Banco Santander achieves a profit of 8,143 million euros between January and September

2023-10-25 18:04:24

Banco Santander has achieved an attributable profit of 8,143 million euros between January and September of this year, which implies an advance of 11% in current euros (13% in constant euros) compared to the figure for the same period in 2022, as a result of the strong increase in income, especially in Europe and Mexico, which has neutralized the advance of provisions, as reflected in the information sent to the National Securities Market Commission (CNMV) by the entity chaired by Ana Botín.

This benefit for Banco Santander in the first nine months of the year takes into account the impact of 224 million euros due to the temporary tax in Spain on banking income. Specifically, Banco Santander accounted for the impact on its first quarter results, as did the rest of the entities.

The attributed benefit of Santander Bank In the third quarter of 2023 alone it grew by 26% (20% more in current euros) compared to the third quarter of 2022, reaching 2,902 million euros.

For its part, the gross margin increased by 13%, to 43,095 million euros, after an increase in the number of clients of nine million, which places the total at 166 million.

Santander Bank has indicated that the rebound in customer activity and interest rates provided a 16% increase in net interest income, up to 24,134 million euros, boosted especially by higher volumes in some countries, the increase in interest rates, and margin management.

Regarding net commissions, they grew by 6%, to 9,222 million euros, due to the sales of value-added products, especially in global businesses. These businesses, together with PagoNxt and automobile financing, account for 38% of total income, and 42% of commission income. Interest margin and commission income represent 96% of Grupo Santander’s total income.

The bank chaired by Ana Botín has indicated that the 13% growth in income exceeded the 10% increase in costs, which has enabled an improvement in the efficiency ratio of 1.5 percentage points, to 44.0 %.

Regarding the entity’s expenses, they stood at 18,961 million euros, of which 10,080 million per staff, which is 13% more than the figure for the same period in 2022. The costs in real terms ( eliminating the impact of average inflation) fell 0.5%.

Provisions grew by 21% year-on-year, an advance already expected by Banco Santander after the increase in interest rates and inflation, normalization in the United States, and greater coverage of the mortgage portfolio in Swiss francs in Poland.

The default ratio was 3.13%, somewhat higher than that recorded in both June and September in 2022. At the end of the third quarter of this year, the cost of risk was 1.13%, below the objective set for the year as a whole. Markets such as Brazil have improved this indicator for the second consecutive quarter.

The group’s liquidity coverage ratio increased to 161%. The liquidity cushion exceeded 331,000 million euros at the end of last September. Of that figure, 210 billion were cash, which is equivalent to more than 20% of Banco Santander’s deposit base.

For its part, the ‘fully-loaded’ CET1 capital ratio advanced to 12.3%, exceeding the Group’s capital target, due to the outstanding generation of gross organic capital (+45 basis points), which covered charges for a future cash dividend payment corresponding to 2023 results, ongoing share buybacks, and other impacts.

In this sense, Banco Santander’s ‘pay out’ has increased for this year from 40% to 50% of the Group’s attributable net profit, distributed 50% in cash dividend and 50% in share repurchases.

Return on tangible equity (RoTE) increased by 1.3 percentage points to 14.8%, and earnings per share (EPS) grew by 17% to 48 cents. The tangible book value (TNAV) per share at the end of the third quarter stood at 4.61 euros. Considering the cash dividend paid last May against the 2022 results and the first on account of the 2023 profit that will be paid in November, the value created for shareholders (TNAV per share plus the dividend per share) represents more than 8,000 million euros.

Banco Santander estimates that it is “on track” to achieve its objectives for 2023, which imply double-digit revenue growth, a RoTE above 15%, an efficiency ratio of between 44% and 45%, a ‘fully-loaded’ CET1 capital above 12% and a cost of risk below 1.2%.

Ana Botín, the president of Banco Santander, has stressed that this is another “record” quarter, and has pointed out that “This year, we have already increased the tangible book value (TNAV) plus the dividend per share by 12% and the cash dividend per share 39% year-on-year. In an increasingly uncertain environment, the strength of our model and our teams is even more evident. “I have full confidence that we will achieve our 2023 objectives based on the positive momentum we have and that we hope to continue in 2024.”

The credit-to-deposit ratio stood at 100% at the end of September, compared to 108% in the same month of 2022.

Banco Santander points out that its loan and deposit portfolio is “very diversified” in all business lines and geographies, and that deposits maintain a “stable” structure, given that approximately 75% are transactional and more than 80% of Individual deposits are insured with deposit guarantee systems.

The analysis by market reflects the “strong growth” in Europe in these first nine months of the year, which “more than” offset the increase in provisions in North and South America. Thus, the entity obtained a profit of 4,176 million euros in Europe, 49% more, with an increase of almost 37% in the net interest margin, up to 9,555 million euros.

In this way, Europe accounted for 45% of the profit, compared to 25% for South America, 21% for North America and 9% for Digital Consumer Bank.

Spain led the profits by country, with 1,854 million euros, 68% more than in the same period of 2022, although Brazil earned 30% less, up to 1,426 million euros, as a consequence of the costs derived from inflation and provisions.

The United Kingdom contributed 1,243 million euros, 9% more, and Mexico increased its profits to 1,163 million euros, which implies an advance of 19%. In contrast, the United States recorded a decrease of 41%, to 865 million euros, as a result of the normalization of provisions for the retail business, and the seasonality of the automobile business.

Finally, it is worth highlighting the 22% increase in Santander CIB’s profit, reaching 2,680 million euros, due to double-digit growth in income in all regions and main business lines, especially in America.