Banco Santander has received a new boost from Credit Suisse. The Swiss entity has increased the target price of the Spanish bank’s share from 4.5 euros to 4.7, and has reiterated its recommendation of ‘overweight’, after the entity chaired by Ana Botín presented its new strategic plan for the period 2023-2025 on Investor Day on February 28.
Credit Suisse analysts believe that Banco Santander’s plan to boost its profitability in all the countries in which it operates is “ambitious” and “encouraging”. The experts of the Swiss entity consider that the plan could increase the organic generation of capital by about 420 basis points, which could imply an excess capital of around 8% of the market capitalization, already discounting a possible regulatory impact of 50 basic points.
Likewise, with a CET1 already located above the set target, and considering the new ‘pay-out’ of 50%, Banco Santander’s free capital flow could favor a reinforcement of the entity’s provisions, and dividends of two digits.
Credit Suisse also increases its estimates on the net profit of Banco Santander for the period 2023-2025, with a profitability of 16%, within the range foreseen by the entity itself chaired by Ana Botín of between 15% and 16% of RoTE by the end of 2025.
In the opinion of Credit Suisse analysts, Banco Santander’s new strategy will provide increases in profitability in the United Kingdom, Spain, and Digital Consumer Bank (DCB), areas currently underperforming, but with greater potential for improvement.
Finally, they underline Banco Santander’s “conservative” growth plan in Brazil, where it is expected to maintain current RoRWA (risk-adjusted return) levels.