Banco Santander (SAN) Q4 2024 earnings summary

Executive summary

• Achieved a record profit of €12.6 billion in 2024, up 14% year-over-year, marking the third consecutive year of record results, driven by strong revenue and customer growth across all global businesses.

• Added eight million customers, reaching 173 million globally, with significant progress in digital transformation and efficiency, improving RoTE to 16.3%.

• Fully loaded CET1 ratio reached an all-time high of 12.8%, reflecting robust organic capital generation and strong shareholder value creation, with TNAV and dividend per share up 14%.

• Strategic focus on transformation and global platforms drove efficiency, cost containment, and improved profitability, delivering the best efficiency ratio in 15 years at 41.8%.

• Shareholder remuneration increased, with cash DPS up 39% year-over-year and total returns of €9.5bn since 2021 via buybacks and dividends.

Financial highlights

• Total revenue rose 10% year-over-year in constant euros to €62.2bn, with net interest income up 10% and net fee income up 11%.

• Net operating income grew 15% year-over-year to €36.2bn, while operating expenses increased 4%, driving positive jaws and improved efficiency.

• Cost of risk ended at 1.15%, outperforming initial guidance, and NPL ratio improved to 3.05% with coverage at 65%.

• Expenses grew well below revenue, leading to improved operating leverage and a cost-to-income ratio of 41.8%, the best in 15 years.

• Share buybacks since 2021, including the 2024 program, have repurchased 15% of outstanding shares, delivering an 18% ROI for shareholders.

Outlook and guidance

• 2025 targets include resilient revenue of around €62 billion, mid to high single-digit fee growth, and absolute cost reduction year-over-year.

• Expecting stable group cost of risk at ~1.15%, returns above 17% pre-AT1 and targeting 16.5% post-AT1.

• Plan to distribute €10 billion in share buybacks over 2025 and 2026, with approximately 50% of reported profit distributed equally between cash dividends and buybacks.

• Operating CET1 range set at 12%-13%, with flexibility to distribute excess capital above this range.

• Double-digit growth in TNAVps + DPS expected through the cycle, with disciplined capital allocation and focus on profitable growth.