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* Quarterly net profit jumps on lower provisions
* Cost of risk falls to 108 basis points vs 128 bps
* U.S. reports record earnings, UK books strong growth
* Capital ratio remains unchanged
(Recasts with analyst comment, shares)
By Jesús Aguado
MADRID, April 28 (Reuters) - Santander beat
first-quarter forecasts, signalling that the worst of the
coronavirus crisis may be over by not adding to provisions for
the pandemic and by booking record earnings in the United
States.
The euro zone's second-biggest lender by market value
reported a net profit of 1.608 billion euros ($1.94 billion)
versus 331 million a year earlier.
That beat the 1.38 billion euros expected by analysts polled
by Reuters, but was still short of the 1.84 billion recorded in
the same quarter in 2019, before the pandemic.
Spain's largest bank's results mirrored solid figures from
HSBC Holdings.
"Business activity (is set) to increase as vaccination
progresses at different speeds," Santander Chief Executive Jose
Antonio Alvarez told a call with analysts.
Santander's loan loss provisions for the quarter were 1.99
billion euros. The bank did not add provisions for
pandemic-related losses. In the same quarter last year,
provisions were 3.91 billion, almost half of which related to
the pandemic.
At end of March, the bank's cost of risk, which measures the
premium of managing credit risks and acts as an indicator for
potential losses in the future, fell to 108 basis points from
128 points in the quarter.
Shares in Santander were down 0.7% by 0759 GMT after rising
5% on Tuesday ahead of its earnings, while Spain's leading
blue-chip index was down 0.17%.
Brokerage Kepler Cheuvreux said the results were solid and
said the United States and Britain were the main stars. It said
the huge fiscal stimulus was helping the United States, where
revenues were up 8% year on year.
Santander's underlying profit from the United States jumped
to 616 million euros from 60 million, making it the highest
contributor among all markets.
Santander said that in Britain, where net profit rose to 294
million euros from 52 million, it would replace its current
Chief Executive Nathan Bostock. He will remain in post until a
successor is appointed.
A strong performance at Santander's Corporate and Investment
Bank (CIB), with a 64% rise in underlying profit, also helped.
Excluding net restructuring charges of 530 million euros,
mainly in Britain and Portugal, the bank increased underlying
profit by about 50% compared to the previous quarter, buoyed by
faster growing emerging economies such as Brazil.
Santander's diversification overseas, especially in Latin
America, has helped it to cope with tough conditions for banks
in Europe since the financial crisis.
In Spain, where net profit climbed to 243 million euros from
90 million, the bank said Antonio Simoes, the bank's regional
chief for Europe, would replace Rami Aboukhair as country head
for Spain.
Overall, net interest income, a measure of earnings on loans
minus deposit costs, fell 6.3% against the same quarter last
year to 7.956 billion euros, in line with analyst's estimates.
The bank finished March with a fully loaded capital ratio
(CET-1), the strictest measure of solvency, of 11.89% under new
accounting standards, unchanged from the previous quarter, and
within its 11-12% target.
($1 = 0.8282 euros)
(Reporting by Jesús Aguado; Additional reporting by Emma
Pinedo; Editing by Jason Neely and Edmund Blair)
