Spain is once again the main geographic market for the benefit of the bank, compared to the US, Brazil and the UK
Banco Santander obtained an attributable profit of 5,241 million euros in the first half of 2023, 7% more in constant and current euros than in the same period of the previous year, as reported this Wednesday.
The bank explains that this result is based on the "strong growth" of revenues, especially in Europe, which neutralized the year-on-year increase in provisions in North and South America.
Revenues grew by 13%, up to 28,234 million euros. The entity points out that the increase was double-digit in all businesses, except for automobiles, affected by the negative sensitivity to the rise in interest rates and by lower income from leasing in the US.
Net interest income reached 20,920 million euros, an increase of 15%, driven by higher volumes in some countries, the increase in interest rates and the management of margins. By region, and at constant exchange rates, growth of 32% in Europe stands out, due to the strong positive sensitivity of the balance sheet in euros to interest rate rises. Within this region, Spain experienced a 57% increase in its margins.
Fee and commission income increased by 5%, driven by sales of value-added products, especially in the bank's global businesses (CIB, Wealth Management
On the expense side, the bank explains that inflationary pressure caused an 11% increase in costs, although the efficiency ratio improved by 1.3 percentage points compared to the first half of 2022, up to 44.2%. , and rose 0.2 points compared to the first quarter of this year. Santander explains that this increase in efficiency is due to an improvement in productivity and a cost reduction in real terms of 1%.
Provisions increased 21% year-on-year, although they remained stable compared to the previous quarter. The entity indicates that the year-on-year growth is mainly explained by the normalization in the United States after the pandemic, as well as by the increase in provisions in Brazil and the increase in the coverage of the mortgage portfolio in Swiss francs, in Poland.
The cost of risk increased slightly in the first quarter, to 1.08% compared to the 1.05% registered at the end of March, although it remains below the target set by Santander for the year as a whole.
For Spain, the bank affirms that credit quality "continued to improve", which led to a reduction in the cost of risk in the year-on-year rate, while it increased slightly in the United Kingdom, Digital Consumer Bank and Mexico.
The NPL ratio also rose slightly, from 3.05% at the end of March to 3.07% at the end of June.
Santander points out that the "strength" of the results was reflected in the increase in profitability and value for shareholders, with a return on tangible capital (RoTE) of 14.5%, which represents an increase of 0.8 percentage points year-on-year, and earnings per share (EPS) of 31 euro cents, 13% more than in the first quarter of 2022.
The fully loaded CET1 capital ratio stood at 12.2%, above the group's capital target, thanks to the generation of gross organic capital that would have offset the charge for the future payment of cash dividends corresponding to the results of 2023 and the cost of the acquisition of the minority interests of Santander México.
At the end of the second quarter, the group's liquidity coverage ratio (LCR), which measures liquid assets against expected short-term cash outflows in a stress scenario, was 158%. As of June 2023, the liquidity buffer, made up of high-quality liquid assets (HQLA), exceeded 300,000 million euros, of which more than 200,000 million were in cash, which is equivalent to 20% of the deposit base from the bank. Approximately 80% of individual deposits are insured with deposit guarantee systems.
THE EVOLUTION OF LOANS, STABLE
On the balance sheet, Santander states that the volume of loans remained stable in the period, with growth in consumer financing of 8%. In addition, he points out that the increases in North America, South America and Digital Consumer Bank were offset by the reduction in Europe, where there has been lower demand from companies and mortgage prepayment.
Customer funds increased by 4%, to 1.13 trillion euros, with growth in deposits of 4% thanks to the increase in retail and CIB customers.
Total clients stood at 163.7 million, 6.1% more than in June 2022, while the bank reached 99 million active clients, increasing by 2 million in the last 12 months. The entity also reports that it has 52.5 million digital customers, after a year-on-year increase of 5%.
In the second quarter, net attributable profit increased by 17% compared to the same quarter of the previous year, to 2,670 million euros.
The president of Banco Santander, Ana Botín, has affirmed that her entity "advances at a good pace" in its objectives of simplifying the business and taking advantage of its global strengths. She highlights the nine million new customers in the last 12 months, which has led to double-digit revenue growth, as well as "solid" credit quality.
"We continue to improve profitability, with a return on tangible capital of 14.5%, and we consistently and organically generate capital, meeting our goal of being above 12%. Thanks to these good results, we create value for investors. shareholders, with an 11% year-on-year increase in tangible book value plus cash dividend per share, and we are meeting all our targets for 2023," he said.
By business units, attributable profit in Europe during the first half increased by 40%, to 2,536 million euros, thanks to strong profit growth in Spain, the United Kingdom, Portugal and Poland. In fact, in Spain, attributable profit increased by 74%, to 1,132 million euros, while in the United Kingdom it grew by 16%, to 818 million euros.
Attributable profit in North America reached 1,346 million euros, 19% less. The behavior of Mexico stood out, where the benefit rose by 23%, while in the United States it fell by 39%.
In South America, attributable net profit fell by 23%, to 1,458 million euros, mainly due to lower profits in Brazil and Chile, while Argentina, Uruguay, Peru and Colombia improved their results.
In Brazil, attributable profit was 823 million euros, 40% less, given the increase in costs derived from inflation, a drop in interest income due to negative rate sensitivity and a change in the profile of risk of bank lending towards higher quality assets.
For its part, Digital Consumer Bank, which brings together the businesses of Santander Consumer Finance and Openbank, obtained an attributable profit of 521 million euros, 7% less, due to the reduction in income from commissions and the temporary tax in Spain .
Santander CIB increased its attributable profit by 28% to 1,876 million euros, while the Wealth Management unit
PagoNxt, which brings together Santander's payment businesses, recorded net losses of 103 million euros.