Banco Santander is set to release its fourth-quarter results on Wednesday. Here are the key details to keep an eye on:
Net Profit Forecast
Santander is expected to announce a net profit of 2.61 billion euros ($2.83 billion), according to the consensus provided by Visible Alpha. In the same period last year, the bank recorded a net profit of EUR2.29 billion.
Revenue Forecast
Market analysts predict that the Spanish bank will report total revenue of EUR14.58 billion, as per the Visible Alpha-provided consensus. Santander reported total revenue of EUR13.52 billion for the fourth quarter of 2022.
Performance Comparison
Santander’s shares have witnessed a remarkable surge of over 13% when compared to the previous year’s figures. This is notably ahead of the 6.6% rise experienced by the Stoxx Europe 600 Banks index.
Key Considerations
As the awaited results are unveiled, it is crucial to pay attention to several factors that may influence Santander’s performance. Stay informed and analyze the following:
Remember to stay updated with the latest developments regarding Banco Santander’s quarterly results.
Santander’s Geographic Diversification Supports Growth Amidst Falling Interest Rates
In a recent research note, UBS analysts Ignacio Cerezo and Alvaro Fernandez-Garayzabal highlighted that Santander stands to benefit from its geographic diversification as interest rates decrease this year. The bank has a presence in countries like Brazil, Chile, and the U.S., which are expected to experience a neutral or even positive impact from lower rates.
While capital returns may not be a significant driver for Santander, investors will be closely monitoring the bank’s 2023 earnings to ensure they are not affected negatively this year. UBS emphasized the importance of maintaining stable earnings levels compared to the previous year.
Looking forward, Renta4 analyst Nuria Alvarez Anibarro predicts that Santander’s 2024 guidance will align with its strategic plan objectives. These objectives include achieving a return on tangible equity (a crucial measure of profitability) between 15% and 17% from 2023 to 2025. Additionally, the bank aims to uphold a fully-loaded common equity Tier 1 ratio (indicating financial strength) above 12%.
With its well-diversified presence in key markets, Santander is well-positioned to navigate the challenges posed by declining interest rates while striving to achieve its long-term targets.
Net Interest Income Projection
According to a note from Barclays Capital analysts, the net interest income of the bank is expected to decrease by 4.1% quarter-on-quarter. This decline is attributed to various factors such as the devaluation of the Argentine peso and inflation in Argentina, as well as a slowdown in economic growth in Europe. These factors could offset the positive impact of interest-rate tailwinds in Brazil, which are currently driving growth.
Impact of Foreign Exchange Rate Devaluation and Inflation
Barclays Capital analysts have expressed concerns about the devaluation of the Argentine peso and inflation in Argentina. Despite these challenges, the bank’s net profit is expected to remain unaffected, thanks to hedges put in place to mitigate potential losses.
Stability of CET1 Ratio
The bank’s CET1 ratio is projected to remain stable at 12.3% by the end of December. This stability is driven by the hedges implemented and a recently completed share-buyback program, as per Barclays analysts.