Banco Santander (SAN) Q2 2024 earnings summary

Executive summary

• Record attributable profit of €6.1 billion in H1 2024, up 16% year-on-year, and Q2 profit of €3.2 billion, up 20% year-on-year, despite €0.5 billion in one-time charges; recurring Q2 profit reached €3.7 billion.

• Strong operating performance driven by growth in net interest income, fees, and efficiency improvements across all global businesses and regions.

• Upgraded 2024 targets: revenue growth to high single digits, efficiency ratio to close to 42%, and RoTE to above 16%.

• Fully-loaded CET1 ratio at 12.5%, with robust credit quality and cost of risk at 1.21%.

• Shareholder remuneration for 2023 results reached €5,552 million, split equally between cash dividends and share buybacks, with TNAV plus dividend per share up 12%.

Financial highlights

• Net interest income rose 12% year-on-year to €23,457 million; total income up 10% to €31,050 million.

• Net operating income increased 15% to €18,137 million; profit before tax up 14% to €9,508 million.

• EPS grew 19% to €0.37; ROTE at 16.3% (annualizing the temporary levy in Spain).

• Efficiency ratio improved to 41.6%, the best in 15 years.

• Cost of risk at 1.21% YTD, NPL ratio at 3.02%, and coverage ratio at 66%.

Outlook and guidance

• Upgraded 2024 revenue growth target to high single digits, efficiency ratio to ~42%, and RoTE to above 16%.

• Cost of risk expected to remain stable at around 1.2%.

• Guidance to maintain CET1 ratio above 12% post-Basel III implementation.

• Double-digit TNAVps + Cash DPS growth confirmed through the cycle.

• Expect continued operational leverage and profitability improvements into 2025.