Banco Santander SA is expecting the coronavirus to have a "very marginal impact" on its first-quarter results and will review its medium-term targets once the economy stabilizes, Executive Chairman Ana Botín said April 3.

Speaking at the bank's annual shareholder meeting, Botín said results for the quarter were in line with that of the first quarter of 2019, when earnings totaled €1.84 billion in 2019. However, current economic conditions make it impossible to forecast how much the virus might affect earnings in the future because of the uncertainty over the length of the health crisis, she said.

"It is still too soon to understand the full impact of the pandemic on the economies in which we operate," she said. Santander is headquartered in Spain, but generates a large chunk of its revenues in Latin America. There was a general agreement among economists and authorities that the short-term impact would be "very significant," she said.

The economic uncertainty means the bank will reassess its midterm goals once the situation stabilizes, she said. The lender is targeting a return on tangible equity — a key measure of profitability — of between 13% and 15% over the medium term.

CEO José Antonio Álvarez said business has followed "normal patterns" in the first quarter, and the bank had only seen the impact from economic shutdowns in the last couple of weeks. The bank will take the "necessary measures" to mitigate the impact on its business and income statement for this year, he said.

Spain went into lockdown in mid-March, bringing the Spanish economy to an effective standstill. Other countries where Santander is present, such as the U.K., have also enforced lockdowns. Brazil is Santander's largest market, and Banco Santander (Brasil) SA put some of its employees in Sao Paulo and Rio de Janeiro on a leave of absence and shuttered some branches in both cities effective March 24, Reuters reported.

Like many governments around the world, Spain has taken measures to mitigate the impact on the economy, including €200 billion in financial aid, with €100 billion worth of guarantees and loans for companies, especially small and medium-sized enterprises.

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Santander's lending had increased 16% in March in Spain compared to February, Botín said. As a result of the lending growth, Botín expected that the bank's first-quarter common equity Tier 1 ratio — a key measure of financial strength — would be line with the 2019 figure of 11.65%.

Botín said she was "comfortable" with the bank's capital position, even before taking into account regulatory measures to relax capital requirements.

Santander has abandoned it final 2019 dividend and will not pay out any dividend in 2020 until it has more visibility over the economic impact of the coronavirus and until it has its 2020 financial results, she said. The bank's board had already agreed not to pay an interim dividend from 2020 earnings on March 23. However, it will hold a shareholder meeting in October where it may decide on a payout, she said.

Axing the final 2019 dividend will free up €1.6 billion in capital, giving the bank "enough firepower" to offer €30 billion in loans for families and business, Botín said. Canceling the 2020 dividend policy translates into a further €60 billion in loans, she said. The total of €90 billion in loans translates into 80 basis points of pro forma capital, based on 2019 underlying profits, Botín added.