Banco Santander (LSE:BNC)’s net interest income flew 16% higher in 2023 as enhanced customer activity coupled with rising interest rates supported the Spanish lender’s bottom line.
When combined with a 5% increase in net fee income, attributable profit surged 21.5% to €11 billion (£9.4 billion), effectively meeting the bank's targets for the year.
In the UK, Santander's annual pre-tax profits climbed by 13% to £2.1 billion in 2023, up from £1.9 billion the previous year.
Group-wide customer funds grew 4%, with deposits up 2%, supported by both individuals and companies.
Overall credit quality remained stable, with the cost of risk for the year at 1.18% and the non-performing loan (NPL) ratio at 3.14%.
Santander’s executive chair Ana Botín commented: “2023 has been a pivotal year for Santander, in which we delivered record results and met all our targets in the right
way.
“We added five million customers, growing revenues and profits at double digits, and increased TNAV plus cash dividend per share up 15%.
“As a result, we will return €5.5 billion to shareholders from 2023 earnings.”
Santander’s 2024 targets include mid-single-digit revenue growth with the cost of risk remaining below 1.2% and a 16% return on tangible equity.
The bank anticipates challenges in the upcoming year, with lower interest rates putting a strain on net interest margins, although it noted that: “We expect the impact of any base rate reductions and pressure on new business margins to be partially offset by increased contribution to income from the structural hedge and pricing discipline”.
London-listed Santander shares rallied 3% following publication of the results.