Santander made a profit attributed of 2,852 million euros andIn 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 distributed evenly throughout the year 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 interest margin in all businesses and all regions, in increasing the number of clientsand in cost control, which “more than” compensated for the expected growth in 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 interest margin, 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%.
Commission income increased 5%, up to 3,240 million euros, 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 greater activity in the retail business, with growth in all regions, and financing at consumption. 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 keeping 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 trillionsince 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 decrease of 2% 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 the future payment of dividends and the repurchase of shares corresponding to the 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 of its 2024 targets, in line with this policy, the cash dividend and buybacks charged to results This year they 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 10% growth in incomewhile costs have been maintained 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 the interest margin in Europe and Americas, while CIB and Wealth fee income growth accelerates. The positive sensitivity to interest rate cuts in some businesses also helps us, especially in Consumer,” she explained.
“Once again, we are on track to meet all our targets for the year, including RoTE of 16%. We will continue investing to provide better service to our 166 million customers, continue to grow and achieve attractive returns for our shareholders. I am very grateful to all the employees for making it possible,” she concluded.
Evolution of global business
On the one hand, the attributable profit of Retail & Commercial Banking (retail and commercial banking) grew by 22%, to €1,503 million, in the first quarter of 2024, thanks to strong growth, 14% of income and to lower provisions, which fell 2%.
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 rose 7% amid 4% revenue growth 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 gave rise to a record quarterly income of 2,112 million euros5% more.
Wealth Management & Insurance, which encompasses the group’s private banking, asset management and insurance businesses, increased attributable profit by 25% to 400 million euros, thanks to the growth of 18% in private banking income and 24% in Santander Asset Management, as well as good cost management. In addition, the unit reached a historical maximum in assets under management of 482,000 million euros, 14% more.
Finally, Payments generated an attributable profit of 137 million euros, 22% more thanks to lower provisions. At PagoNxt, which brings together Santander’s most innovative payment businesses, EBITDA margin increased by 9.5 percentage points to 17% and the total volume of payments in businesses (Getnet) increased by 14%, to 53.7 billion euros. Cards, which manages about 100 million cards worldwide, increased turnover (use of those cards) by 6%, to 78.3 billion euros.
