Santander continues to enjoy the best of possible scenarios. The rate increases shoot up results to record levels without provisions for insolvency or defaults threatening the business for the moment.
Profits in the first nine months of the year were 8,143 million euros, 13% more than in the same period of the previous year and a record figure. In terms of earnings per share, the increase was 17%, since the bank has repurchased shares and the result looks better.
One of the reasons for the new rebound in profits is in the country of origin, Spain, which contributed 1,854 million euros and which, of all where the bank operates, was the one that increased the result the most, 68%. He did so despite the banking tax implemented by the Government, which forces the bank to disburse 224 million this year.
With its improvement in profits, Spain becomes the country that contributes the most to net profit. It exceeds the 1,243 million in the United Kingdom, 12% more, the 1,163 million in North America, 19% more, or the 1,426 million in Brazil, 30% less.
The bank’s income increased by 13%, to 43,095 million euros, not only due to the greater difference between what was obtained with loans and what was paid for deposits, but also due to the increase by nine million in the number of clients, up to 166. millions. The interest margin rose by 16% and commissions by 6%.
Rate hikes boost business, but they also put it to the test. Provisions for bad debts increased by 21%, up to 9,037 million euros, which represents an “expected increase following the increase in interest rates and inflation, normalization in the United States and greater coverage of the mortgage portfolio in Swiss francs in Poland,” says the bank.
The cost of risk was 1.13%, below the annual target, while the non-performing loan ratio remains stable, at 3.13%. The group has a liquidity of 161%, well above the 100% objective – this regulatory requirement implies the ability to withstand a continuous outflow of cash for thirty days -, while the good quality capital ratio is 12.3 %, also higher than what the ECB asks of you.
“We have achieved another record quarter, with an increase in earnings per share of 17% and a return on tangible capital of 14.8%,” says the bank’s president, Ana Botín, before highlighting the strengthening of the global network.
“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,” he adds.
The objectives for the year as a whole consist of a double-digit increase in income, a profitability measured in terms of RoTE above 15% and quality capital above 12%, in addition to a cost of risk below 1 ,2%.
Botín also explains that the bank continues to make progress in simplifying its business, which has become one of the great challenges of the new CEO, Héctor Grisi. The objective is to reduce the bank’s large number of products to simplify the offer and give it a global implementation.