Santander Posts 11-Billion-Euro Loss for First Half, Confident About Outlook

Santander Posts 11-Billion-Euro Loss for First Half, Confident About Outlook

Spanish multi-national banking group Banco Santander, S.A posted a 10.8-billion-euro loss for the fi..

Spanish multi-national banking group Banco Santander, S.A posted a 10.8-billion-euro loss for the first half of the year after taking a one-off provision of 12.6 billion euros in the second quarter to reflect the impact of the virus pandemic on the business, the group announced on Wednesday.

The group maintains that its balance sheet remains healthy and underlying growth strong.

Santanders net operating revenue for the first half is overall up by 2 percent compared to last year, to a profit of 1.9 billion euros, thanks to its cost-saving efforts, the group said.

However, in their annual exercise of reviewing the value of their acquisitions, the group had to make an impairment charge of 12.6 billion euros to reflect the impact of the pandemic and increased capital cost. This charge turned a net operating income of 1.9 billion euros into a net underlying loss of nearly 11 billion euros for the first half of the year.

In responding to Bloombergs comment about Santander having the highest impairment charge of any European bank, Santander CFO Jose Cantera emphasized that the charge was a non-capital, non-cash accounting charge and that the groups underlying profitability of the quarter was really strong.

The group maintained that the business is well capitalized. Santander has a common equity tier 1 capital ratio of 11.8 percent, which is above the required minimum of 10.5 percent and at the top end of their own target range. The tier 1 capital ratio is a core measurement a banks strength and its ability to withstand financial distress.

In the second quarter, the group saw an accelerated growth in the digital hemisphere, with 47 percent of sales occurring on digital platforms, versus 36 percent recorded at the same time last year.

In addition, the groups corporate and investment banking business achieved an impressive 32 percent growth in net operating income before the impairment charge despite the harsh economic conditions.

“The impact of the pandemic has tested us all,” Ana Botin, Santanders executive chairman, said in a statement. “We remain confident about the potential for value creation within our business.”

The shaRead More – Source

CATEGORIES
Share This