Santander shares slip despite beating first quarter forecasts
Spain's largest lender posted better-than-expected quarterly profits thanks to a strong performance in almost all regions - especially in Brazil, UK and Spain - and a drop in its non-performing loan ratio.
Net profits at Santander jumped 14% during the first three months of the year to reach €1.87bn, edging past the consensus forecast from FACTSET for €1.847bn.
Mexico was one weak spot, with results down 3% in comparison to the prior quarter.
At €11.3bn top line growth was 5% ahead quarter-on-quarter, with costs just 1.6% higher versus the fourth quarter of 2016 and loan loss provisions stable.
Its net interert income improved 10.2% year-on-year to hit €8.402bn while its non-performing loan ratio dropped from 4.33% one year ago to 3.74%.
Together, the above saw it return on tangible equity rise by 100 basis points to 12.1%. driving an 11 basis point improvement in its common equity Tier 1 ratio to 10.66%.
Santander reiterated its commitment to lift its CET1 ratio by roughly 10 basis points per quarter.
Commenting on the results, chairman Ana Botin highlighted the strong results in LatinAmerica (with Brasil contributing 26% of the rise in profits), Spain and in consumer finance.
Despite the challenges for financial institutions which exist in the current operating environment, Botin said the outlook for Santander was "positive".
Analyst Nuria Alvarez at Madrid-based broker Renta 4 said the results were better than expected on all the main metrics and geographic regions, aside from the Poland and the US.
Alvarez also emphasised the solid performance put in by Santander's Spanish operations.
For their part, analysts at Bank of America-Merrill Lynch highlighted the soild results in Brazil, UK and Spain.
Results in the UK jumped 20% sequentially in both Sterling and euro terms.
"Good set of numbers from Santander overall, we thought, with the highest bottom line print since 2Q15."
As of 1130 GMT shares in Santander were 0.94% lower at €5.98 in Madrid trading.