Santander 2018 results present a mixed picture. For the full calendar year, group net profit rises 18% year-on-year to €7.8bn.
In particular, Santander reports strong performances in Brazil, Spain, Mexico and the US.
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Attributable profit for fiscal 2018 in Brazil is up by 22% to €2.6bn. In Spain, profit is up by 21% for the full year to €1.7bn. But in the UK, Santander’s third most profitable market, underlying profit is down by 8% to €1.36bn.
Elsewhere, underlying profit rises by 14% year-on-year in Mexico to €760m while the US reports a 42% increase to €552m.
Santander 2018 results: missed UK targets
Santander UK says its results reflect competitive revenue pressures, higher regulatory and strategic project costs in the current uncertain environment.
The bank’s UK arm missed a number of targets in 2018. It set a 2018 cross-sell goal of having 4.7 million customers with more than one product. In 2018, that figure rose by 4% or 200,000 to 4.1 million.
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By GlobalDataSantander UK is also aiming for 6.5 million UK digital customers. In 2018, that figure rises by 10% to 5.5 million.
In 2018, Santander UK’s cost of deposits inched up by 4 basis points to 0.67%. UK operating expenses are up by 4.7% to €3bn and Santander expects a further increase this year.
The UK performance is not however all gloomy. Provisions decrease by 14% and the cost of credit remains stable at just 7 basis points.
Santander 2018 results: UK digital highlights
Santander retains 55% of refinanced mortgage loans online in 2018. In addition it also opens 43% of current accounts and 65% of credit cards through digital channels.
And group wide, Santander reports positive digital metrics. Total digital customers increase by 26% in 2018 to 32 million. Santander is also developing new independent digital businesses in order to support the core bank as well as to offer disruptive products and services:
Openbank, Santander’s digital sub-brand is now starting to expand internationally.
In 2018, Openbank mortgages are up by 370% with deposits ahead by 19%.
Santander is also continuing to rightsize its branch network. In January it announced plans to close 140 of its branches in the UK. Santander retains a nationwide network of 614 branches following the proposed closures.
At the same time, the bank says that 100 of its branches will be refurbished over the next two years through an investment of £55m. The refurbishments will include a range of changes with a focus on personal service, convenience and community engagement.
Group wide, Santander ends 2018 with 13,217 branches, down by 3.5% or a net 480 outlets since December 2017.
Executive chair of Santander Ana Botin says: “2018 has been an excellent year for the Group. We have successfully completed our three year strategic plan. Our focus on earning customer loyalty and digital transformation has been central to our success.”
Notably, one of the key three year targets hit is the bank’s cost income ratio. In fiscal 2018 it is down by 1 percentage point to 47%.
