Santander sees annual profits surge

Banco Santander reported a surge in annual profits on Wednesday, as the global economy recovered from the worst of the pandemic.

The Spanish lender reported total revenues for the year to 31 December 2021 of €46.4bn, a 4% jump on 2020, while net operating income came in at €25.0bn, up 6%.

Underlying pre-tax profits rose 58% to a record €15.3bn. Attributable pre-tax profits were €8.1bn, compared to the €8.8bn loss it made in 2020 following a series of writedowns, restructurings and provisions.

An improvement in credit quality meant provisions eased 37% on a constant currency basis, after the bank released around €750m that had been set aside to cover bad loans in 2020.

Santander said the "strong" performance had been driven by a rebound in activity, with loans and deposits ahead 4% and 6% respectively. Customer numbers rose 5m over the year to 153m.

Across Santander’s three core geographical regions, underlying profit surged 110% and 109% respectively in Europe and North America, to €3bn and €3.1bn, and by 24% in South America to €3.3bn.

Executive chair Ana Botín said: "Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25% higher than pre-Covid levels in 2019.

"Across all our regions and businesses, we are delivering solid and consistent top-line growth, with the US and UK as standout performances in 2021."

Looking to the current year, she added: "We are on track to meet our medium-term targets set out in 2019, despite the impact of the pandemic, and aim to achieve a return on tangible equity of over 13%, cost-to-income ratio of around 45% and fully-loaded tier one capital of around 12% in 2022."

The group’s current CET1 is 12%.

Victoria Scholar, head of investment at Interactive Investor, said: "This is a strong set of results from the Eurozone’s second-biggest bank. European banks are more attractively valued than US banks at the moment, and while the rate hiking path in the Eurozone is behind that of the US and the UK, it is still benefiting from a robust economic backdrop and will benefit from a shift towards tightening from the European Central Bank on the horizon."

As at 1145 GMT, shares in Santander were ahead 2% in London at 265.25p.