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Summary
- Banco Santander reported a 2 per cent rise in net operating income in H1 2020, due to a fall in operating expenses
- Barclay's delivered a profit before tax of £1,272 million (H119: £3,014 million)
- Lloyd's recorded a net income of £7.4 billion for H1 2020, which down by 16 per cent when compared to H1 2019
The growth of the banking sector plays a vital role in the development of any economy. In case of any kind of disruption occurring in the banking sector, there is a direct impact on the economy’s growth. The current economic downturn due to the spread of COVID-19 pandemic is posing new risks for the financial sector of the United Kingdom. The regulatory authorities are working closely to hedge the economic destruction in order to prevent the impairment of households & businesses and support financial market functioning. The companies have also begun to reduce their cost base and strengthen liquidity in order to find growth in the future and deal with the current financial crisis.
Banco Santander S.A.
The Spain-based company, Banco Santander SA, is a provider of retail and commercial banking solutions.
Financial Highlights
On 29 July 2020, Banco Santander released its half-yearly results for the period ending 30 June 2020. Despite the challenging environment, revenues in the first half were in line with that of H1 2019. The bank reported an underlying profit of €1,908 million in H1 2020, which was lower than the H1 2019 level by a hefty 48 per cent, due to the impact of Covid-19. The net operating income of the Group was €11.9 billion for H1 2020, which was up 2 per cent in comparison with the previous year, resulting from a decline in the operating expenses by 5 per cent year-on-year in real terms. It incurred a statutory attributable loss for the first half of 2020 worth €10.8 billion because of the non-cash, non-recurring impairment charges of €12.6 billion.
Even during the Covid-19 pandemic, the bank was successful in providing financial support to its customers, recording an average of €1.6 billion every day in new lending during Q2 2020 and offering more than five million customers with payment holidays. The company transitioned to digitalisation with 47 per cent of the sales taking place through digital channels in the second quarter of 2020 (2019: 36 per cent). Out of 40 million digital customers (up by 15 per cent) with the bank, more than 32 million are now using mobile banking (up by 22 per cent). The credit quality of the bank remained strong, recording a fall in the non-performing loan ratio by 25 basis points to 3.26 per cent since June 2019. The bank also witnesses an increase in coverage ratio by four percentage points to 72 per cent.
Stock Performance
Banco Santander S.A. (LON:BNC) stocks were trading at GBX 172.18 on 30 July 2020 at 12:16 PM, down by 8.05 per cent from its previous close of GBX 187.26. The 52-week low/high range was GBX 163.80/352.60. It had a market capitalisation (Mcap) of £31,066.43 million. The volume traded at the time of reporting was 1,749,062. The company recorded a negative return on price, which was 43.79 per cent on YTD (Year to Date) basis.
Barclay's PLC
Barclays Plc is a global financial services provider offering personal and business banking, wholesale and commercial banking, and private and investment banking solutions to individuals, SMEs, corporates, and high-net-worth clients.
Financial Highlights
On 29 July 2020, Barclay's released its interim results for the half-yearly period ending 30 June 2020. The bank delivered a profit before tax of £1,272 million (H1 19: £3,014 million), resulting from an increase in income by 8 per cent and a reduction in operating expenses by 3 per cent, which was offset by materially higher credit impairment charges. The Statutory RoTE was recorded as 2.9 per cent (H1 19: 9.1 per cent), and statutory EPS was 4.0 pence (H1 19: 12.1 pence). A strong performance in CIB and diversified business model of the Group helped in achieving an increase in pre-provision profits by 27 per cent to £5,010 million. The total income increased by 8 per cent to £11,621 million.
The credit impairment charges increased to £3,738 million (H1 19: £928 million), it was reflected by an increase of £591 million in respect of single name wholesale loan charges and £2.4 billion impacted from revised IFRS 9 scenario. Cost efficiencies and continued cost discipline in the current environment resulted in a decrease in operating expenses by 3 per cent to £6,563 million. The company's attributable profit was £695 million (H1 19: £2,072 million). Total assets increased to £1,385 billion (December 2019: £1,140 billion) because of an increase in derivative assets by £78 billion. The company also recorded an increase in TNAV per share to 284 pence (December 2019: 262 pence).
Stock Performance
Barclay's PLC (LON:BARC) stocks were trading at GBX 100.68 on 30 July 2020 at 12:22 PM, down by 4.13 per cent from its previous close of GBX 105.02. The 52-week low/high range was GBX 80.24/192.46. It had a market capitalisation (Mcap) of £18,215.43 million. The volume traded at the time of reporting was 19,415,575. The company recorded a negative return on price, which was 43.29 per cent on YTD (Year to Date) basis.
Lloyd's Banking Group
Lloyds Banking Group Plc is a United Kingdom-based bank, engaged in the business of providing financial and banking services with an array of specialised services such as Investment Banking, Merchant Banking and Personal Banking.
Financial Highlights
On 30 July 2020, Lloyd's Banking Group released its half-yearly results for the period ending 30 June 2020. The bank recorded a net income of £7.4 billion, which was down by 16 per cent as compared to H1 2019. The decrease in net interest margin by 2.59 per cent reflected lower rates. The impact by slowdown across key markets in the first half of the year was visible as other income of only £2.5 billion was recorded.
Continued investment in digital projects and enhanced support for customers during the pandemic resulted in a decrease in total costs by 4 per cent to £3.9 billion. The group recorded a trading surplus of £3.5 billion, which reduced by 26 per cent in comparison with H1 2019. A significant deterioration in forward-looking economic outlook was evident with the impairment charge being £3.8 billion, including £2.4 billion in the second quarter. Loan books, based on actual defaults to date, continued to perform well. Income developments and the increased impairment charge had an impact on the bank with statutory loss before tax being £602 million and statutory profit after tax being £19 million. Tangible net asset value per share of 51.6 pence was recorded by the company.
Stock Performance
Lloyd's Banking Group (LON:LLOY) stocks were trading at GBX 26.05 on 30 July 2020 at 12:29 PM, down by 8.18 per cent from its previous close of GBX 28.37. The 52-week low/high range was GBX 27.73/67.25. It had a market capitalisation (Mcap) of £20,071.69 million. The volume traded at the time of reporting was 462,472,284. The company recorded a negative return on price, which was 55.48 per cent on YTD (Year to Date) basis.
