Santander banks highest quarterly profit in 12 years

Banking giant Santander has recorded its most profitable quarter in 12 years after releasing hundreds of millions of euros set aside for potential pandemic loan losses.

The Spanish group reported an underlying profit of €2.28billion in the final three months of 2021, an eightfold jump on the same period last year, as it released over €750million in impairment loan provisions.

Its annual attributable profit also recovered to €8.12billion, which was 25 per cent higher than its pre-pandemic levels, as it benefited from increased investment banking activity and a strong performance by its consumer finance bank.

Rebound: Santander’s annual profit recovered to €8.12billion, which was 25 per cent higher than its pre-pandemic levels as it benefited from increased investment banking activity

This compared to a massive €8.77billion loss in 2020, the first-ever annual loss in the company’s history, caused by the bank reserving billions more in loan loss provisions as well as heavy costs associated with job losses and branch closures.

Underlying earnings in both the US and Brazil jumped to €2.3billion, though growth was much more pronounced in the former market where it expanded by 230 per cent on the back of a recovery in borrowing to finance car purchases.

Profits skyrocketed by fourfold in the UK, however, thanks in part to record mortgage lending spurred by the stamp duty holiday and Britons’ desire to move to more spacious properties, and the release of nearly €250million in credit provisions. 

Nathan Bostock, the bank’s UK chief executive, said the performance came against a ‘changeable and competitive environment’ and signified the company’s position as Britain’s third-biggest mortgage lender.

‘Our strategy means we are in good shape thanks to our prudent approach to risk, strong capital and resilient balance sheet and we are well placed to continue growing as the UK economy recovers,’ he remarked.

But there was also a healthy increase in earnings across all regions and countries as the worldwide economic recovery led to considerably higher levels of deposits and borrowing by consumers. 

Increase: City analysts are widely predicting rate that the Bank of England will announce a raise in the UK’s interest rate to 0.5 per cent after raising it to 0.25 per cent in December

Low interest rates across most of the group’s territories did hold back net interest income, but thriving credit and deposit volumes meant this still grew by 7 per cent.

The Bank of England’s Monetary Policy Committee raised the UK’s interest rate to 0.25 per cent from a record low of 0.1 per cent in December in response to rising inflation, which is currently at its highest in about 30 years.

Tomorrow, it is set to announce whether another raise will go ahead. City analysts are widely predicting rate that the central bank will up the interest rate to 0.5 per cent. 

Meanwhile, Santander’s net fee income recovered 8 per cent from relatively weak card transaction levels at the start of 2021, and double-digit percentage growth in its management, insurance and investment banking businesses.  

Santander additionally noted impressive results at its fintech subsidiaries, including digital-only OpenBank, whose non-Spanish customer numbers reached 1.7 million, and payments platform PagoNxt, whose revenues surged by 47 per cent.

Ana Botin, the firm’s executive chairman, said: ‘Through PagoNxt and Digital Consumer Bank, we expect to deliver group connectivity, leveraging our global scale, as well as faster growth in customers in the coming years.’

‘We are focused on delivering profitable growth in a responsible way, and ESG matters have become even more material for our stakeholders. 

‘This is why we have focused our efforts on continuing to support our customers on their transition to a green economy, supporting financial inclusion and empowerment, and ensuring we do things the right way with a long-term vision while also delivering results over the near-term.’  

Shares in Santander were up 1.9 per cent to 265.1p during the late afternoon on Wednesday,  

This post first appeared on Dailymail.co.uk