Santander profits up 11 per cent on higher interest rates

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Spanish bank Santander reported an 11 per cent rise in quarterly profits on Tuesday, as it continued to enjoy the benefits of higher interest rates.

Unlike European rivals, whose profits have faltered this year, the bank’s first-quarter results were supported by a 16 per cent increase in net interest income — the difference between what it earns on lending and pays out on deposits — thanks to its wider global customer base.

It made €2.9bn in profit in the first quarter on total income of €15.4bn, up 9 per cent on a year earlier and a record quarterly result for the group.

Executive chair Ana Botin said that the results demonstrated “once again the value of diversification”.

At Santander’s annual general meeting in March, the bank said it planned to return €6bn to shareholders in dividends and buybacks this year.

Its shares have risen close to 50 per cent over the past 12 months to a six-year high.

Santander — which has 166mn customers around the world — reported under a new operating model for the first time on Tuesday, based on business divisions rather than geographical regions.

Its retail unit, which accounts for more than half of the bank’s income, generated €8bn of revenue in the first quarter, up 13 per cent on a year earlier. The consumer business, which includes car financing, was up 4 per cent, the corporate and investment bank was up 5 per cent and wealth management was up 17 per cent, while its payments business was flat.

Santander said a rise in customer activity and interest rates boosted income. Its retail business reported a 17 per cent increase in net interest income, while in wealth management and consumer, net interest income rose 26 and 25 per cent, respectively.

The bank’s first-quarter results were affected by its annual payment of the Spanish windfall tax on bank profits, which was introduced last year. The tax will last until at least 2025 and cost Santander €335mn this year.

Spanish rival CaixaBank also published its first-quarter results on Tuesday, where it reported €1bn of net profit, up 17.5 per cent from a year earlier.