Santander Bank reported attributable profit of 7,316 million euros for the first nine months of 2022, a 25% rise in current euros versus the same period a year earlier according to the bank on Wednesday.
Excluding the one-time 530 million euro expense in the first nine months of 2021, ordinary profit grew by 15% in current euros.
In the third quarter, attributable profit was 2,422 million euros, up 2% (11% in current euros) after accounting for a net fee of 181 million euros tied to new moratorium schemes in Poland.
Profit before tax reached 11,761 million euros, down 6% (up 3% in current euros) and taxes on profits stood at 3,538 million euros, yielding an effective tax rate of 30%.
The macroeconomic environment is expected to stay challenging as Europe and North America adjust to inflation levels not seen in decades. Yet the bank notes that its teams have substantial experience in managing such conditions and expects higher revenues to offset rising costs and risks, a stance reaffirmed by President Ana Botín.
The leadership also emphasized that the group maintains a track record of rising profitability, with earnings per share growing 31% annually, which supports continued increases in TNAV and cash per share dividends, reinforcing value for shareholders.
way to achieve goals
Santander highlighted progress toward its revenue, profitability and capital targets for the year, despite inflationary pressures and efforts to boost productivity for 2021 while closing the year.
The Board intends to distribute about 40% of ordinary profits to shareholders in 2022, with the distribution split roughly evenly between cash dividends and share repurchases.
the bank stressed that diversification across businesses remains a strong driver of growth.
Ordinary profit for the period rose 32% in Europe to 2,837 million euros and 6% in South America to 2,884 million euros, while North America fell by 9% (up 2% in current euros). Provisions for loan losses reached 2,271 million due to expected normalization. Digital Consumer Bank delivered an ordinary profit increase of 11% to 908 million euros.
Strong activity and higher interest rates in the UK, the euro area, Poland and other markets supported an 8% rise in net interest income (15% in current euros due to currency strength). Notable gains were seen in the UK, Poland, Mexico and Argentina with marked growth.
Wage revenue advanced 7% (14% in current euros) as volumes rose and activity improved.
Overall revenue climbed 5% to 38,629 million euros, with net interest income and fee income making up 97% of group revenue. Specially, net interest income rose 15.4% to 28,460 million euros while gross profit margin increased 11.5% to 38,594 million euros.
Inflation’s sharp rise pushed costs higher by 6%, yet the bank noted these costs fell by 5% in real terms thanks to efficiency gains and better alignment of expenses with markets.
The productivity rate for the first nine months of the year finished at 45.5%, up 0.1 percentage point from the prior year, positioning Santander among the most productive peers.
These results improved profitability metrics, including a RoTE of 13.6% and earnings per share of 0.409 euros, well above the cost of capital, a 31% rise. The goal for 2022 remains a RoTE above 13%.
By September 2022, tangible book value per share stood at 4.31 euros.
TNAV per share plus cash per share showed an 11% increase over the last twelve months, with an update anticipated in November 2022.
3.08% NPL rate
The group’s balance sheet remains solid with a non-performing loan ratio of 3.08% and 70% coverage, 10 basis points lower than the previous year thanks to solid performance in Europe and the Digital Consumer Bank.
The cost of risk rose by three basis points to 0.86% in the quarter, driven by higher provisions reflecting macroeconomic uncertainty.
Santander also delivered strong organic capital generation in the quarter, with a CET1 ratio of 12.10%. Looking ahead, the group plans to hold this level around 12%.
Despite market uncertainty, the bank maintained strong commercial activity in the period.
Customer funds reached a record 1.13 trillion euros, up 4%, driven by a 6% rise in deposits and a 7% increase in loans to 1.04 trillion euros. Mortgages and consumer loans grew 7%, while lending to companies rose 6%.
Spain
In Spain, ordinary profit for the first nine months reached 1,104 million euros, supported by lower loan loss allowances and cost reductions that lifted overall profitability. The risk profile improved, maintaining a stable non-performing loan ratio of 0.71% (down from 3.69% in the prior year).
Revenues grew 3% on higher commissions, up 6%, across both retail banking and Santander CIB.