Banco Santander (SAN) Q3 2024 earnings summary

Executive summary

• Attributable profit reached €12,574 million in 2024, up 14% year-over-year, driven by strong revenue growth and improved cost of risk, with Q3 profit at €3.3 billion and nine-month profit at €9.3 billion.

• Transformation initiatives and the ONE Transformation program improved efficiency by 229 basis points, with ROTE at 16.3% and record cost-to-income ratio of 41.7%.

• All business segments contributed to growth, with retail, consumer, CIB, wealth, and payments showing strong revenue and profit trends, except for Consumer and Payments, which faced higher provisions and write-downs.

• Shareholder value creation reflected in a 14% increase in TNAV plus dividend per share and a 39% higher cash dividend per share for 2024, with a 50% payout policy split between cash dividends and share buybacks.

• Solid balance sheet with fully-loaded CET1 ratio at 12.8% at year-end 2024, up 0.3 percentage points quarter-on-quarter.

Financial highlights

• Total income for 2024 was €62,211 million, up 7.9% year-over-year, with net interest income up 8% and net fee income up 8%.

• Net operating income increased 12.3% to €36,177 million, and profit before tax rose 13.9% to €19,027 million.

• Efficiency ratio improved to 41.8%, the best in 15 years, and EPS grew 18% to €0.77.

• Cost of risk improved to 1.15% for 2024, with NPL ratio at 3.05% and coverage ratio at 65%.

• Book return on risk-weighted assets at 2.9% in Q3, equivalent to 23% ROTE on new business.

Outlook and guidance

• On track to exceed upgraded 2024 targets, with expectations for continued revenue growth, improved efficiency, and stable cost of risk; 2025 profits expected to surpass 2024.

• NII expected to be slightly down in current euros but up in constant euros for 2025, with fee income and operating income projected to grow.

• Efficiency ratio targeted at 42% for 2024, with ambition to improve further in 2025.

• Capital ratio expected to remain above 12% under Basel III, with minimal impact from regulatory changes.

• The board is expected to propose a final cash dividend, with total cash dividend per share for 2024 anticipated to be about 20% higher than 2023.