Spain leads the profits by country, with a profit of 1,854 million euros, 68% more

Santander obtained an attributable profit of 8,143 million euros in the first nine months of 2023, 11% more in current euros (13% more in constant euros) compared to the same period of the previous year thanks to the strong growth in income, especially in Europe and Mexico, which allowed the increase in provisions to be neutralized, according to the information sent this Wednesday to the National Securities Market Commission (CNMV).

It is worth highlighting that this benefit already takes into account the impact of 224 million euros due to the temporary tax imposed in Spain on banking income. Santander, like the rest of the entities, accounted for the impact on the results of the first quarter.

If only the third quarter is taken into account, the attributable profit increased by 26% (20% more in current euros) compared to the third quarter of 2022, up to 2,902 million euros.

The gross margin grew by 13%, to 43,095 million euros, after increasing the number of clients by nine million, which puts the total at 166 million. The bank explains that the rebound in customer activity and interest rates led to a 16% increase in the interest margin, up to 24,134 million euros, driven by higher volumes in some countries, the increase in interest rates interest rates and margin management.

Likewise, net commissions increased by 6%, to 9,222 million euros, thanks to the sales of value-added products, especially in global businesses. These businesses, together with PagoNxt and auto financing, represent 38% of total income and 42% of commission income. Furthermore, interest margin and fee income account for 96% of the group's total income.

The bank points out that the 13% growth in income exceeded the 10% increase in costs, which has allowed an improvement in the efficiency ratio of 1.5 percentage points, to 44.0%. Expenses stood at 18,961 million, of which personnel were 10,080 million, 13% more than in the same period of 2022. The costs in real terms, that is, eliminating the impact of average inflation, were reduced by 0.5%.

Provisions increased by 21% year-on-year, an increase expected by the bank 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.

The non-performing loan ratio stood at 3.13%, slightly above that recorded in both June and September in 2022. The cost of risk was, at the end of the third quarter, 1.13%, below the target set for the year as a whole, and markets such as Brazil have improved this indicator for the second consecutive quarter.

On the other hand, the group's liquidity coverage ratio rose slightly to 161%. As of September 2023, the liquidity buffer exceeded €331 billion, of which €210 billion was cash, equivalent to more than 20% of the bank's deposit base.

The 'fully-loaded' CET1 capital ratio grew to 12.3%, above the group's capital target, thanks to the strong generation of gross organic capital (45 basis points), which offset charges for a future payment of cash dividend corresponding to 2023 results, ongoing share buybacks and other impacts.

It is worth remembering that Santander's pay out has risen for this year from 40% to 50% of the group's attributable net profit, distributed around 50% in cash dividends and 50% in share repurchases.

Return on tangible equity (RoTE) increased 1.3 percentage points to 14.8%, while earnings per share (EPS) increased 17% to 48 cents. The tangible book value (TNAV) per share at the end of the third quarter was 4.61 euros. Taking into account the cash dividend paid last May against 2022 results and the first on account of 2023 profit to be paid in November, the value created for shareholders (TNAV per share plus the dividend per share ) is equivalent to more than 8,000 million euros, according to the bank.

In this way, the entity indicates that it is "on track" to meet the objectives established for 2023, which include double-digit revenue growth, a RoTE above 15%, an efficiency ratio of between 44% and 45%. %, a 'fully-loaded' CET1 capital ratio above 12% and a cost of risk below 1.2%.

The president of Banco Santander, Ana Botín, has highlighted that this is another "record" quarter. "This year, we have already increased tangible book value (TNAV) plus dividend per share by 12% and cash dividend per share by 39% year-on-year. 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 stated.

2% FALL IN LOANS

Regarding the balance, customer funds increased by 5%, with a growth in deposits of 4% thanks to the increase in retail and Corporate clients

In this way, the ratio of loans to deposits stood at 100% at the end of September, compared to 108% in September 2022.

The bank also indicates that its loan and deposit portfolio is "very diversified" across all business lines and geographies, while deposits maintain a "stable" structure: approximately 75% are transactional and more than 80% of Individual deposits are insured with deposit guarantee systems.

'PULL' OF EUROPE AND MEXICO

By markets, Santander highlights the "strong growth" in Europe during the first nine months of the year, which "more than offset" the increase in provisions in North and South America. Specifically, the European business obtained a profit of 4,176 million euros, 49% more, with an increase of almost 37% in the net interest margin, up to 9,555 million euros.

In this way, Europe accounted for 45% of the profit, compared to 25% for South America, 21% for North America and 9% for Digital Consumer Bank.

In addition, Spain led the profits by country, with 1,854 million euros, 68% more than in the same period of 2022, while Brazil earned 30% less, up to 1,426 million euros due to the increase in costs derived from inflation and provisions.

The business in the United Kingdom earned 1,243 million euros, 9% more, while Mexico raised its profits to 1,163 million euros, 19% more. On the other hand, the United States experienced a drop of 41%, to 865 million euros, due to the normalization of provisions for the retail business and the seasonality of the automobile business.

The 22% increase in Santander CIB's profit stands out, up to 2,680 million euros, thanks to double-digit growth in income in all regions and the main business lines, especially in America.