Santander Strong Q3 Performance: Spanish banking giant Santander has reported impressive third-quarter results, exceeding expectations with a 20% increase in net profit. The bank achieved a net profit of 2.9 billion euros ($3 billion), outperforming the average forecast of 2.77 billion euros from a poll.
Santander, Europe’s second-largest lender by market value, has historically relied on its Latin American operations to offset challenging conditions in Europe. However, it is now benefiting from the higher interest rates prevailing in its home continent. Notably, net profit in Europe surged by 64% year-on-year in the quarter, while South America witnessed a 7% decline.
Chair Ana Botin believes the bank can accomplish its 2023 goals of double-digit income growth and over 15% ROTE. Revenues rose 10% year-over-year, exceeding market expectations and raising the bank’s ROTE to 15.49% from 14.61% in the second quarter.
Although loan loss provisions rose by 19% to 3.27 billion euros, this figure remained slightly above expectations. Investors, however, remain cautious about the potential impact of a global economic downturn on banks.
JP Morgan commended Santander’s robust results, noting that they were “aided by core revenue growth, strong trading income, and a low tax rate.” Nevertheless, the bank’s shares dipped by 0.8% in morning trade, despite having risen over 20% year-to-date.
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Santander’s cost of risk, a measure of the cost associated with managing credit risks and potential losses, increased to 113 basis points (bps) from 108 bps at the end of June. It remained below the bank’s 120 bps guidance for the year.
Santander’s net interest income (NII), representing earnings on loans minus deposit costs, saw an 11.6% year-on-year increase in the quarter, reaching 11.22 billion euros, exceeding analyst estimates of 11 billion.
The bank experienced significant growth in its primary market, Spain, with net profit surging by nearly 60%, accompanied by a 56% increase in NII. Results in Spain were driven by higher returns on loans, primarily due to floating-rate credit, while deposit costs grew at a more moderate pace.
Santander also delivered strong performance in Portugal and Poland, and net profit in the UK rose by 5.7% year-on-year in the quarter.
In Brazil, the bank’s second-largest market, net profit declined by 8.9%, although NII rose by 3.3%, reflecting improved trends. Conversely, net profit in the United States fell by 50.4% due to higher funding costs in the auto business, coupled with a 49% increase in provisions.
Santander’s Tier-1 fully loaded capital ratio, the strictest measure of solvency, increased to 12.3% in September, up from 12.2% in June, as strong capital generation offset accruals for future cash dividend payments and the current share buyback program.
Our Reader’s Queries
Is Santander financially stable?
Banco Santander, S.A.’s Long-Term Issuer Default Rating (IDR) has been affirmed at ‘A-‘, along with the Short-Term IDR at ‘F2’ and the Viability Rating (VR) at ‘a-‘ by Fitch Ratings. The Outlook remains Stable.
What is Santander profit in 2023?
Santander has announced a 7% increase in attributable profit for the first half of 2023, reaching 5,241 million ($5,802 million). This has resulted in a 13% rise in earnings per share compared to the same period last year.
What is Moody’s rating at Santander?
Santander Financial Services plc has received an A1 rating from Moody’s for its long term deposit risk. Additionally, the company has been given an Aa3 rating for its long term counterparty risk by Moody’s.
What are the interest rates for Santander 2023?
Santander now offers a complete range of savings products that can be easily opened online or in-branch. These include the Santander Edge Saver, which offers an impressive 7.00% AER/6.78% gross for 12 months, the Fixed Rate ISA with tax-free interest rates ranging from 5.25% to 5.10% depending on the term length, and the Regular Saver with a 5.00% AER/gross for 12 months. With these options, Santander provides a variety of savings solutions to meet the needs of its customers.