Banco Santander 2Q Net Profit Rose Despite Higher Provisions -- Update
July 28 2022 - 4:03AM
Dow Jones News
By Xavier Fontdegloria
Banco Santander SA reported an increase in second-quarter net
profit and backed its targets for 2022, as a double-digit rise in
revenue more than offset higher loan-loss provisions and costs amid
surging inflation.
The Spanish lender--one of the eurozone's largest banks--said
Thursday that it posted a net profit of 2.35 billion euros ($2.40
billion), a 14% increase from EUR2.07 billion a year earlier. The
figure matches a consensus from analysts provided by FactSet.
Total revenue in the April-June period rose 13% to EUR12.81
billion, the bank said. Net interest income--the difference between
what banks earn on loans and pay clients for deposits--increased
16% to EUR9.55 billion, the bank said.
Net interest income should increase in the coming quarters as it
benefits from interest-rate increases, the bank said.
Net loan-loss provisions increased 50% on year to EUR2.63
billion, in part because of the release of provisions in the second
quarter of 2021 as well as the expected normalization in provisions
in the U.S. and increases in Poland and Brazil, the bank said.
The cost of credit--the ratio of provisions to expected loan
losses--increased to 83 basis points in the second quarter from 77
basis points in the first quarter. No significant deterioration in
credit quality is expected in the months ahead because of high
household savings rates and low unemployment rates across the
bank's main markets, Santander said.
Operating expenses rose 12% on year to EUR5.9 billion, boosted
by a 16% increase in costs in South America amid high inflation in
the region.
Santander said it is on track to meet its financial targets for
the year, including an underlying return on tangible equity--a key
measure of profitability--of more than 13% and revenue growth
around the mid-single digits. In the first half of 2022, the bank's
underlying RoTE stood at 13.7%.
"Despite the uncertainty and economic headwinds, we remain
confident in our ability to meet the group's performance targets
for 2022," Ana Botin, the bank's executive chairman, said.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
(END) Dow Jones Newswires
July 28, 2022 03:48 ET (07:48 GMT)
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