Santander beats on Q3 net profits, adds to capital buffers
Banco Santander
€4.75
18:16 25/04/24
Spain's largest lender posted better-than-expected third quarter profits even as it strengthened its capital buffers.
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For the three months to September, Santander saw underlying net income climb from -€11.13bn for the prior three-month stretch to €1.75bn, beating analysts' forecasts for €1bn.
Santander's common equity Tier 1 ratio improved as well, from 11.65% at the end of 2019 or 11.84% at the end of the second quarter to 11.98%.
"Given the group’s current performance, the strength of our balance sheet, our liquidity profile and mix of businesses, I am confident that we will be able to resume cash dividends once regulatory conditions allow," group chairman, Ana Botin, said.
Yet just the week before, Spanish central bank head, Pablo Hernandez de Cos, warned of the looming impact of deteriorating asset quality and the risk that a resurgence in Covid-19 infections, together with the unwinding of support measures, could make matters worse."
Underscoring that point perhaps, net interest income declined by 12.4% from a year earlier to €7.77bn, although the group's non-performing loan ratio fell by 32 basis points from a year ago to 3.15%.
Offsetting the decline in net interest income, Santander generated €500m of savings over the first nine months of 2020 and said it was on track to hit a medium-term target of €1bn ahead of schedule, by year end, and that it would deliver a further €1bn in savings by the end of 2022.
Linked to the above, the lender began laying out plans for a reduction in its workforce which according to Spanish daily, Expansion, would impact 3,000 staff.
To take note of, its Brazilian operations turned in a better-than-expected underlying profit of €550m (consensus: €420m).
Over the three months ending in June, Santander had posted the first quarterly loss ever in its 163 year history.
As of 0959 GMT, shares of Santander were rising 2.39% to €1.76 but remained over 50% lower year-to-date.