* Santander books first quarterly loss ever
* Total impairments related to COVID-19 rise to 12.6 bln euros
* Says one offs don’t have an impact on cash flow or capital level
* Remains committed to mid-term ROTE targets set in April 2019
* Proposes payment of scrip dividend, aims to resume cash payments (Adds details)
By Jesús Aguado
MADRID, July 29 (Reuters) – Spain’s Santander reported a record net loss of 11.1 billion euros ($13 billion) in the second quarter after it took the biggest hit yet for a European bank dealing with the impact of the coronavirus crisis.
The euro zone’s second-biggest bank by market value said on Wednesday it had booked one-offs worth 12.6 billion euros as the economic deterioration caused by the COVID-19 pandemic forced it to writedown previous acquisitions, mainly in Europe.
Santander’s core markets spanning Brazil to Spain have been some of the hardest hit by the pandemic, with weaker emerging market currencies exacerbating the pain.
Of the total impairments, 10.1 billion are related to goodwill and 2.5 billion to DTAs, an instrument that grants tax breaks to companies when reporting losses or against certain provisions.
The bank said the impairments would have no impact on its cash flow or capital levels, which rose slightly in the quarter.
On Wednesday, the lender reiterated its cost of risk guidance of between 130 basis points and 150 basis points by end-2020 after it rose in June to 126 basis points compared to 100 bps at end-March.
Excluding the extraordinary charges, underlying attributable profit fell 27% to 1.53 billion euros in the second quarter compared to a year ago.
The COVID-19 related impairments also hit its return on tangible equity ratio (ROTE), a measure of profitability, which stood at 5.19% at end-June.
Santander Chairman Ana Botin said in a statement that the bank remained committed to lifting its ROTE to 13-15% in the medium term and would provide an update on its strategic plans in the coming months.
Separately, Santander also said it was proposing the payment of a scrip dividend, payable in new shares, equivalent to 10 cents per share for 2019, to be paid this year, after the European Central Bank’s recommendation to euro zone banks not to pay dividends in cash until the end of the year.
The bank said its board intended to resume paying a full cash dividend as “soon as market conditions normalise, subject to regulatory approvals and guidance,”.
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