By Xavier Fontdegloria
Banco Santander SA’s net profit increased by more than expected in the first quarter as higher revenue offset a rise in loan-loss provisions.
The Spanish bank–one of the eurozone’s largest lenders–said Tuesday that it posted a quarterly net profit of 2.54 billion euros ($2.72 billion), a 58% increase from the same period a year earlier, and backed its targets for the full year.
Analysts had expected the bank report a net profit of EUR2.35 billion, according to a consensus forecast provided by FactSet. In 2021’s first quarter, earnings were hit by a one-off restructuring charge worth EUR530 million.
Total revenue rose to EUR12.31 billion from EUR11.39 billion. Net interest income–the difference between what banks earn on loans and pay clients for deposits- increased by 11% to EUR8.86 billion, and net fee income rose 10% to EUR2.81 billion. Net loan loss provisions increased by 5.5% to EUR2.10 billion.
“While inflation will affect the pace of global economic growth, with specific impacts varying across our regions and businesses, we are reiterating our 2022 targets,” Chairman Ana Botin said.
Banco Santander expects an underlying return on tangible equity–a key measure of profitability–of more than 13% in 2022. The underlying RoTE in the first quarter stood at 14.21%, it said.
The bank’s fully-loaded core Tier 1 capital ratio, a measure of resilience, stood at 12.12% in March, unchanged from December 2021. The rate was at 12.05% after including the impact of the acquisition of US fixed-income broker Amherst Pierpont, which closed in April. Santander aims to maintain a fully-loaded CET1 of 12% this year.
Write to Xavier Fontdegloria at [email protected]
Credit: www.marketwatch.com /