Earn 466 million in Spain, with a 46% increase in interest margin

Banco Santander obtained net attributable profit of 2,571 million euros in the first quarter of 2023, which represents an increase of 1.1% compared to the same period last year, as reported by the entity when publishing its income statement quarterly.

If the impact of the temporary tax on bank income is not taken into account, which involved a disbursement of 224 million euros, the net result of the financial institution would have been 2,795 million euros, which would mean an advance of 10 %.

Compared to the previous quarter, Banco Santander experienced a deposit outflow of 10,773 million euros in the period from January to March, for which they stood at 998,949 million euros. However, the entity has stressed that the problems of the medium-sized banks in the US and Credit Suisse experienced in the month of March "do not apply" to Santander.

"85% of the bank's deposits are from individual clients and companies, and approximately 80% of individual deposits are insured with deposit guarantee systems," the financial institution stressed. It has also highlighted the diversification of its sources of financing and assets between countries and businesses, as well as the fact that it has 300,000 million in liquidity reserves between cash and central banks.

The loan and advance portfolio experienced an increase of 3% compared to last year, up to 1.041 trillion euros thanks to the boost in all areas except Europe, where due to Spain and Poland the balances fell due to the drop in credit to companies and the early mortgage repayments.

Non-performing loans fell by 21 basis points compared to the previous year, to 3.05%, thanks to declines in Europe (to 2.35%) and in Digital Consumer Bank (2.05%), although it increased in North America (2.95%) and in South America (5.99%).

The 'fully loaded' CET1 capital ratio, the highest quality, reached 12.2% in the quarter, which represents an improvement of one tenth compared to a year earlier and two tenths in the quarter. Santander has highlighted that the generation of organic capital (24 basis points) offset the impact of 25 basis points of cash dividend payment and share repurchases. The rest of the increase is due to positive impacts at the regulatory and market level.

Regarding profitability, the return on tangible capital (RoTE) was 14.38% at the end of the first quarter. This is an improvement of 17 basis points compared to a year earlier and 162 basis points compared to the last quarter of 2022.

"If the impact of the tax were distributed throughout the year (56 million per quarter), the return on tangible capital in the first quarter would be 15.3%, on track to reach the target for the year," the company added.

BANK INCOME.

The total income (gross margin) of the bank led by Ana Botín was 13,935 million euros between January and March, which is equivalent to an increase of 13% compared to the same period in 2022.

Of this figure, interest income (interest margin) was 10,396 million euros, 17.4% more than in the first quarter of 2022. Santander has highlighted the "particularly high increase" in Portugal (54%), Poland (47%) and Spain (46%). It has also warned that although in South America the volumes grew by double digits and interest rates rose, this is not appreciated in the results "due to the negative sensitivity of some countries", as is the case of Brazil or Chile.

In parallel, net fee income increased by 8.2% in the year, to 3,043 million euros, which Santander has attributed to the scale of the bank and its global businesses.

Likewise, the company has explained that the "strong rise in inflation" caused a general increase in operating costs, which reached 6,145 million euros, 11% more. Of this figure, personnel expenses were 3,245 million, 13.3% more, while the rest of administrative expenses were 2,111 million euros, 7.3% more.

If the effect of prices is discounted, in real terms costs fell by 1%, something that the bank has attributed to the improvement in productivity and active management. Thus, the group's efficiency ratio improved by 90 basis points, to 44.1%.

RESULTS FOR SPAIN.

Regarding the results of the bank only in Spain, Banco Santander's attributable net profit was 466 million euros, 27.7% more than in the first quarter of 2022.

Total revenue (gross margin) in Spain was 2,547 million euros, 26% more. This is due to the 46.4% increase in commission income (interest margin), up to 1,460 million euros, which was offset downward by the increase of only 0.8% in commission income, up to 752 million euros.

On the other hand, administration and amortization expenses experienced a year-on-year increase of 4.3%, reaching 1,014 million euros.

With regard to the balance sheet, Banco Santander closed the quarter with a portfolio of loans and advances in Spain of 248,586 million euros, 3.2% less than a year ago, while customer deposits increased by 7 .9%, up to a total of 310,954 million euros.

Likewise, profitability in Spain experienced a year-on-year increase of 371 basis points, to 11.09%, while the non-performing loan ratio contracted by 128 basis points, to 3.19%.

At the end of the quarter, Santander had 14.49 million total customers in Spain (5.4%), of which 7.97 million were active customers (4.7%). The number of employees was 27,047 (3.6%), although branches fell to 1,909 (-2.1%)

"Despite the fact that the macroeconomic environment remains uncertain, we continue to increase the customer base, with which net customer acquisition reached the nineteenth consecutive month of growth," the financial institution explained with respect to Spain.