Banco Santander SA (SAN) Q3 2024 Earnings Call Highlights: Record Profits and Strategic Growth

GuruFocus News
4 min read

In This Article:

  • Profit: EUR 3.3 billion in Q3, up 12% year-on-year; EUR 9.3 billion for the first nine months, up 14%.

  • Return on Tangible Equity (RoTE): Increased to 16.2%.

  • Efficiency Ratio: Improved by 229 basis points.

  • TNAV Dividend per Share: Increased by 14%.

  • Cash Dividend per Share: 39% higher in 2024.

  • Cost of Risk: Improved to 1.14% year-to-date.

  • CET1 Ratio: 12.5% as of September.

  • Revenue Growth: High single-digit growth supported by solid business dynamics.

  • Net Interest Income (NII): Increased 9% year-on-year.

  • Fee Income: Record levels, contributing to over 95% of total income.

  • Cost-to-Income Ratio: Improved to 41.7% for the nine-month period.

  • Deposits: Increased 12% year-on-year.

  • Consumer Revenue: 9% net operating income increase.

  • Payments Profit Growth: 10% excluding nonrecurring items.

  • PagoNxt EBITDA Margin: Improved to 23%.

  • Share Buyback Program: Up to EUR 1.5 billion underway.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Banco Santander SA (NYSE:SAN) reported a record profit of EUR 3.3 billion for Q3 2024, a 12% increase compared to Q3 2023.

  • The company achieved a 14% increase in profit for the first nine months of 2024, reaching EUR 9.3 billion, supported by strong customer revenue growth across regions.

  • Efficiency improved by 229 basis points, with a RoTE increase to 16.2%, indicating better operational performance.

  • The balance sheet remains solid with a CET1 ratio of 12.5%, comfortably above the 12% target, even after Basel III implementation.

  • Banco Santander SA (NYSE:SAN) continues to enhance its digital platforms, improving customer experience and operational efficiency, as seen in the successful deployment of its global app in multiple countries.

Negative Points

  • Loan loss provisions grew in line with average lending, indicating potential concerns about credit quality.

  • The company faces challenges in managing interest rate sensitivity, particularly in Europe and Brazil, which could impact future NII.

  • There is uncertainty regarding the financial impact of a recent UK motor finance ruling, which could affect future financial results.

  • The NII in current euros is expected to decrease slightly in 2024, reflecting challenges in managing currency fluctuations and interest rate environments.

  • The trading income in Brazil has been weak, impacted by market volatility, which could affect overall revenue performance.

Q & A Highlights

Q: Can you provide more details on the NII performance and expectations for the coming quarters? A: Hector Grisi Checa, CEO, explained that NII in constant euros is up 1%, with the impact of Argentina affecting current euros. The sensitivity of the balance sheet to rate changes is mainly in retail and commercial business, with proactive management to reduce sensitivity. Jose Cantera, CFO, added that Argentina's exchange rate adjustments significantly impacted NII, but measures have been taken to mitigate rate sensitivity, expecting NII to rise in constant euros in 2025.

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