Santander posts profit beat amid rise in customers and stronger capital position

Key Points
  • Santander reported a 9% increase in its number of loyal customers.
  • CET 1 capital ratio stood at 11.65%, compared to 11.3% at the end of 2018.
  • In the U.K., Santander reported a lower underlying profit due to "ongoing competitive pressures."
Spanish Santander Bank executive chairperson Ana Botin.

Santander posted a 35% year-on-year increase in net income for the fourth quarter of 2019, beating market expectations, supported by a rise in its customer base and capital gains.

The Spanish bank posted a net profit of 2.78 billion euros ($3.06 billion) in the last quarter of the year. For the whole of 2019, the bank's net income dropped by around 16%.

Here are some of the highlights for the fourth quarter:

  • Total income hit 12.5 billion euros — slightly lower than the fourth quarter of 2018.
  • CET 1 capital ratio stood at 11.65%, compared to 11.30% at the end of 2018.
  • The total dividend proposal is 0.23 euros per share.

Santander also reported a 9% increase in the number of its "loyal" customers over the last year — meaning those that use the Spanish lender as their primary bank. "Our focus on customer loyalty, geographic diversification and scale drove strong operating performance across all regions," Ana Botin, the chair of Banco Santander, said in a statement.

Demand for credit isn't improving despite low rates, Santander chairman says

Speaking to CNBC's Geoff Cutmore, Botin said she felt "very good" about the latest results. "We have delivered on all our strategic priorities," she said, "We have created a lot of capital this year."

The Spanish bank also recorded some charges in 2019 as well as restructuring costs in several markets. These amounted to about 1.7 billion euros. Nonetheless, their impact was somewhat offset by a 693 million euro business transaction with Santander and Credit Agricole combining their custody and asset servicing operations.

"Our South American business continued to generate healthy growth; we maintained strong momentum in North America, with the U.S. delivering among the fastest growing underlying profit of all markets; and in Europe we achieved a 10% return on tangible equity, despite a challenging interest rate environment," Botin added in her statement.

Santander's stock rose 4% in early deals on Wednesday.

UK market still under pressure

In the U.K., Santander reported a lower underlying profit due to "ongoing competitive pressures," Botin told CNBC that the U.K. has experienced a "very important transformation program."

"You're only just beginning to see the results, so U.K. costs actually came down and costs will come down more next year but not at expense of service," she said.

Costs dropped by 3% in real terms for its U.K. business. The total number of branches has fallen by more than 18% in annual terms to 616, and the number of employees has also dropped by about 4% in the same period.