Santander achieved an attributable profit of €8,143 million in the first nine months of 2023, up 11% in current euros versus the same period last year, as strong growth in revenues, particularly in Europe and Mexico, offset the expected year-on-year growth in provisions. In the third quarter, attributable profit increased 26% (+20% in current euros) versus the third quarter of last year to €2,902 million.
The strength of the results was reflected in a return on tangible equity (RoTE) of 14.8% (+1.3 percentage points); earnings per share (EPS) of 48 euro cents, up 17%, and tangible net asset value (TNAV) per share on 30 September at €4.61.
Including the cash dividend paid last May against 2022 earnings and the interim dividend against 2023 earnings to be paid in November, TNAV per share plus cash dividend per share was 12% higher year to date.
In the first nine months of the year, the value created for shareholders (TNAV + cash dividend) is equivalent to more than €8 billion.
Customer funds grew 5%, with deposits up 4%, supported by both individuals and Corporate and Investment Banking (Santander CIB). Customers continued to utilize excess deposits to pay down debt in the quarter, particularly mortgages. For that reason, as well as a reduction in demand in some markets due to higher interest rates, total loans were down 2%, with consumer lending up 7%.
Deposits maintain a stable structure: approximately 75% are transactional, and more than 80% of retail deposits are insured with deposit guarantee schemes.
In total, income increased 13% to €43,095 million as the bank added nine million customers, taking total customers to 166 million. The rise in both customer activity and interest rates supported a 16% increase in net interest income. Net fee income was up 6% driven by sales of high value products – particularly within the bank’s global businesses. The global businesses represent 38% of total income and 42% of net fee income. Net interest income and net fee income accounted for 96% of the group’s total income, reflecting the quality of the bank’s earnings.
As income growth (+13%) outpaced growth in costs (+10%), the efficiency ratio improved by 1.5 percentage points to 44.0%. The bank continued to reduce costs in real terms (-0.5%).
Loan-loss provisions were up 21% year-on-year, reflecting an expected increase following higher interest rates and inflation, the normalization in the US, as well as additional provisions to cover the Swiss franc mortgage portfolio in Poland. Overall credit quality remained robust, with cost of risk lower than target for the year at 1.13%, and markets such as Brazil are improving its cost of risk for the second quarter in a row. The non-performing loan (NPL) ratio remained broadly stable at 3.13%.
“The group achieved another record quarter with earnings per share up 17% and a return on tangible equity of 14.8%. We have added nine million customers, increased revenues by 13%, and continue to make excellent progress in simplifying the business.” says Ana Botín, Banco Santander executive chair.
