Record profit for Santander for 2022 but loss provisions up in final quarter

Santander on Thursday said its 2022 net profit rose 18 per cent to a record €9.6 billion on higher lending, though results were overshadowed in the fourth quarter as provisions more than doubled on economic uncertainty.

The euro zone’s second-biggest lender by market value posted net profit in the October to December period of €2.29 billion, up around 1 per cent from a year before and above the €2.07 billion forecast by analysts in a Reuters poll.

Net profit in 2022 - which exceeded the €9.39 billion expected by analysts - was boosted by higher interest rates and revenues, the addition of 7 million new clients to its global customer base, and a solid performance at its Corporate and Investment Bank unit.

In the fourth quarter however loan loss provisions rose 106 per cent year-on-year to €3.02 billion, mainly in the United States and Brazil, though that was slightly below an analysts’ forecast of €3.08 billion.

Santander said in a statement additional provisions had resulted from "updated macro assumptions... given the economic uncertainty".

The lender's cost of risk - the cost of managing credit risks and potential losses - rose to 99 basis points from 86 basis points at the end of September, still below the 100 basis points guided for the year.

For 2023, it expected cost of risk to rise but remain below 120 basis points.

At the start of the year Hector Grisi became the bank's chief executive to oversee the bank's digital transformation through the economic uncertainty that is rattling the whole industry.

Banks across Europe are beginning to benefit from higher borrowing costs.

Net interest income - earnings on loans minus deposit costs - rose 17 per cent to €10.2 billion in the quarter, broadly in line with the €10.15 billion forecast by analysts, on the back of higher interest rates. NII for the full year grew 16 per cent. - Reuters

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