Santander achieved an attributable profit of €6,059 million in the first half of 2024, up 16% in current euros versus the same period last year, as strong growth in net interest income in all the global businesses and regions, supported by four million more customers, and very good cost control, more than offset the expected year-on-year growth in provisions.
The group continued to increase profitability and shareholder value creation, with a return on tangible equity (RoTE) of 15.9%, or 16.3% if the impact of the temporary banking levy in Spain, which was registered in full in the first quarter (€335 million), was distributed evenly across the year; earnings per share (EPS) of €0.37, up 19%, and tangible net asset value (TNAV) per share of €4.94 at the end of the first half. Including the cash dividend paid in November 2023 and the final dividend paid in May, total value creation (TNAV plus cash dividend per share) increased 12%.
As a result of the strong momentum within the business, Santander has upgraded its 2024 targets and is now expecting high-single digit revenue growth for the year (an increase from its previous target of mid-single digit growth); an efficiency ratio of c.42% (from below 43%); and RoTE of over 16% (from 16%). The targets of cost of risk at c.1.2% and fully-loaded CET1 above 12% after Basel III implementation are maintained.
In the first half of 2024, customer funds (deposits and mutual funds) grew 5%, with deposits up 2%, supported by strong growth in time deposits (+12%), as well as the ongoing increase in customer numbers. Total loans grew 2% to €1.03 trillion, as growth in Consumer, CIB, Wealth and Payments offset a small decrease in Retail.
Total income increased 9% to a record of €31,050 million. The rise in both customer activity and good margin management supported an 11% increase in net interest income, with growth in all businesses. In Retail, net interest income increased 12%, supported by good growth in most countries, reflecting the strength of the bank’s diversification. Net fee income was up 6% to a half-year record of €6,477 million, supported by higher activity in all global businesses. More than 95% of total revenue is customer-related, reflecting the quality and recurrence of the bank’s results.
As total income growth outpaced the increase in costs (+3% or -1% in real terms), the efficiency ratio improved significantly, falling 2.6 percentage points to 41.6%. This reflects the impact of the ongoing transformation, which is allowing the bank to improve customer experience while reducing the cost-to-serve. This is particularly evident in Retail, where the efficiency ratio improved by 4.8 percentage points to 39.5%, and Consumer, which improved 2.7 percentage points to 40.6%. By deploying the bank’s proprietary technology, including Gravity, as well as other optimizations, it has already achieved efficiencies of €314 million since 2022.
Loan-loss provisions were up 8%, reflecting the expected increase due to normalization in the Consumer business, which was partially offset by the good performance in the Retail business. Overall, credit quality remained stable, with cost of risk at 1.21%, in line with the yearly target. The non-performing loan (NPL) ratio remained broadly stable versus the previous quarter at 3.14%.
The bank’s fully-loaded CET1 capital ratio increased by 20 basis points in the quarter to 12.5%, ahead of the group’s capital target, as strong gross organic capital generation in the quarter (+52 basis points) more than offset the accrual for shareholder remuneration against 2024 results2 (-25 basis points).
At Banco Santander’s recent annual general meeting (AGM), shareholders approved a final cash dividend against 2023 results of 9.50 euro cents per share, which was paid in May, resulting in a total cash dividend per share charged to 2023 of 17.60 euro cents per share, up c.50% versus 2022. The bank also completed two share buyback programmes against 2023 earnings for a total amount of around €2.8 billion. Santander has repurchased approximately 11% of its outstanding shares since 2021.
Assuming the bank achieves all its 2024 targets and based on the bank’s current shareholder remuneration policy, total remuneration against 2024 results would amount to over €6 billion.
- Fully-loaded CET1 increased to 12.5% after adding 20 basis points in the last quarter.
- TNAV plus cash dividend per share increased 12%.
- Net interest income increased 12% to a record €23,457 million, driven by growth in all businesses, particularly in Retail, CIB and Wealth.
- Net fee income increased 6%, with good commercial dynamics and higher customer activity in all global businesses.
- Efficiency improved significantly to 41.6% (-2.6 percentage points) driven by the bank’s transformation towards a simpler, more digital and integrated model, with costs stable for the fourth consecutive quarter in constant euros.
- Loan-loss provisions rose 8% due to the expected normalization in Consumer, with a good performance in Retail thanks to lower provisions in Europe.
- Credit quality remained robust, with cost of risk in line with the target for the year at 1.2%.
- In the second quarter, attributable profit reached a record high at €3,207 million, up 20%.
- Santander has upgraded three 2024 targets: high-single digit revenue growth (from mid-single digit); an efficiency of c.42% (from below 43%); RoTE of over 16% (from 16%); cost of risk of c.1.2%; and fully-loaded CET1 above 12%.
