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Santander reports highest quarterly profit for 12 years

Published: 12:27 02 Feb 2022 GMT

Banco Santander -

Banco Santander (LSE:BNC) announced its highest quarterly profit for 12 years in the final three months of 2021, as activity rebounded, leading to strong growth in lending and deposits.

Underlying profits in the last three months of 2021 totalled €2.27bn, up 5% versus the previous quarter.

Net interest income grew by 8.7% to €8.72bn in the fourth quarter, beating forecasts for €8.51bn.

For 2021 as a whole, attributable profit came in at €8.12bn, compared with a loss of €8.77bn the year before. The 2021 figure was 25% higher than in 2019, before COVID-19, the group said in a statement.

Full-year underlying pre-tax profits totalled €15.3bn, a rise 65% in constant currencies compared with the previous year.

Revenue totalled €46.4bn, up 7% on 2020, driven by a rise of 5mln in new customers and strong activity across the group’s regions and businesses.

Net operating income increased by 9% year-on-year in constant euros to €25bn on the back of 4% growth in lending and a 6% rise in deposits.

Loan loss provisions dropped 37% as the group released €750mln of the pandemic-related provisions made in 2020. The figure was at the lower end of guidance for a release of €700mln-€1bn.

Turning to its regions, the bank said underlying profit in Europe and North America more than doubled in 2021 compared with the previous year, increasing by 110% and 109% respectively.

In South America, underlying profit increased by 24%.

In the UK, underlying profit was €1.57bn last year, a four-fold rise on 2020, driven by solid volume growth and lower loan-loss provisions. Total income in the UK was up 18%, with net interest income rising 22%, on the back of higher credit volumes and a reduction in cost of funds.

UK net mortgage lending rose by 70% to a record €9bn, with digital customers increasing by 6%.

There was strong growth in digital adoption across the group, with 76% of all transactions in core banks going through digital channels in 2021 versus 55% in 2019.

For the current year, Santander is targeting mid-single digit growth in revenues, a cost-to-income ratio of around 45%, a return on equity (RoTE) above 13% and a payout ratio of 40% of underlying profit.

“Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25% higher than pre-covid levels in 2019," said Santander executive chairman Ana Botín.

"Across all our regions and businesses, we are delivering solid and consistent top-line growth, with the US and UK as standout performers in 2021, and Brazil and Chile the most profitable banks in their peer group."

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