Banco Santander SA has raised its revenue growth target in 2024.
The mentioned financial institution’s net income for April-June of the current year was fixed at 3.2 billion euros ($3.5 billion). This indicator increased by 20% compared to the result for the same period in 2023. It is worth noting that the bank’s net income for the second quarter of 2024 exceeded the preliminary expectations of analysts interviewed by the media.
Santander’s revenue for April-June of the current year was fixed at 15.67 billion euros. This indicator showed an increase of 9.6% compared to the result for the same period in 2023.
The financial institution stated its intention to focus on cost control.
The bank expects revenue growth in single digits compared to previous averages. The relevant information is contained in the earnings statement, published by the financial institution on Wednesday, July 24.
The key retail business of the lender in the second quarter of the current year showed growth largely due to the indicators recorded in Spain and Brazil, which are the main markets for the lender. In the mentioned South American country, Santander is the beneficiary of cutting interest rates. In this case, the specifics of monetary policy easing are that the appropriate measures are immediately applied to deposits. In Spain, lenders were affected by the fact that the European Central Bank has decided to hold down the cost of borrowing for longer than initially expected.
Santander Chairwoman Ana Botin says that in the second quarter of 2024, the financial institution demonstrated the best efficiency ratio in the last 15 years, amounting to 40.6%. Also, according to her, the lender is currently implementing a new technology platform that helps significantly reduce costs across all units.
Against the background of the bank’s financial statements for the last quarter, the value of its shares in Madrid increased by 1.95%, reaching 4.66 euros per equity. Since the beginning of the current year, the lender’s securities have risen in price by 23%.
Santander Chief Financial Officer Jose Garcia Cantera, during a conversation with media representatives, said that the bank’s management expects the positive dynamic to continue next year. Against the background of a corresponding mood in the context of the perception of the prospects for 2025, the lender increased some of its indicators.
This year, briefly, Santander became the most valuable bank in the European Union, overtaking BNP Paribas SA.
Currently, the financial institution is expanding plans to return capital to investors. The lender has put non-strategic business units up for sale. The bank is also expanding the scope of consumer finance as part of the deal with Apple Inc.
Santander has been actively scaling up its corporate banking activities in recent years. Besides, the lender is betting on payments and consumer businesses. At the same time, the financial institution still relies on retail operations, which account for about 50% of its revenue structure.
Jefferies analyst Inigo Vega says that the dynamic of the bank’s revenue in the second quarter of 2024 was good, especially in the fee segment, and notes a strong result in the United States and Spain.
In the area of corporate and investment banking, a financial institution faced costs that caused a decrease in profits. In this case, expenses have increased against the background of expansion. The lender’s net income in the mentioned business segments for the second quarter of 2024 was fixed at around 700 million euros. This indicator decreased by 1% year-on-year.
The bank has raised its efficiency ratio target for 2024 to about 42%. The target return on tangible equity, which is an indicator of profitability, was also raised to 16%.
The bank’s capital ratio increased to 12.5% in the second quarter of 2024 from the previous 12.3% due to organic generation. The cost of risk remained stable at 1.2%. The non-performing ratio decreased to 3.02% from the previous 3.1%.
As we have reported earlier, Santander Launches Overdraft-Free Checking Accounts.
