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Oct. 27, 2020, 2:23 a.m. EDT

Santander boosts provisions view; more cuts ahead

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By Pietro Lombardi

Banco Santander SA vowed to cut an additional one billion euros ($1.18 billion) in costs from its European operations in the next two years, and said it now expects to set aside less for potential loan losses this year than it previously guided.

The Spanish bank said Tuesday that by the end of the year it will achieve its goal to save EUR1 billion in Europe, and promised to cut EUR1 billion more in costs in the region in coming years.

The lender also improved its guidance for bad-loans provisions for this year.

It now expects cost of credit of around 1.3%, from a previous guidance of 1.4%-1.5%. It has set aside EUR2.54 billion in the third quarter for potential loan losses, taking such provisions so far this year to EUR9.56 billion.

Quarterly net profit rose to EUR1.75 billion. This compared with EUR501 million a year earlier, when results were hit by charges related to its U.K. business. On an underlying basis, profit fell 18%.

Revenue was EUR11.09 billion, an 11% decline on an underlying basis.

Analysts had expected a quarterly profit of EUR971.5 million, on revenue of EUR10.59 billion and provisions of EUR3.12 billion.

Santander's core Tier 1 ratio rose to 11.98% at the end of September from 11.84% in June.

The bank also gave some guidance for this year and the next, including an underlying profit of EUR5 billion this year and core capital at the top end of its 11%-12% range.

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