(Includes quote from Santander Chairman and breakdown)
By Jesús Aguado
MADRID, April 28 (Reuters) - Spain’s Santander posted an 82% year-on-year slump in quarterly net profit on Tuesday as it booked higher provisions for expected credit losses from the coronavirus outbreak.
The euro zone’s second-largest bank by market value reported a profit of 331 million euros ($358.11 million) for the first quarter ended in March.
Overall loan-loss provisions rose 80% after the bank set aside 1.6 billion euros to offset the impact from COVID-19 based on the expected deterioration of the macroeconomic conditions arising from the health crisis.
The respiratory disease caused by the new coronavirus has so far killed 23,521 people in Spain.
“We will review our strategic targets once we have a more complete understanding of the full impact of the crisis,” Santander Chairman Ana Botin said in a statement.
Excluding extraordinary provisions, which included 46 million euros of restructuring costs in Europe, Santander’s underlying quarterly profit rose 1% to 1.98 billion euros.
That was slightly better than an average analyst estimate of 1.8 billion euros drawn from a Reuters poll.
Banks worldwide have been taking measures to offset risk amid the crisis. U.S. lenders have set aside billions of dollars to cover potential loan defaults, while European players such as Credit Suisse and Deutsche Bank have been doing likewise.
Santander too has boosted its lending capacity partly by scrapping its final 2019 dividend, after a regulatory directive to do so to support an economy hamstrung by curbs.
As of end-March, Santander had a core tier-1 capital ratio - the strictest measures of solvency - of 11.58% compared to 11.65% at end-December.
Including the full implementation of new accounting standard IFRS-9, with an impact of 25 basis points, Santander’s capital ratio stood at 11.33%.
$1 = 0.9244 euros Reporting By Jesús Aguado; Editing by Himani Sarkar and Inti Landauro