Banco Santander US ((SAN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Banco Santander US showcased a generally positive sentiment, highlighting record profits, strong fee income growth, and improved efficiency ratios. However, the call also acknowledged challenges such as currency depreciation, high cost of risk in Brazil, and ongoing litigation provisions, which present areas of concern for the company.
Record Quarterly Profit
Banco Santander US achieved a record quarterly profit of EUR 3.5 billion, marking the best nine-month period ever in 2025. This impressive performance was driven by strong revenue growth across its global businesses and a solid customer base, underscoring the bank’s robust financial health.
Increased Customer Base
The bank reported a significant increase in its customer base, which grew by 7 million year-on-year to reach 178 million. This expansion has been instrumental in enhancing the customer experience through its global platforms, contributing to the bank’s overall growth strategy.
RoTE Increase
Return on Tangible Equity (RoTE) saw an increase of 70 basis points to 16.1%, reflecting the bank’s efficiency gains and profitability. This metric is a key indicator of the bank’s ability to generate returns on its tangible assets.
Strong Capital Ratio
Santander’s capital ratio ended the quarter at an all-time high of 13.1%, supported by robust credit quality. This strong capital position provides a solid foundation for future growth and stability.
Shareholder Value Creation
Despite facing currency headwinds, the Tangible Net Asset Value (TNAV) plus cash dividend per share grew by 15%. This growth highlights the bank’s commitment to creating value for its shareholders.
Fee Income Growth
The bank achieved a record period for fee income, which increased by 8%. This growth was supported by significant customer growth and a shift in product mix towards value-added products, enhancing the bank’s revenue streams.
Efficiency Improvements
Santander reported an improvement in its efficiency ratio, which dropped to 41.3%, the best in over 15 years. This improvement was driven by a 1% reduction in costs year-on-year, demonstrating effective cost management.
Growth in Payments and Cards
Payments revenue increased by 19%, with Cards and PagoNxt delivering double-digit growth. This surge in payments and card transactions drove a profit growth of more than 60%, showcasing the bank’s strong performance in these areas.
Currency Depreciation Impact
The bank faced challenges due to currency depreciation, with a difference in growth rates between current and constant euros of around 5 percentage points. This was mainly due to the depreciation of the Brazilian real and the Mexican peso.
High Cost of Risk in Brazil
Brazil’s cost of risk remained high at around 4.71%, despite some improvements. The challenging environment, characterized by high real interest rates, continues to pose risks for the bank’s operations in the region.
Argentina’s Economic Challenges
Argentina faced significant economic challenges, including high inflation and real interest rates, resulting in a cost of risk of nearly 7%. This situation necessitates a cautious credit approach by the bank.
Regulatory Headwinds
The bank anticipates regulatory and supervisory charges of 20 to 25 basis points for the year, with some charges still pending for the fourth quarter. These regulatory headwinds could impact the bank’s financial performance.
Litigation Provisions
Ongoing litigation in the U.K., including motor finance and AXA provisions, presents uncertainty regarding the final scope and impact. These provisions remain a concern for the bank’s future financial outlook.
Forward-Looking Guidance
Looking ahead, Banco Santander US plans to distribute at least EUR 10 billion to shareholders through share buybacks in 2025-2026. The bank also expects continued growth in fees across CIB, Wealth, and Payments, with significant increases of 7%, 19%, and 16%, respectively. Additionally, the bank’s cost management strategies are expected to contribute to solid net operating income growth, with improvements in credit quality and a consistently improving cost of risk year-on-year.
In conclusion, Banco Santander US’s earnings call highlighted a positive outlook with record profits and strong growth across various sectors. Despite facing challenges such as currency depreciation and high costs of risk in certain regions, the bank’s strategic initiatives and robust financial performance provide a solid foundation for future growth and shareholder value creation.