Jefferies | Banco Santander | BUY | SAN SM ! €4.75 ! PT: € 5.10 | % to PT: +7%
A 1% miss versus cons at bottom-line level albeit some variations by geos. But decent print at PBT level (+1% beat). Revenue dynamics trending well, with Spain particularly strong. Brazil NII and asset quality trends also supportive, alongside good performance in fees in the US. Across the Group, OpEx and CoR progressing in line with expectations.
Santander reported 1Q24 attributable profit of €2,852m, which was 1% below company-compiled consensus of €2,889m. PBT was a 1% beat, with pre-prov profits a 2% beat. Revenue was a 2% beat, with strong dynamics across both NII and fees, particularly coming from Spain. Costs a 1% miss.
- NII was 5% above consensus, up 8% quarter-on-quarter and 18 year-on-year.
- Fee income was a 3% beat, with trading income also a 1% beat, but other income €368m worse (the miss being driven by €600m net monetary position adjustment related to hyperinflation accounting in Argentina).
- Total costs were a 1% miss.
- Total impairment charge was a 4% miss versus consensus.
- Customer loans were in line with consensus, up 1% quarter-on-quarter and flat year-on-year. Customer deposits were in line with consensus, flat quarter-on-quarter and up 4% year-on-year.
- Capital: CET1 ratio of 12.3% was in line with consensus, with both CET1 and RWAs in line.
- Guidance maintained; 1Q numbers on track to hit the FY24 targets.
Attributable profits by key market:
- Spain: 43% beat (€232m), with both NII and fees strong, and a sizeable trading income beat; Portugal: 9% beat (€25m); Poland: 17% beat (€31m); USA: 59% beat (€103m), with good performance in fees and noting the tax benefit related to the EV business.
- UK: 6% miss (€18m); Brazil: 12% miss (€73m), we observe solid NII and LLC dynamics, but lower IOC deductions trigger much higher tax rate, Chile: 39% miss (€57m), with NII coming under pressure given short position in inflation; Mexico: 7% miss (€31m), DCB: 24% miss (€72m); Corp center: 49% miss (€117m).
