The bank's net loan-loss provisions increased to €7bn, in the first six months of this year, up 63%, mainly due to the Covid-19 pandemic

Banco Santander

The façade of Banco Santander headquarters in Santander, Spain. (Credit:

Spanish banking giant Banco Santander has reported a 53% decline in its underlying profit to €1.9bn for the first half of this year, compared to €4bn recorded in the same period last year.

Banco Santander attributed the fall to the rise in loan-loss provisions attributable to the Covid-19 pandemic.

It earned a total income of €22.51bn in the first six months of this year, down 8% from €24.4bn earned in the January-June period in 2019. The operating expenses of the bank also declined by 8% to €10.65bn.

The bank’s net loan-loss provisions increased from €4.3bn in H1 2019 to €7bn, up 63%, mainly due to the Covid-19 pandemic. The profit before tax had also fallen by 49% to €3.84bn in the first half of this year.

The Spanish bank said that its net interest income and customer revenues have remained stable year-on-year at €16.2bn and €21.3bn, respectively, driven by growth in Latin America under its corporate & investment banking, wealth management & insurance businesses.

Banco Santander stated: “While the pandemic has had a significant impact on customer activity, the underlying performance of the business was strong, supported by resilient customer revenues, higher than expected cost reductions, robust credit quality and good organic capital generation.”

The bank lent an average of €1.6bn every day during the second quarter to provide financial support to customers during the pandemic.

To continue its core banking services, while keeping employees and customers safe during the pandemic, the bank is currently operating about 90% of its branches and substantially all of its 40,000 ATMs.

Banco Santander’s underlying profit in Europe decreased by 54%

In Europe, the bank’s underlying profit had fallen by 54% for the period, due to an increase of in loan loss provisions after an anticipated macro-economic deterioration. But, the bank had also achieved over €300m in cost savings during the period.

In North America, the underlying profit had fallen by 29% to €617m due to increase in loan-loss provisions. But the net operating income had increased by 2%, with improvements in both revenues and costs.

In South America, the underlying profit plummeted by 13% to €1.38bn as revenue increase was offset by rise in loan loss provisions due to the pandemic’s impact.

Banco Santander executive chairman Ana Botín said: “The past six months have been among the most challenging in our history. The impact of the pandemic has tested us all and I am proud of how Santander has responded. During the second quarter, we lent an average of €1.6 billion every day, supporting millions of individuals and businesses.

“Our teams have raised over €100 million to help communities respond to the pandemic, and we continued to serve our customers while keeping our people safe.

“Our resilient model has delivered strong operating performance, with capital increasing, costs falling ahead of plan, and credit quality remaining healthy.

“While our statutory profit reflects a non-cash revaluation of goodwill and DTAs due to the impact of the pandemic on the economic outlook, it has no impact on the group’s balance sheet strength. The foundations of our business remain extremely strong, with capital at the top end of our target range.”