Santander's quarterly profit jumps as it releases pandemic provisions

February 3, 2022: On Wednesday, Spain’s Santander reported an eightfold rise in fourth-quarter net profit compared to the same quarter in 2020 on lower loan loss provisions and a solid performance in its U.S. and U.K. markets.

In the quarter, Santander released 750 million euros ($845.25 million) in Covid-19 related provisions at a moment when some banks, mainly in the United States and Britain, are starting to reduce them due to improved economic conditions.

The euro zone’s second-biggest bank booked a net profit of 2.28 billion euros in the October to December period compared to 277 million euros made in the same quarter in 2020 marked by hundreds of million euros in restructuring charges.

“Across all our regions and businesses, we are delivering solid and consistent top-line growth, with the U.S. and U.K. as standout performers in 2021, and Brazil and Chile the most profitable banks in their peer group,” Santander Chairman Ana Botin said in a statement.

The net profit was in line with forecasts by analysts polled by Reuters, though it was still below a 2.78 billion net profit booked in the fourth quarter of 2019 before the pandemic when the bank booked capital gains worth more than 700 million euros.

Botin told CNBC on Wednesday that the Spanish lender was focused on investing for the future through buybacks rather than short-term dividend yields.

“It’s not just the cash dividend, it’s also the buybacks, and with the capital levels we have achieved, the profitability in our business, the growth, means that we should be able — and that’s the aim — to continue growing dividends and buybacks amounting to 40% of underlying profits,” Boutin said.

“It’s about returning to shareholders, and yes, we aim to increase that as we increase our profits, but it’s also about being around in the next 10, 15, and 20 years.”