Santander profit increases 11% driven by interest rate hikes

The great Spanish bank Santander recorded significant growth (+11%) in its net profits in the third quarterthanks to buoyant trading activity fueled by interest rate hikes, such as in the UK, the euro zone and Argentina.

The first Spanish bank, strongly established in Europe and Latin America, obtained 2,422 million euros (about 2,410 million dollars) in profit between June and September. In the same period of 2021, it had obtained 2.17 billion euros ($2.16 billion).

This result, achieved despite a deficit of 181 million euros (about 179 million dollars) linked to a reform of mortgage loans in Poland, was higher than expected by analysts consulted by Factset, who expected on average about 2,150 million euros ($2.14 billion) of bank profit.

During the first nine months of 2022, Santander saw its profits increase 25%, to 7,316 million euros ($7,286 million).

These “good results” are supported by “an increase in income and profitability above the target”, despite the “complicated” macroeconomic context linked to high inflation, the president of the banking group said in a statement, Ana Botin.

The Spanish bank, which has 159 million customers worldwidethat is, about 8 million more than in the third quarter of 2021, indicated that it saw its revenues grow strongly in Argentina (+142% in one year), in Poland (+104%) and in Mexico (+12%) .

“Diversification”

“The geographical and business diversification of the group once again promoted [su] solid and profitable growth”, protecting it to a certain extent from the effects of the war in ukrainesaid Santander, which has no presence in Russia or Ukraine.

Despite these good results, Santander shares fell 3% on the Madrid Stock Exchange at 09:30 GMT, to stand at 2.73 euros, on a stable day (-0.29%).

Earnings are above expectations, analysts at consulting firm Jefferies admitted, but doubts remain about the financial outlook as “inflationary pressures weigh on costs.”

These results come after Spain’s leftist government announced the introduction next year of an exceptional tax on the profits of large banking groups, which the latter strongly oppose.

This measure, intended to compensate for the support measures implemented in recent months in the face of the escalation of the inflationwill be valid for two years. It will allow the state to recover 1.5 billion euros ($1.49 billion) annually in 2023 and 2024.