Accounts for an impact of 335 million euros due to the temporary tax on banks
Santander obtained an attributable profit of 2,852 million euros in the first quarter of 2024, 11% more in current euros compared to the same period of the previous year, as reported this Tuesday to the National Securities Market Commission (CNMV).
The bank’s profitability and shareholder value increased in the first quarter, with a return on tangible equity (RoTE) of 14.9%, which rises to 16.2% if the impact, of 335 million euros, of the temporary tax on banks in Spain, recorded entirely in the first quarter.
These results are supported by the “strong growth” of the net interest income in all businesses and all regions, the increase in the number of clients, and the control of costs, which “more than” offset the expected growth of the provisions.
Revenue increased by 9% to a record €15.38 billion. The increase in both customer activity and interest rates led to a 16% increase in net interest income, up to 15,045 million euros, with growth in all businesses. The gross margin, for its part, advanced 8.1% in the quarter, with an increase of 8.1%.
Fee income increased by 5%, to €3.24 billion, the highest figure in a quarter, thanks to sales of value-added products, especially in corporate and investment banking (CIB) in the United States, and the greater activity in the retail business, with growth in all regions, and consumer financing. More than 95% of revenue comes from customers.
Revenue growth, of 9%, exceeded cost growth of 5%, which improved the efficiency ratio by 1.5 percentage points, to 42.6%, in line with the objective for the year of maintaining it below 43%, which the bank attributes to the transformation it is carrying out, which allows lowering the unit cost per client. This trend is “especially visible” in retail banking, where the efficiency ratio has improved by almost four percentage points, from 45% to 41.1%.
Customer funds (deposits plus investment funds) grew by 5%, with an increase in deposits of 3%, due to the 24% increase in time deposits, in the current context of higher interest rates, and the increase of five million customers. Total loans remained stable at €1.02 trillion, as growth of 4% in Consumer thanks to the automotive business in Europe and Brazil, 4% in Asset Management (Wealth) and 7% in Payments ) offset a 2% decline in Retail and 1% in CIB due to lower volumes in Spain and Brazil.
Provisions for bad debts increased by 7%, as a result of the expected normalization in the financing business. The bank highlights, however, that credit quality remained “solid”, with the cost of risk at 1.20%, in line with the annual objective. The non-performing loan ratio remained stable, at 3.10%.
In terms of solvency, the ‘fully loaded’ CET1 capital ratio remained at 12.3%, above the group’s target. In the first quarter, the bank generated 32 basis points of capital, which offset the charge it made for future dividend payments and share buybacks for 2024 results.
It should be remembered that Santander’s remuneration policy contemplates a profit distribution – pay out – of approximately 50%. If the group achieves all its 2024 objectives, in accordance with this policy, the cash dividend and buybacks charged to the results of this year would exceed 6,000 million euros.
The president of Banco Santander, Ana Botón, commented that the entity has had a “very good start to the year”, with revenue growth of 10%, while costs have remained the same compared to previous quarters.
“With this, we achieved a return on tangible capital of 16.2% in the quarter, annualizing the impact of the temporary tax on banks in Spain, and a growth of 14% in TNAV plus cash dividend per share. In the quarter we made progress in all businesses, with Retail increasing profit by more than 20% thanks to the growth of net interest income in Europe and America, while the growth of commission income from CIB and Wealth also accelerates sensitivity. positive to the interest rate cuts in some businesses, especially in Consumer,” he explained.
“Once again, we are on track to meet all of our targets for the year, including a 16% RoTE. We will continue to invest to better serve our 166 million customers, continue to grow and achieve attractive returns for our shareholders. I am very grateful to all employees for making it possible,” he concluded.
EVOLUTION OF GLOBAL BUSINESS
On the one hand, the attributed profit of Retail
Digital Consumer Bank generated an attributable profit of 464 million euros, 5% less, due to the impact of the normalization of the cost of risk and despite the good evolution of the net margin, which increased by 7% due to the 4% growth of income and cost control. Loans increased by 4%, 5% more in auto, in a context that is beginning to show signs of recovery.
CIB recorded an attributable profit of 705 million euros, 5% less, as the business has been investing in new products and new capabilities, according to Banco Santander. The business dynamics were very positive, with a growth in customer activity that led to a record quarterly income of 2,112 million euros, 5% more.
Wealth Management
Finally, Payments generated an attributable profit of 137 million euros, 22% more thanks to lower provisions. In PagoNxt, which brings together Santander’s most innovative payment businesses, the EBITDA margin increased by 9.5 percentage points to 17% and the total volume of payments in merchants (Getnet) increased by 14%, to €53.7 billion . Cards, which manages about 100 million cards worldwide, increased turnover (use of those cards) by 6%, to 78.3 billion euros.
