Spanish financial institution Santander (SAN.MC) has put aside one other €2.5bn (£2.2bn, $3bn) to cowl potential losses linked to the COVID-19 pandemic, taking its complete loss buffers to €9.5bn.

Santander’s third quarter mortgage loss provision was up 22% on the identical quarter a 12 months earlier when forex fluctuations are stripped out.

It got here because the financial institution reported what government chair Ana Botin known as a “considerably stronger” three month interval, after a historic loss within the second quarter.

Earnings within the third quarter rose 1% on final 12 months to €11bn, whereas pre-tax revenue fell by 3% to €3.1bn. Underlying revenue dipped by 4% to €1.75bn. The figures had been forward of forecasts.

Shares in Santander rose 4% in Madrid in early commerce.

Santander shares jumped in Madrid after the financial institution reported better-than-expected outcomes. Picture: Yahoo Finance UK

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“The restoration of our enterprise is progressing nicely, and the third quarter was considerably stronger than the second,” Botin stated in a press release.

Santander misplaced €11.1bn within the second quarter of 2020, its largest three-month loss in historical past. It got here after the Spanish financial institution booked write-offs of €12.6bn (£11.4bn), blaming “the deterioration in financial outlook resulting from covid-19”.

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The majority of the cost was linked to Santander’s UK enterprise. Santander wrote down the worth of its UK franchise by €6.1bn (£5.5bn).

Botin on Tuesday stated the UK enterprise was “recovering strongly.” UK earnings rebounded by 15% between the second and third quarter, hitting £1bn. Nonetheless, pre-tax revenue is down 59% to this point this 12 months resulting from rising loss provisions, falling rates of interest, fee holidays for patrons, and adjustments to overdraft guidelines.

Botin stated Santander was on monitor to ship an underlying revenue of €5bn for the 12 months.

“Though the outlook for 2021 relies on how the pandemic evolves, we have now confirmed that our technique and enterprise mannequin place us nicely to proceed supporting our prospects and delivering outcomes for our shareholders,” Botin stated.

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Santander stated it was on monitor to chop prices by €1bn this 12 months and deliberate to strip out one other €1bn of prices over the following two years.

Michael Hewson, chief market analyst at CMC Markets, stated Santander’s outcomes had been “notable” for the big loss provision taken within the third quarter, which set it aside from European rivals.

“They look like one of many few European banks who’re gearing up for big mortgage losses within the coming months because of the pandemic,” Hewson stated.

“The financial institution has put aside a complete of €9.56bn in respect of unhealthy loans to this point 12 months up to now, whereas the remainder of the large banks within the European banking sector seem to have put aside lower than €20bn between them.”

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