November 28, 2020

Banco Santander suffers losses of 9,048 million due to COVID-19 and advances a change of strategy

Banco Santander has closed the period between January and September with losses of 9,048 million euros due to the impact of the coronavirus crisis, causing different accounting adjustments in the goodwill of various units of the group, as explained to the CNMV. At the same time, this Tuesday it held its shareholders’ meeting to approve the payment of the dividend in 2021, which it had to suspend this year due to the recommendations of the European Central Bank.

During this meeting, the president of the entity, Ana Botín, has taken the floor, who has stressed that without the impact of this pandemic, the results of the company would have been profits of 3,658 million euros. “These are exceptional results, taking into account the adverse circumstances, and which demonstrate the strengths of Santander,” he said in his speech to shareholders. “Second, our business activity is recovering to levels close to the pre-COVID situation,” he added.

However, in this context and with the forecast that negative rates will remain for several years, the president of Santander has advanced that the bank is going to “accelerate” a transformation plan for the next few years, called ‘One Santander ‘. “We will simplify the products and services we offer to our clients to improve the experience with the bank, and at the same time we will continue to drive innovation by leveraging our digital capabilities, redesigning our distribution model and automating our processes on a common platform,” Botín said.

One of the transformation points in the strategy is the commitment to the consumer credit business, creating “a global bank for digital native consumer finance”, based on the structure of Santander Consumer Finance and Openbank, the group’s digital bank . “These are two businesses with great growth potential,” said Botín, who has advanced a savings plan of 1,000 million euros for these two companies.

Along with this business, the entity will also bet on the creation of a great payment platform. “Payments are key in our relationship strategy as they are part of our clients’ day-to-day lives,” said the bank’s president. This plan consists of turning this business into an autonomous company with the aim of “offering solutions to Santander’s clients in a first stage, and later to new clients and other companies.” “The creation of this company will help us to generate new sources of income in addition to continuing to grow with our clients. The global market opportunity is about 500,000 million euros, of which 50,000 million are businesses and 350,000 are international trade,” he stressed .

Regarding the results between January and September, the company has indicated in its financial report presented this Tuesday before the CNMV that income (taking the gross margin as a reference) has been cut by 9.6% compared to the same period last year , to 33,355 million euros, highlighting the 14.3% drop in commission income. The entity attributes this drop to the decline in activity due to the health crisis and interest rates.

With regard specifically to the situation of the business in Spain, Santander explains that profit has been cut by 58%, down to below 500 million euros. The bank points to growth of 7,700 million euros (+ 2% year-on-year) very localized in the self-employed, SMEs and companies, due to the impact of the loans guaranteed by the ICO. The levels of formalization of mortgages and consumption remain at levels lower than last year, in line with the economic slowdown in the country. The income of the Spanish subsidiary has fallen 10%.


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