Santander Q4 profit at record high on Europe, Brazil lending income Reuters via

© Reuters. A Santander company logo is pictured at the company’s headquarters in Boadilla del Monte, outside Madrid, Spain, February 2, 2023. REUTERS/Violeta Santos Moura

By Jesús Aguado

MADRID (Reuters) – Strong lending income in Europe and Brazil helped Spain’s Santander (BME:) offset a loss in Argentina and post a record high profit for the last quarter of 2023, beating forecasts.

Net profit for the quarter rose 28% year-on-year to 2.93 billion euros, above analysts’ expectations for 2.64 billion euros, thanks to a 34% gain in net profit in Europe.

Santander has relied in the past on Latin America for revenue growth but has recently benefited from higher European interest rates.

For the whole of 2023, net profit rose 15% to a record 11.08 billion euros as revenues rose 10.5%.

The higher profit helped lift Santander’s return-on-tangible equity ratio (RoTE), a measure of profitability, to 15.06% by the end of 2023 from 13.37% in 2022, meeting its year-end target of more than 15%.

“Our progress in executing our strategy, combined with the strength and diversification in our model, will allow us to continue to grow whilst further improving profitability, targeting a RoTE of 16% for 2024,” Executive Chair Ana Botin said in a statement.

Santander’s net quarterly interest income (NII), or earnings on loans minus deposit costs, rose 9.5% year-on-year in to 11.12 billion euros, more than the 10.93 billion expected by analysts, but NII fell 0.9% against the previous quarter.

In Brazil, NII rose 12.3% against the same quarter of 2022 and 7.6% from the third quarter.

In Spain, NII rose 24% year-on-year in the quarter but fell 0.2% against the previous quarter. Investors are watching closely to see if the boost from higher interest rates has peaked as markets anticipate cuts in 2024.

Like peer BBVA (BME:), Santander’s results in South America were hit by an hyperinflation adjustment and a peso devaluation in Argentina.

Santander booked a loss of 20 million euros in Argentina, which accounted for 3% of the bank’s total profit for 2023.

($1 = 0.9244 euros)