Santander’s books record a profit of 9.6 billion euros for 2022 in terms of loan income

  • 2022 makes a profit of 18% to record 9.6 billion euros vs 9.4 bln forecast
  • It is targeting double-digit revenue growth by 2023
  • Shares up 4%

MADRID, Feb 2 (Reuters) – Solid growth in tax and loan income allowed Spain’s Santander ( SAN.MC ) to post 18% profit to a record 9.6 billion euros in 2022, clearing advanced provisions set aside against economic uncertainty. .

The eurozone’s second-largest lender by market value posted a profit in the October to December period of 2.29 billion euros, up 1% from last year and above forecasts 2.07 billion euros by analysts in a Reuters poll.

Net profit in 2022 – exceeding the 9.4 billion euros expected by analysts – was boosted by higher interest rates and revenue, the addition of 7 million new customers, and a performance that firm in its Corporate and Investment Bank branch.

Santander said its core return-on-tangible equity ratio (ROTE), a measure of profitability, ended the year at 13.37% versus 12.73% in 2021. It was targeting ROTE above 15% for 2023.

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By 0928 GMT its shares were up 4%, outperforming Spain’s blue-chip Ibex-35 (.IBEX) index.

In the fourth quarter, loan loss rates more than doubled annually to 3.02 billion euros, mainly in the United States and Brazil, although that was slightly below analysts’ forecasts and following the release of 750 million euros a year earlier.

The borrower’s cost of risk rose to 99 points from 86 points in September. For 2023, it expected the cost of risk to rise but remain below 120 points.

Banks across Europe are beginning to benefit from higher borrowing costs. Santander’s net interest income – loan earnings minus deposit costs – rose 17% to 10.2 billion euros in the quarter, broadly in line with an earlier forecast. Full year NII grew by 16%.

Revenues rose 12% in 2022, above market forecasts, and the bank was targeting double-digit revenue growth for 2023.

It benefited from movements in Latin American local currencies, but results in the region were also marked by rising inflation across emerging markets, particularly Brazil. Overall, the group’s expenses in 2022 have increased by 11.6%.

In Brazil, which accounts for more than a quarter of the group’s earnings, net profit fell by 8% year-on-year in the quarter, and NII fell by 1% against the previous quarter, and risk costs rose to 479 bps from 446 bps. in September.

Core profit in the United States fell 43% in the quarter, while in Britain profits were down 38%, also on higher defaults and charges following a regulatory charge.

This was in contrast to Spain, where profits rose more than six times while provisions fell by 38% in the quarter compared to the same period in 2021, while NII rose by 37%.

In terms of solvency, Santander’s prime 1 rate, the toughest measure of solvency, fell to 12.04% from 12.10% in September, but remained above 12% that it expected.

Santander said the cost-to-income ratio closed the year at 45.8% compared to 46.2% in 2021. It was aiming to be between 44 and 45% for 2023.

($1 = 0.9074 euros)

It reports on Jesús Aguado; additional reporting by Emma Pinedo; Edited by Inti Landauro and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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