Banco Santander believes that it will continue to obtain benefits from interest rate increases

2023-10-28 09:00:15

Banco Santander believes that it will continue to obtain profits based on increases in interest rates over the coming quarters.

José García Cantera, the financial director of Banco Santander, stated this past Wednesday during the presentation of results for the third quarter of the year that “In Europe we hope to continue benefiting from the repricing of the portfolio in a context of stable or slightly rising interest rates.” “an increase that more than compensates for a possible growth in the cost of deposits in the first half of the year.”

Since Banco Santander accounts for a negative impact of the increase in interest rates in Latin America (less income is received with the increase in rates), the entity chaired by Ana Botín believes that, during the second half of 2023, it will increase its income by the region thanks to the expected decrease in rates.

Santander Bank recorded an attributable net profit of 8,143 million euros between January and September of this year, which represents an advance of 11% compared to the figure for the same period in 2022. In detail, total income increased by 11.1%, up to 42,871 million euros, and interest income grew by 12.9%, to 32,139 million euros.

Héctor Grisi, the CEO of Banco Santander, has emphasized the fulfillment of the objectives for 2023 that were published last February during the Investor Day. Although the return on tangible capital (RoTE) is still at 14.8%, Grisi expects to end 2023 in line with the 15% objective.

As regards Spain, the CEO of Santander Bank has indicated that it is one of the geographies that has benefited the most from the rise in interest rates, and that the revaluation of assets and portfolios will continue during the first half of 2024, at least. Likewise, Banco Santander expects a future increase in customer margin, since costs will remain contained, as no “significant movements” of deposits are observed in Spain.

Héctor Grisi has commented that clients are being “cautious” when it comes to requesting loans, given the possibility that interest rates will continue to rise. This fact, together with higher mortgage repayments, has led to Banco Santander’s loan portfolio in Spain being cut by 10% compared to a year ago. However, Grisi believes that when rates stabilize, “credit will return.”

Regarding the implementation of a digital euro, the CEO of Banco Santander recalled that this possibility will not occur until 2025 or 2026. Grisi has indicated that Banco Santander will continue to “monitor the potential impact” that the digital euro may have on European business. of the group.

Regarding the third quarter of this year, Grisi has stressed that the “solid growth” of the entity has demonstrated “the strength and resilience” of the business model of Santander Bank.

The manager has also highlighted that the entity continues to progress “towards a simpler and more integrated model”, which brings with it improvements in costs and greater value for shareholders.