The Santander Group took a giant £11.4 billion loss from the impact of the coronavirus pandemic, which pushed the Spanish banking giant into a £9.8 billion slump for the first half. It comes as Barclays took a further £1.6 billion hit from the coronavirus crisis in the second quarter of the year even as the investment arm of the bank managed to keep it in profit.
The bank said it would see a pre-tax profit of £1.27 billion in the first half of the financial year, down from £3 billion the year before. It came on revenue of £11.62 billion in the first half of 2020.
Analysts had been expecting the impairment charge to reach a little over £1.4 billion as the company prepared for a slew of bad loans linked to fall out from the pandemic.
The UK wing of Santander managed to keep its head above water even as its Spanish parent took its first loss in its 160-year history.
A large part of the hit came as the bank took a new look at the value of UK building society Abbey National – which it bought in 2004.
Santander said that about £5.4 billion of the impairment came from acquisitions in the UK – Abbey National being the biggest of these.
Despite going through what chairwoman Ana Botin said it was the “most challenging” six months in Santander’s history, the bank is still promising a dividend to its shareholders, around two million of which are in the UK.
She said: “The board is committed to applying a 100 percent cash dividend policy as soon as market conditions normalise, subject to regulatory approvals and guidance, and we have accrued capital this quarter to reflect this commitment.”
The bank has lent on average £1.5 billion every day during the second quarter to support its customers, Ms Botin said.
This helped keep Barclays in the black during the first half, and will be seen as a win for chief executive Jes Staley’s “diversified model”.
He said: ”Credit impairment charges increased to £3.7 billion in the first half due to the forecast impact of COVID-19.
“However, our improved pre-impairment performance ensured that we still delivered £1.3 billion profit before tax for the first half of 2020, post impairment.
”While the remainder of 2020 will be challenging, our diversified model means we can remain financially resilient and continue to support our customers and clients.”
The bank has been a major lender in schemes to help small businesses through the coronavirus crisis.
On Wednesday it revealed that coronavirus loans worth £10.2 billion had been given to Barclays customers under three government-backed schemes.
The schemes – Bounce Back Loans, Coronavirus Business Interruption Loans (CBILS) and the CLBILS scheme for bigger firms – were in part backed by the Treasury which promises to shoulder some of the interest and other burdens.
Mr Staley added: “This has been a period focused on supporting our customers, clients and the UK economy through the COVID-19 pandemic – providing the people and businesses that we serve with a bridge to recovery in every way we can.
“To help consumers with their short-term household finances, more than 600,000 payment holidays have been provided, along with other fee waivers and support measures.”