The bank booked a charge of 530 million for restructuring costs for the full year, mainly in the UK and Portugal.
Santander multiplied almost by five its benefit in the first quarter compared to the same period of the previous year. The bank thus reached 1,608 million euros, which represents a difference of 386% with the first quarter of last year, in which the bank made provisions of some 1,600 million.
All in all, the bank has scored this quarter a charge for about 530 million euros, corresponding to all the costs of restructuring planned for the year, mainly in the United Kingdom and Portugal.
According to the bank’s calculations, without this charge, ordinary profit would have been 2,138 million, that is, 50% more than the previous year for the same dates. It would be the bank’s highest ordinary profit since the second quarter of 2010.
Increase in margins
The interest margin of the entity grew by 5%, something that according to Santander is due to the fact that new credit returned to pre-pandemic levels in Europe and South America, with notable growth in the United Kingdom (+24%), Spain (+10% ) and Brazil (+6%).
In fact, the fee income they recovered to pre-pandemic levels thanks to increased activity, growth in services and higher value-added products, especially in the corporate business and insurance.
Total revenues increased by 8%, to 11,390 million euros, while costs they remained stable. The efficiency ratio improved to 44.9% (2.3 percentage points less), while profitability, measured through ROE, advanced to 9.8%, compared to 1.47% in the first quarter of 2020 and 5.54% at the end of the year.
Customer funds exceeded one billion euros for the first time thanks to the increase in savings by companies and families during the pandemic. The demand deposits grew by 14% (+2% from December), to 668,000 million euros, while investment funds they rose 19% (+3% from December), to 170,000 million.
Less arrears and provisions
For its part, the default ratio fell five basis points from March last year, to 3.2%, while the coverage ratio closed the quarter at 74%. The cost of credit it also improved, by 20 basis points, from December, to 1.08%, thanks to lower provisions in the quarter.
In fact, the provisions of the quarter stood at 1,992 million euros, 43% less than the first quarter of last year, while the accumulated figures stood at 24,034 million.
As for the capital, the CET1 ratio stood at 12.3%, above the previous record. The bank has also increased its capital cushion against the minimum required, which is now 345 basis points, compared to 189 before the pandemic.
In fact, the bank reserved 15 basis points of capital to pay a dividend, which translates into 40% of the ordinary profit for the quarter. As already reported, the bank will accrue 40% of the ordinary profit during the year for the payment of this remuneration once the European Central Bank (ECB) lift its restrictions.
By region, the Europe recorded a profit of 826 million euros in the first quarter, compared to 193 million euros in the same period of the previous year, something that was due to higher revenues (+13%), lower costs (-4%) and lower provisions (-40%).
In Spain, the ordinary profit was 243 million euros in the first quarter, compared to 90 million euros in the same period of the previous year (+170%), thanks to lower provisions (-29%) and cost reduction (-8%). The interest margin grew by 10%.
the business in North America (United States and Mexico) registered an ordinary profit of 773 million euros, 174% more than on the same dates of the previous year, driven by the record result in the United States, which increased to 616 million euros (ten times more).
As to South America, ordinary profit was 773 million euros, 41% more, thanks to the growth in income (10%) and lower provisions.
More specifically, in Brazil Ordinary profit reached 562 million euros, 47% more, due to the 31% drop in provisions, the improvement in the cost of credit and higher income (+8%).
Finally, Digital Consumer Bank, which now encompasses Santander Consumer Finance (SCF) y open bench, recorded an ordinary profit in the first quarter of 291 million euros, 25% more due to higher revenues (+1%) and a reduction in provisions, with a greater contribution from Germany (83 million euros), countries Nordic countries (57 million) and the United Kingdom (50 million). The NPL ratio stood at 2.23%.