Spanish bank Santander has reported a fall in total group income for the third quarter of 2020 with a value of €33.6 billion from €36.9 billion during the same quarter of 2019.

Santander reported GDP contractions of -9%, -18.7%, and -12.4% for the US, Mexico, and Brazil respectively with global activity recording steady gains in Q3 20 despite being momentarily impacted by a resurgence of the Covid-19 pandemic.

Derivative instruments for the group totalled €15.1 billion, a 3.8% decrease from Q3 19’s €15.7 billion; risk weighted assets (RWAs) stood at €555 billion, a 9.5% drop from €613 billion in the third quarter of 2019.

As an issuer group, the bank led by Ana Botín (pictured) has a total of 1,896 live structured products in the SRP database listed across nine countries with Spain, Brazil, UK, Mexico, Portugal, and Poland the main markets for the Spanish bank.

The investments are mostly wrapped as structured bonds and COEs, deposits, medium-term notes, and warrants. Some of the most featured underlyings include the Brazil Consumer Price Index (IPCA), USD/BRL currency pair and Ibovespa Brasil Index in Brazil, the BBVA and Iberdrola shares in Spain, and the FTSE 100 index in the UK.

EUROPE

Net operating income totalled €6.9 billion in the third quarter while profit before tax reached €3.2 billion.

Underlying attributable profit is €2 billion and the bank attributes this to higher provisions while loans grew by three percent, which offset the falls in new lending in the consumer and individual segments.

The bank reported a 13% boost in revenues from Q2 20 of €5.1 billion while expenses also climbed by one percent to reach €2.5 billion.

Spain: During the third quarter, the bank’s focus shifted to restarting activities with growth and saw its transactional products increase by three percent.

Santander was the most active issuer of structured products in the Spanish market during Q3 2020 on the back of 80 products worth an estimated US$1 billion, followed by Bankinter and Banco Sabadell. The bank has 418 live products in the Spanish market worth an estimated US$7 billion.

Total income fell by 10% impacted by net interest income which in turn was driven by negative interest rates while higher loan-loss provisions were derived from the pandemic.

Customer funds grew by 1% due to a higher demand for deposits while mutual funds grew by 4%, favoured by markets and net positive inflows in recent months.

Portugal: The Spanish bank remains a marginal player in the Portuguese structured products market – it has only six live structures worth an estimated US$100m.

LATIN AMERICA

Mexico: SRP data shows that Santander continues to be one of the most prolific issuer groups in Mexico, retaining its fourth place ranking in the league tables.

During the third quarter of 2020, the bank issued 36 structured products valued at US$62m compared with 126 products with a sales volume of US$224m in Q3 19.

Monex holds the top ranking with 1,096 products sold for US$2.1 billion, followed by BBVA (506/US$871m), and Citi (44/US$184.3m).

The Spanish bank has 34 live products worth an estimated US$150m in the Mexican market, mainly dual currency notes, warrants and quanto call spreads.

Profit before tax stands at €266m, a 0.4% increase from the previous quarter and gains on financial transactions value €21m, a 75.8% plummet from Q2 20.

Total assets are valued at €78.3 billion while market debt securities stand at €7.4 billion, 1.1% climb from the previous quarter.

Brazil: Santander has recorded double-digit year-on-year growth in assets and liabilities while maintaining credit quality at controlled levels.

During the first nine months of 2020, underlying attributable profit amounted to EUR 1.5 billion, an 11% drop year-on-year.

Total income rose by three percent boosted by gains on financial transactions while net fee income dropped by 2% due to the current market environment.

Gross loans and advances to customers has grown by 20% year-on-year while customer funds climbed by the same amount. Mutual funds decreased by 6%.

The Spanish bank has almost 1,300 live structures in the Brazilian market mainly uncapped calls (791); capped calls (388) and digitals (112).

Click here to view Santander’s third quarter earnings.