Banco Santander, S.A. (SAN) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 26, 2023 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Begona Morenes

Good morning, everybody, and welcome to Banco Santander's Conference Call to discuss our Financial Results for the First Half of 2023. Just as a reminder, both the results report and presentation we will be following today are available to you on our website.

I am joined here today by our CEO, Mr. Hector Grisi; and our CFO, Mr. Jose Garcia-Cantera. Following their presentations, we will open the floor for any and all questions you may have in the Q&A session. [Operator Instructions]

With this, I will hand over to Mr. Grisi. Hector, the floor is yours.

Hector Grisi

Thank you, Begona. Good morning everyone, and thank you for joining us.

Let me just share with you what we will focus on today. First, I will talk about our half one results on the context of how we are progressing with the strategy we outlined at our Investor Day. Jose will then review our financial performance in greater detail. And then, I'll conclude with a few closing remarks.

Despite the challenges the financial system experienced at the beginning of the year, Q2 was another strong quarter for Santander demonstrating the strength and resilience of our strategy and unique business model even in times of market volatility.

We delivered record profit of €2.7 billion, an increase of 14% compared with Q2 in ‘22, thus plus 17% in constant euros.

In the first half of ‘23, profit was €5.2 billion, up 7% supported by robust customer revenue growth. Revenue increased double-digits year-on-year, supported by all regions and global businesses. Global scale and network businesses are contributing around 40% of total Group revenue. Our number of customers grew by nine million year-on-year taking the total to 164 million and loans increased by 1% and deposits by 5%.

The Group continues progressing towards a simpler and more integrated model through One Transformation. The program that is accelerating our structural model change to drive efficiency improvement, and growth in profitability.

As a result, our efficiency ratio improved one point-three percentage points year-on-year to 44.2% and our net operating income grew double-digits. Our return on tangible equity RoTE rose 80 basis points year-on-year to 14.5, while our earnings per shares improved 13% year-on-year supported by greater profit and share buybacks.

At the same time, our strong balance sheet with solid and sound capital ratio, liquidity at comfortable levels and robust credit quality contributed to solid profitable growth, value creation, and shareholder remuneration. These results allow us to deliver value creation in terms of TNAVps plus EPS year-on-year of 11%, of which represents an increase of more than €6 billion in the first six months of the year.