferred tax assets, which amounted to 12.6 billion in the second quarter. And to this were added the restructuring costs of the last period of the year. Without these extraordinary items, the result was positive at 5,081 million, 38% less year-on-year, due to the provisions derived from the pandemic.
It has not been an easy exercise for the sector. The biggest crisis in 85 years has brought down the profitability of the banking union even further and has forced banks to hedge against the crisis. And the larger the size, the larger the endowments. This past year, the group made loan-loss provisions of 12,173 million euros, which represents an increase of 31% in year-on-year terms.
Likewise, beyond the goodwill adjustments, Santander halted its particular recovery of profits in the fourth quarter by restructuring costs of 1,146 million, which led to earnings falling to 277 million, compared to 1.75 billion in the immediately previous period.
Ana Botín, president of the bank, has shown her satisfaction with “the resilience and strength” shown by the business model and structure of the entity. «Although the crisis is global, our geographic and business diversification has worked once again and highlights the strength of our team and our model. The results in America have been good and global businesses have grown at a good pace, which has allowed us to face a more difficult environment in Europe, “he explained in a statement.
The latter is related to the fact that in Europe Ordinary profit fell 45% year-on-year, while in North and South America it was just down 3% and 4%, respectively. A panorama that contrasts with the alerts sent by the Bank of Spain that international diversification – especially thinking about emerging markets – in this crisis seems more a drag than a strength. In the case of Santander, the business on the other side of the Atlantic has been an oxygen balloon, compared to the sluggishness of the Old Continent.
Beyond this, the total capital ratio «phased-in» was 16.18% and the CET1 «phased-in» in 12.34%. “We have a solid capital base and comfortably comply with the minimum ratios required by the European Central Bank on a consolidated basis, which are 13.01% in the total capital ratio and 8.85% in the CET1” , indicates the entity. In the case of the “fully loaded” ratio, this ended the year at 11.89%.
Non-performing loans, one of the aspects that most concern the institutions and the Bank of Spain, continued to be contained at the group level in the 3.21%, which represents a reduction of 11 basis points year-on-year. The cost of credit closed the year at 1.28% and the coverage ratio stood at 76%, 8 basis points more than in 2019. However, the outlook is not the same in all its markets. Spain registers the highest NPL rate of the entire group with 6.23% (despite falling year-on-year), with a coverage ratio of 47.1%. It is followed by Chile with 4.79% and Poland with 4.74%. Thus, the bank has indicated that it is prepared “to face the year with a fund of 24.3 billion accumulated provisions.”
Likewise, the full recovery of Banco Santander’s cash dividend is already on the horizon. Regarding the remuneration in charge of 2020, the board of directors proposes to pay 2.75 cents of euros per share, which is the maximum that is allowed with the restrictions of the ECB. And in the medium term, recovering the cash payout of 40-50% of ordinary profit.