Banco Santander S.A. (SAN) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 29, 2022 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Begona Morenes

Good morning, everybody, and welcome to Banco Santander's conference to discuss our financial results for the first half of 2022.

Just as a reminder, both the results report and the presentation we will be following today are available to you on our website. I'm joined here today by our CEO, Mr. Jose Antonio Alvarez; and our CFO, Mr. Jose Garcia Cantera. Following their presentations, we will open the floor for any questions you may have in the Q&A session.

With this, I will hand over to Mr. Jose Antonio Alvarez. Jose Antonio, the floor is yours.

Jose Antonio Alvarez

Thank you, Begoña, and good morning to everyone. Thank you for joining us this morning. So well, I should start saying that the second quarter, we've been living in a period in which we saw inflation hitting decade high levels, interest rates going up, start to raise, and significant concerns regarding lower economic activity in the future. So this is to sum up a little bit the environment of the last quarter.

In this environment, we continue to grow our business, our customer base, and we translate this into growth in the loans and deposits and revenues in our P&L NII plus fees, as you can see in the slide. So the progress in the digital front has been significant in the quarter.

When we talk about profitability, second quarter profit was €2.4 billion, reaching for the first half €4.9 billion, 33% higher than the previous year. If we look in the cost on euros is 21% higher than the previous year. The cost, in a highly inflationary environment, remained well below inflation, and our efficiency ratio stood at 45.5%, in line to reach our end of the year target of 45%.

We improved our profitability ratios, the return on tangible equity stays at 13.7%, and we continue to create significant value for our shareholders. EPS grew 38% compared to the previous year, and tangible net asset value per share plus cash dividend per share grew 9% year-on-year.

In regard with the strength, the quality of the balance sheet, NPLs continued to trend down, the cost of which remains well inside our expected range, and our capital is a slight level of 12%, the core equity Tier 1 following a strong net organic generation of 18 basis points in the second quarter.