Santander Q1’18 net up 10% at €2.054 bn, buoyed by Brazil

Banco SantanderBanco Santander

Santander clocked up a 10% year-on-year rise in first quarter net profit to 2.054 billion euros, beating forecasts for 2.01 billion euros in a Reuters poll.

The results were driven by strong growth in its largest market, Brazil. But its operations in Mexico and Spain also boosted group performance.

Santander is the first of the Spanish banks to report first quarter results, which show that it is remains one of the most profitable global entities. Return on tangible equity (RoTE) increased by 29 basis points to 12.4%, while fully loaded CET1 capital ratio rose 16 basis points over the quarter to 11%.

Ana Botin, Santander’s executive chairman said in a statement that this year “has started well, with the group generating double digit profit growth driven by strong results in Brazil, Spain and Mexico, and an improved performance in the US.”

She added that the outlook for 2018 “remains positive” and is “confident” that the Eurozone’s biggest bank by market value will reach its 2018 objectives. These include achieving double-digit earnings per share growth.

In Brazil, which accounts for over 25% of group profits, net profit rose 7% year-on-year in the first quarter of 2018, underpinned by solid loan growth.

In the domestic market, net profit rose 26 percent. Smaller lender Popular, which Santander bought for a nominal 1 euro last June, was consolidated into its accounts from the third quarter of 2017.

The group’s performance in the UK, however, was less positive. Net attributable profit fell 23% to 320 million euros, with revenues affected by strong competition and costs increasing due to higher investments in strategic, digital transformation and regulatory projects. But overall credit quality remained good, with the NPL ratio falling by 14 basis points to 1.17%.

The group’s NPL ratio also fell further during the first quarter to 4.02%, down 135 basis points since the integration of Popular. The cost of credit declined to 1.04%, down 13 basis points since the first quarter of 2017.

The number of clients rose by 3.3 million year-on-year, while lending and customer funds rose 13% and 16% respectively, excluding the exchange rate effect.