Santander Q1 2023 net profit rises by 1% year-over-year to €2.57bn, beating analyst forecasts. The first quarter earnings are boosted by a rise in lending income. That helps to offset a rise in provisions and the effects of a Spanish banking levy.
Ana Botín, Banco Santander executive chair, said: “It has been a strong start for the year. Income is 13% higher than last year driven by growth in customers and volumes. Lending and deposits are up 3% and 6%, respectively. Double-digit income growth, improved efficiency and robust credit quality drove our return on tangible equity to 14.4%. That is up from 13.4% in 2022, while our balance sheet remains rock solid.
“Despite recent volatility, we are on track to meet our 2023 targets. That is, achieving 5% increase in tangible net asset value per share plus cash dividend per share since the start of the year.”
Santander Q1 2023 highlights
- Fee income rises by 7% y-o-y in constant euros, with particularly good growth in payments, Santander CIB, and Wealth Management and Insurance;
- Santander’s cost income ratio of 44.1% in Q1 2023 is down 90 basis points from 45.0% in the year ago quarter;
- Total customer numbers rise by 9 million from a year ago to 161 million;
- Growth in customer activity supported a 14% increase in net interest income and
- Santander’s non-performing loan ratio of 3.05% is down 21 basis points year-on-year.
Santander Q1 2023 UK profit +11% y-o-y
In the UK, attributable profit for the first quarter is by 11% y-o-y to €395m. Total income increases by 12% driven by strong net interest income growth. The bank’s ongoing simplification and digitalisation helped to reduce the cost-income ratio to eff49.3%. Some 92% of new current accounts are now opened through digital channels. Customers numbers rise by nearly 200,000 supported by ISA (saving accounts) products.
Santander Q1 2023: profits fall in US, South America
On the other hand, Santander US profit drops by 51% y-o-y to €300m. Santander says that this is largely due to higher funding costs in the auto business and the expected normalisation in credit performance.
Profit also drops in South America, down by 14% to €790m. The fall is attributed to higher provisions and an increase in costs due to inflation. Santander added more than six million customers to nearly 71 million in the region, thanks to strong growth in Brazil.
The bank’s digital consumer bank unit, including Santander Consumer Finance and Openbank businesses also report a drop in profits. Specifically, an attributable profit of €244m, down 12%, affected by the normalisation of provisions and the temporary levy in Spain. Openbank, the largest 100% digital bank in Europe by deposits, reached two million customers for the first time.
Santander ends the first quarter with a global branch network of 8,993 outlets. That is a net reduction of 255 units, or 2.8% from the year ago quarter.