SAN - Banco Santander stock gains after strong profit growth guidance reaffirmed

2023-07-26 11:38:00 ET

Banco Santander ( NYSE: SAN ) American depositary receipts ((ADRs)) climbed 4.4% in Wednesday morning trading after the Spanish lender saw its Q2 attributable profit rise 14% Y/Y, helped by its efficiency initiative. That puts the bank "well on track" to achieving 2023 financial targets, it said.

Q2 net interest income of €10.5B ($11.6B), exceeding the Visible Alpha consensus of €10.4B, increased from €10.4B in the previous quarter. For H1 2023, net interest income increased almost 14% Y/Y to €20.9B.

Net fee income of €3.06B edged up from €3.04B in the previous quarter.

Net loan-loss provisions of €2.90B, lower than the €3.06B Visible Alpha estimate, rose from €2.87B in Q1 and from €2.63B in Q1 2022.

Attributable profit rose to €2.67B, up 4% Q/Q and 14% Y/Y.

"The acceleration of structural changes towards a simpler and more integrated model through One Transformation, which we are expanding across the group, is driving efficiency and profitable growth," the company said.

Operating expenses rose to €6.33B in Q2 from €6.15B in Q1 and from €5.90B in Q2 2022.

Q2 efficiency ratio of 44.3% compared with 44.1% in the prior quarter and 46.0% in the year-ago period.

Gross loans and advances to customers stayed stable at €1.02T at June 30, 2023, roughly flat with March 31.

Return on equity improved to 11.56% in Q2 from 11.38% in Q1.

The company sees achieving 2023 targets ,  including: double-digit income growth; RoTE above 15%; cost-to-income ratio of 44-45%; fully-loaded CET1 above 12%, and cost of risk below 1.2%.

Earlier, Banco Santander ( SAN ) GAAP EPS of €0.16, net interest income of €10.74B.

More on Banco Santander:

• SAN at high risk of cutting its dividend
• A look at Banco Santander's previous income statements
• Banco Santander: Strong Liquidity Position, Trading at Just 5.5x Earning s

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