Welcome to the Quarterly Shareholder Report where you can check the most significant information about Santander's share and the Group in the second quarter of 2023.
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"We are making excellent progress against our strategic objectives of simplifying our business and leveraging the strength of our global network. Our results reflect that progress, with nine million customers joining us in the past twelve months, resulting in double-digit revenue growth. Credit quality remains robust, and we continue to deliver improved profitability with return on tangible equity reaching 14.5%, and consistent organic capital generation with capital above our 12% target. Because of this strong performance we are creating value for shareholders, with TNAV plus cash dividend per share up 11% year-on-year, and we are well on track to meet all our 2023 targets."
Ana Botín, Banco Santander Executive Chair
START
EUR 2.803
30/12/2022
MAXIMUM
EUR 3.873
07/03/2023
MINIMUM
EUR 2.812
03/01/2023
END
EUR 3.385
30/06/2023
The second quarter of 2023 was again characterized by inflationary pressures, which, despite having declined, remain persistently high. The main central banks continued to rise interest rates, albeit at different speeds.
The Federal Reserve, after a 25bp increase in May, paused raising rates in June to properly assess their impact on the economy, leaving rates at 5.25%.
The European Central Bank, eased its rate up by 25bps at each of its last two meetings to 4.00%, while the Bank of England surprised the market with a 50 bp rise to 5.00% at the June meeting, following the acceleration in core inflation.
In this context, the main central banks maintained that it is too early to say that their ceiling was reached and predicted possible rises in the following meetings.
All in all, the global economy remained resilient, with better prospects for 2023 than forecast at the beginning of the year, mainly due to strength in US household spending, lower gas prices in Europe, the reopening of China, the end of the global covid-19 health emergency announced by the World Health Organization in May, and the robustness of the labour market in many economies.
The European financial sector maintained a positive performance after first quarter turbulence, mainly due to the isolated crises suffered by some American banks, which subsequently affected Credit Suisse, and to the uncertainty in the debt ceiling negotiations in the US.
The Santander share price ended the quarter with a positive return of 21%, outperforming the market in relative terms. In the banking sector, EuroStoxx Banks was up 12%, DJ Stoxx Banks increased 11% and MSCI World Banks decreased slightly 0.2%. The other main indices closed up, Ibex 35 +17% and DJ Stoxx 50 +10%.
The Santander share price ended the quarter with a positive return of 21%, outperformed the market in relative terms.
Select comparables
30 December 2022 = 100.
of analysts recommend buying or holding SAN shares
66.7%
Buy
30.0%
Hold
3.3%
Sell
EUR 4.51
average target price
of analysts for
SAN shares
Source Bloomberg at 30/06/2023.
Share capital distribution by type of shareholder:
Institutions
Retail
Board*
Share capital distribution by geographic area:
Europe
The Americas
Other
In application of the shareholder remuneration policy for 2022, the bank paid a second cash dividend of EUR 5.95 cents per share against 2022 results in May.
Likewise, and in application of the shareholder remuneration policy for 2022, a second share buyback programme was carried out March and April 2023 for EUR 921 million, representing 1.64% of the share capital. The shares acquired were amortized and the corresponding capital reduction was executed.
After carrying out both actions, total shareholder remuneration against 2022 results was EUR 3,842 million, approximately 40% of 2022 underlying profit.
The shareholder remuneration policy the board approved for the 2023 results is a payout of approximately 50% of the Group's net reported profit (excluding non-cash, non-capital ratios impact items), distributed approximately as 50% in cash dividend and 50% in share buybacks. The execution of the shareholder remuneration policy is subject to future corporate and regulatory approvals.
Transform our business and operating model through our global technology initiatives to build a digital bank with branches that provides access to financial services for our customers through several channels.
Top 3 NPS1
in 5 markets
164 mn
total customers
99 mn
active customers
1. NPS – internal benchmark of individual customers' satisfaction audited by Stiga/Deloitte in H1'23.
In-market scale in each of our core markets in volumes combined with our global scale support greater profitability and provide a competitive advantage over local peers.
Top 3 in lending2
in 9 of our markets
2. Market share in lending as of March 2023 including only privately-owned banks. Digital Consumer Bank (DCB) refers to auto in Europe.
Our well-balanced diversification between developing and mature markets, as well as between business and customer segments, delivers recurrent pre-provision profit with low volatility.
3. H1'23 attributable profit by region. Operating areas excluding the Corporate Centre.
Attributable profit H1'23
In Q2 2023, attributable profit amounted to EUR 2,670 million, 4% higher than in the previous quarter, and it increased 14% compared to the same period of 2022. In constant euros, it rose 17%.
In the first half of 2023, attributable profit was EUR 5,241 million, 7% higher than the first half of 2022 (+7% in constant euros) and 12% if we excluded the temporary levy on revenue obtained in Spain (EUR 202 million in Spain and DCB in the first quarter).
Constant euros
(*) As a % of operating areas. Excluding the Corporate Centre.
| Underlying income statement | % change / H1'22 | ||
|---|---|---|---|
| EUR million | H1'23 | EUR | Constant EUR |
| Net interest income | 20,920 | 13.6 | 14.9 |
| Gross income | 28,234 | 12.4 | 13.1 |
| Net operating income | 15,755 | 15.1 | 15.2 |
| Profit before tax | 8,329 | 5.2 | 5.0 |
| Attributable profit to the Group | 5,241 | 7.1 | 7.2 |
Total customers
millions
Active customers
millions
Digital customers
millions
Excluding the exchange rate impact:
Loans to
customers
Customer
funds
Europe
55%
62%
North America
16%
15%
South America
16%
17%
Digital Consumer Bank
13%
6%
% operating areas. June 2023.
| % change/ H1'22 | |||
|---|---|---|---|
| EUR million | H1'23 | EUR | Constant EUR |
| Gross loans and advances to customers* | 1,022,191 | 0.7 | 0.1 |
| Customer deposits** | 940,716 | 4.7 | 4.3 |
| Mutual funds | 193,400 | 5.2 | 3.9 |
| Customer funds | 1,134,116 | 4.8 | 4.2 |
Performance by business area
| 2023 targets | H1’23 | ||
|---|---|---|---|
| Revenue1 |  |
Double-digit growth | +13% |
| Efficiency ratio | |
44-45% | 44.2% |
| CoR | |
<1.2% | 1.08% |
| FL CET1 | |
>12% | 12.2% |
| RoTE | |
>15% | 14.5% |
Jun-23 |
2025 targets |
|||
| Green Finance raised and facilitated (since 2019) |
€98.6bn |  |
€120bn | |
| Socially responsible Investments (AuM) |
€58.6bn | |
€100bn | |
| Financial inclusion (# People)1 |
0.9mn | |
5mn | |
More information available at www.santander.com/en/our-approach.
Note: Not taxonomy.
1. Starting Jan-23. Does not include financial education. Data not audited.
Non-IFRS and alternative performance measures
This document contains financial information prepared according to International Financial Reporting Standards (IFRS) and taken from our consolidated financial statements, as well as alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015, and other non-IFRS measures. The APMs and non-IFRS measures were calculated with information from Grupo Santander; however, they are neither defined or detailed in the applicable financial reporting framework nor audited or reviewed by our auditors.
We use these APMs and non-IFRS measures when planning, monitoring and evaluating our performance. We consider them to be useful metrics for our management and investors to compare operating performance between periods.
Nonetheless, the APMs and non-IFRS measures are supplemental information; their purpose is not to substitute IFRS measures. Furthermore, companies in our industry and others may calculate or use APMs and non-IFRS measures differently, thus making them less useful for comparison purposes. APMs using ESG labels have not been calculated in accordance with the Taxonomy Regulation or with the indicators for principal adverse impact in SFDR.
For further details on APMs and Non-IFRS Measures, including their definition or a reconciliation between any applicable management indicators and the financial data presented in the consolidated financial statements prepared under IFRS, please see the 2022 Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission (the SEC) on 1 March 2023 (https://www.santander.com/content/dam/santander-com/en/documentos/informacion-sobre-resultados-semestrales-y-anuales-suministrada-a-la-sec/2023/sec-2022-annual-20-f-2022-en.pdf), as well as the section “Alternative performance measures” of Banco Santander, S.A. (Santander) Q2 2023 Financial Report, published on 26 July 2023 (https://www.santander.com/en/shareholders-and-investors/financial-and-economic-information#quarterly-results). Underlying measures, which are included in this document, are non-IFRS measures.
The businesses included in each of our geographic segments and the accounting principles under which their results are presented here may differ from the businesses included and local applicable accounting principles of our public subsidiaries in such geographies. Accordingly, the results of operations and trends shown for our geographic segments may differ materially from those of such subsidiaries.
Non-financial information
This document contains, in addition to financial information, non-financial information (NFI), including environmental, social and governance-related metrics, statements, goals, commitments and opinions.
NFI is included to comply with Spanish Act 11/2018 on non-financial information and diversity and to provide a broader view of our impact. NFI is not audited nor reviewed by an external auditor. NFI is prepared following various external and internal frameworks, reporting guidelines and measurement, collection and verification methods and practices, which are materially different from those applicable to financial information and are in many cases emerging and evolving. NFI is based on various materiality thresholds, estimates, assumptions, judgments and underlying data derived internally and from third parties. NFI is thus subject to significant measurement uncertainties, may not be comparable to NFI of other companies or over time or across periods and its inclusion is not meant to imply that the information is fit for any particular purpose or that it is material to us under mandatory reporting standards. NFI is for informational purposes only and without any liability being accepted in connection with it except where such liability cannot be limited under overriding provisions of applicable law.
Forward-looking statements
Santander hereby warns that this document contains “forward-looking statements” as per the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such statements can be understood through words and expressions like “expect”, “project”, “anticipate”, “should”, “intend”, “probability”, “risk”, “VaR”, “RoRAC”, “RoRWA”, “TNAV”, “target”, “goal”, “objective”, “estimate”, “future”, “commitment”, “commit”, “focus”, “pledge” and similar expressions. They include (but are not limited to) statements on future business development, shareholder remuneration policy and NFI. However, risks, uncertainties and other important factors may lead to developments and results to differ materially from those anticipated, expected, projected or assumed in forward-looking statements. The following important factors (and others described elsewhere in this document and other risk factors, uncertainties or contingencies detailed in our most recent Form 20-F and subsequent 6-Ks filed with, or furnished to, the SEC), as well as other unknown or unpredictable factors, could affect our future development and results and could lead to outcomes materially different from what our forward-looking statements anticipate, expect, project or assume: (1) general economic or industry conditions (e.g., an economic downturn; higher volatility in the capital markets; inflation; deflation; changes in demographics, consumer spending, investment or saving habits; and the effects of the war in Ukraine or the COVID-19 pandemic in the global economy) in areas where we have significant operations or investments; (2) climate-related conditions, regulations, policies, targets and weather events; (3) exposure to various market risks (e.g., risks from interest rates, foreign exchange rates, equity prices and new benchmark indices); (4) potential losses from early loan repayment, collateral depreciation or counterparty risk; (5) political instability in Spain, the UK, other European countries, Latin America and the US; (6) legislative, regulatory or tax changes (including regulatory capital and liquidity requirements), especially in view of the UK´s exit from the European Union and increased regulation prompted by financial crises; (7) acquisition integration challenges arising from deviating management’s resources and attention from other strategic opportunities and operational matters; (8) our own decisions and actions including those affecting or changing our practices, operations, priorities, strategies, policies or procedures; (9) uncertainty over the scope of actions that may be required by us, governments and others to achieve goals relating to climate, environmental and social matters, as well as the evolving nature of underlying science and industry and governmental standards and regulations; and (10) changes affecting our access to liquidity and funding on acceptable terms, especially due to credit spread shifts or credit rating downgrades for the entire group or core subsidiaries.
Forward looking statements are based on current expectations and future estimates about Santander’s and third-parties’ operations and businesses and address matters that are uncertain to varying degrees, including, but not limited to developing standards that may change in the future; plans, projections, expectations, targets, objectives, strategies and goals relating to environmental, social, safety and governance performance, including expectations regarding future execution of Santander’s and third-parties’ energy and climate strategies, and the underlying assumptions and estimated impacts on Santander’s and third-parties’ businesses related thereto; Santander’s and third-parties’ approach, plans and expectations in relation to carbon use and targeted reductions of emissions; changes in operations or investments under existing or future environmental laws and regulations; and changes in government regulations, regulatory requirements and internal policies, including those related to climate-related initiatives.
Forward-looking statements are aspirational, should be regarded as indicative, preliminary and for illustrative purposes only, speak only as of the date of this document, are informed by the knowledge, information and views available on such date and are subject to change without notice. Santander is not required to update or revise any forward-looking statements, regardless of new information, future events or otherwise, except as required by applicable law.
Not a securities offer
This document and the information it contains does not constitute an offer to sell nor the solicitation of an offer to buy any securities.
Past performance does not indicate future outcomes
Statements about historical performance or growth rates must not be construed as suggesting that future performance, share price or results (including earnings per share) will necessarily be the same or higher than in a previous period. Nothing in this document should be taken as a profit and loss forecast.
Third Party Information
In this document, Santander relies on and refers to certain information and statistics obtained from publicly-available information and third-party sources, which it believes to be reliable. Neither Santander nor its directors, officers and employees have independently verified the accuracy or completeness of any such publicly-available and third-party information, make any representation or warranty as to the quality, fitness for a particular purpose, non-infringement, accuracy or completeness of such information or undertake any obligation to update such information after the date of this report. In no event shall Santander be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for inaccuracies or errors in, or omission from, such publicly-available and third-party information contained herein. Any sources of publicly-available information and third-party information referred or contained herein retain all rights with respect to such information and use of such information herein shall not be deemed to grant a license to any third party.
