Iñigo Vega (Jefferies) | A 9% net income beat, mainly driven by revenues (trading and other income) and lower other provisions. Strong prints in South EU, alongside Poland and the US, while key geos in Latam and the UK were soft. The print looks good enough to us, with LLPs the only notable miss driven by €100m in extra NPL provisions booked at Corp Centre. FY25 guidance maintained despite EZ rate assumption running 50bps lower now.
Santander reported 1Q25 attributable profit of €3,402m, which was 9% above company-compiled consensus of €3,127m. PBT was a 5% beat, with pre-prov profits a 2% beat. Revenue was a 1% beat, with NII and fees broadly in line, but beats coming from other income and trading income. Costs were in line with consensus, but loan loss provisions were €72m heavier, given a near-€100m provision booked in corporate center for NPL clean-up. The print includes €87m Spanish special banking tax accrual in the tax line. FY25 guidance maintained, despite Santander putting through a lower 1.5% terminal rate scenario now.
Ex-Argentina, attributable profit was a 10% beat, with PBT a 5% beat. Pre-provision profit was a 2% beat. Revenues were a 2% beat and costs were 1% heavier. In Q1’25, the alternative FX rate used for Argentina was c.1,426 compared to c.1,232 in Q4’24.
NII was in line with cons, down 5% q/q and down 5% y/y. Ex-Argentina, NII was a 1% beat.
Fee income was a 1% beat (0.5% beat ex-Argentina). Trading income was a 13% beat (18% beat ex-Argentina). Other operating income of 112m EUR compares to cons of €51m (in line ex-Argentina).
Total costs were in line (1% miss ex-Argentina).
LLP were a 2% miss versus cons (or 4% miss ex-Argentina). However, 12m CoR at 114 bps remains in line with FY25 guidance.
Customer loans were a 1% miss versus cons, up 1% quarter-on-quarter and flat year-on-year. Customer deposits were in line with cons, flat quarter-on-quarter and up 2% year-on-year.
Capital: CET1 ratio of 12.9% was in line with cons, with CET1 4% better but RWAs 3% heavier. The print includes -8bps reg. headwinds.
2025 Guidance maintained, despite a lower terminal rate scenario of 1.5% in the EZ.
Attributable profits by key market:
Spain: 42% beat (€342m, cons was likely pencilling in the special banking tax in relation to 2024 profits, which wasn’t actually booked. Better NII driven by volumes and cost of deposit management)
UK: 21% miss (down €74m)
Portugal: 28% beat (€60m)
Poland: 13% beat (€27m, on lower CHF provisions)
Brazil: 9% miss (down €49m, on NII miss driven by the higher rates, fee headwinds given seasonality and lower volumes in 1Q25 and higher provisions given higher inflation and the rates environment). Earnings pre-minorities up 3.8% year-on-year in BRL, down 22% quarter-on-quarter. Revenue up 5.2% year-on-year, opex up 4.8% and LLCs up 14.7% on loan growth of 2.8% year-on-year. LLC was up 7% sequentially with coverage flat)
USA: 38% beat (€114m);
Chile: 1% miss (€1m). Strong performance year-on-year (110% in net income in CLPs) given easy comps. Earnings down 7% quarter-on-quarter. Loans flat year-on-year.
Mexico: 4% miss (down €15m, on lower trading revenues, higher provisions on volumes and macro). Earnings pre-minorities up 11.5% year-on-year in MXN, down 9% quarter-on-quarter. Revenue up 9% year-on-year (8.3% NII and 13.5% fees, opex up 10% and LLC down 4% on loans growing 5.4% year-on-year (below system’s).
DCB: 24% miss (down €60m, on lower fees given lower originations and regulatory headwinds in Europe);
Corp Center: 39% miss (down €111m, on near-€100m provision taken for NPE clean-up and lower trading income given risk transfer initiatives);
Other: €42m beat. Argentina – earnings contrib. of€129m to bottom line, down 55% but aligned with avg. Q contrib. in FY24 (€166m). Loans growing 146% year-on-year in ARS, well above inflation.
