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Last update: 25/04/2023 - 14:30
Banco Santander achieved an attributable profit of €2,571 million in the first quarter of 2023, up 1% in current euros versus the same period of 2022, supported by strong growth in customer activity, robust asset quality, and good cost control.
Don't miss these key takeways
• Customer activity was solid in the first quarter as the bank added nine million customers year-on-year (yoy). Loans and deposits grew by 3% and 6% respectively in the same period in constant euros (i.e., excluding currency movements), supporting solid growth in net interest income (+14% on the same basis), boosted by Europe and North America.
• Fee income was up 7% yoy in constant euros, with particularly good growth in payments, Santander CIB, and Wealth Management and Insurance - reflecting the strength of the group’s global and network businesses, which together represent 43% of fee income and 39% of total income.
• The group’s efficiency ratio improved further to 44.1% as growth in income outpaced growth in operating expenses, despite inflationary pressures and investments in technology and digitalization.
• Credit quality remained solid. While loan-loss provisions were up yoy, mainly due to the normalization in provisions in the US as highlighted in previous quarters, provisions fell 3% in constant euros compared to Q4 2022 and cost of risk remained low at 1.05% - below the bank target for the year (less than 1.2%).
• The recent AGM approved a final cash dividend against 2022 of 5.95 euro cents per share, payable from 2 May 2023, meaning the total cash dividend charged against 2022 is up 18% versus the previous year at 11.78 euro cents. The board has approved a new remuneration policy, increasing payout from 40% to 50% of attributable profit in 2023.
• The bank remains on track to meet the 2023 targets outlined in February, including: double-digit income growth; RoTE above 15%; cost-to-income ratio of 44-45%; fully-loaded CET1 above 12%, and cost of risk below 1.2%.
We are progressing well in our simplification and commercial transformation, and the increasing value of the group is again evident in our results, with 39% of total income coming from our global and network businesses.
The full-year impact of the temporary levy in Spain was recorded in the first quarter (€224 million). Excluding this impact, attributable profit would be €2,795 million, up 8% (+10% in current euros).
The group continued to grow its customer base, adding nine million customers in the last 12 months, taking the total to 161 million. Customer funds grew 5% to €1.12 trillion, with good growth in deposits (+6%) in all regions, supported by individuals and Corporate and Investment Banking (Santander CIB). Seasonal draw downs in Santander CIB in January led to a 2% decrease in deposits since the end of last year; however, deposit volumes increased again from February, reflecting positive business trends.
Total loans increased 3%, with mortgages and consumer lending up 2% and 9%, respectively. The bank’s loan book remains well diversified across both business lines (mortgages, companies, auto, CIB) and geographies.
Santander’s ongoing focus on customer loyalty and digital innovation enabled the bank to achieve a top-three position in customer satisfaction in eight countries based on net-promoter score (NPS) rankings. The group continues to make progress on simplifying its product offering and accelerate its digital transformation to offer better services to customers and build a digital bank with branches.
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