Banco Santander earned a record 8,143 million euros in the first nine months of the year, up 11.3%, thanks to improved revenues, especially in Spain, which means it is already assured that this year it will obtain a result of more than 10,000 million euros, the highest figure in its history.
In this way, the group will achieve the milestone set in 2007 by the then chairman, the late Emilio Botín, before the outbreak of the financial crisis, and which now, sixteen years later and with Banco Popular already within its perimeter, will be achieved by his daughter and successor, Ana Botín.
The results could even be close to 11,000 million, as the rise in interest rates paves the way for the bank to obtain a return close to 15%, a goal confirmed on Wednesday by the CEO, Héctor Grisi, both to analysts and at a press conference.
But the group’s chief financial officer, José García Cantera, pointed out that even with this profitability, the cost of capital, one of the indicators most closely followed by the market, is not covered, so the bank is still trading below its book value.
Banco Santander pays almost 300 million for the special tax on banks
Although the top management of Santander insists that they allocate a third of their results to shareholder remuneration, another third to boosting the business and another third to paying taxes, they repeat that the special tax on the sector is discriminatory and hope it will be eliminated.
“We understand that taxes must be collected,” said Grisi, before calling for equal treatment for all companies, whatever their sector, which does not mean that everyone has to pay more, and without going into the possibility of a new coalition government maintaining the tax on banks, which was to be temporary.
This levy led Santander to pay 224 million this year based on 2022 revenues, which would rise to almost 300 million in the next two years.
By the end of 2023, the improvement in banking revenues in Spain is 30%, which will bring the 224 million to more than 291 million.
Deposit remuneration will depend on market developments
As for the remuneration of deposits, which is still not being paid across the board, Santander’s number two repeated the idea that it will depend on how the market evolves, with “strong competition”, shortly after highlighting that Santander continues to attract customers, including in Spain.
With regard to the fall in credit, the bank reiterates that it has not turned off the tap and continues to approve the same percentage of operations, the problem is that demand has fallen although, they insist, loans are still cheaper than in other European countries, “even in Germany”.
Also, it is still noticeable that people are using savings made during the pandemic to repay their debts, especially mortgages, which has contributed to the fall of almost 3 % of the overall credit portfolio.
Spain again surpasses Brazil as Banco Santander’s highest earning subsidiary
Of the aforementioned EUR 8,143 million earned by Santander worldwide, EUR 1,814 million came from Spain, beating Brazil for the second consecutive quarter as the subsidiary that earned the most money (EUR 1,426 million, 30% less because of inflation and provisions).
In general, geographical and business diversification continued to favour the global accounts, allowing the growth of some, such as Europe, to offset the decline in others, marked by the increase in provisions, such as North and South America.
The group earned 4,176 million euros in Europe, which includes Spain and Poland, 49% more, while in South America – Brazil, Chile, Argentina, Uruguay, Peru and Colombia – net profit fell 16% to 2,329 million.
In North America, which includes the United States and Mexico, the bank earned EUR 1,900 million, 19% less than a year earlier, mainly due to higher provisions in the US, which neutralised the good results in Mexico.
In the global accounts, revenues in the period rose 13% to 43,095 million euros, compared with costs of 18,961 million, which increased 10% and led to an improvement in the efficiency ratio of 1.5 percentage points to 44%.
More fee income from value added products
Banco Santander’s fee income increased 6%, driven by sales of value added products, particularly in the bank’s global businesses.
Loans and advances to customers declined 2.7% to EUR 1.039 trillion, while customer funds rose 5.1%, with deposits up 4% to EUR 1.034 trillion, thanks to growth in retail customers and Corporate & Investment Banking.
Customers continued to use excess deposits to repay debt, especially mortgages, which, together with the decline in demand in some markets due to higher interest rates, resulted in the aforementioned fall in the total loan portfolio, although consumer finance increased by 7 %.
The NPL ratio rose to 3.13 % from 3.08 % a year ago, with NPL coverage at 68 %, slightly worse than the previous 70 %.