The bank's CEO expects that the impact of the pandemic will require new provisions by the end of the year.
Santander Totta made 118.9 million euros in the first quarter of the year. The amount represents a drop of 13.4% in relation to the same period last year, having already been penalized by the Covid-19 pandemic. To face the crisis and foresee an increase in bad loans, the bank led by Pedro Castro e Almeida reinforced the provisions.
The bank has placed 30 million euros in provisions, reflecting the impact it expects the pandemic to have on the economy and, consequently, on credit quality. The CEO acknowledged that “the results of the first quarter of 2020 already showed a slight impact associated with the Covid-19 pandemic.”
“The entire global financial system is going to have a large increase in impairments. We will make provisions throughout the quarters depending on the visibility we have,” explained Castro and Almeida.
The bank reached the end of the first quarter with an NPE ratio (non-performing exposures) standing at 3.25% (against 3.99% in the same period).
The CFO Manuel Pedro clarified that “the improvements in the business were practically offset by provisions”. Operating income remained practically unchanged (-0.2%) at 354.5 million. Net interest income fell 6.4% to 202 million euros. On the other hand, operating costs stood at 147 million euros, 3.7% down on the same period last year.
Customer funds totalled 41.8 billion euros, up 1.5% on the same period last year, and loans to customers amounted to 41.0 billion euros, an increase of 1.3% compared to March 2019.