Santander Polish bank quarterly profit misses forecasts

(Reuters) - Santander Bank Polska SA SPL1.WA reported a fall in net profit in the first quarter of 2020 to 170 million zloty ($40.5 million), a deeper drop than forecast due to provisions for potential losses connected with the coronavirus crisis.

The results of the Spanish giant’s Polish unit offer an early indication of what could happen to the whole sector as the bank opens the results season.

Its net profit was 100 million zloty below expectations of analysts polled by Reuters and 168 million zloty lower than a year before.

The bank, Poland’s biggest non-state lender, said it had decided to create a 119 million zloty provision related to “unexpected credit losses” connected to uncertainty over the coronavirus impact on the economy.

The results were worked out in the first quarter, while the first coronavirus infection was registered in Poland on March 4. Analysts have said worse conditions lie ahead.

Poland’s economy is expected to contract by 3.6% this year, according to Reuters poll, but the finance minister has already said the recession could lead to a contraction of 4.0-4.5%.

Recent rate cuts will have an additional negative impact on banks results, analysts have said.

Santander Bank Polska also said its net interest income rose to 1.64 billion zloty in the first quarter of 2020, from 1.61 billion a year earlier. Net provisions rose to 466 million zloty, which was higher than forecast.

Reporting by Gdansk Newsroom and Marcin Goclowski; Editing by Edmund Blair