Santander texts document 9.6-billion-euro recoveries for 2022, but Q4 provisions are up

February 3, 2023: On Thursday, Santander said its 2022 net profit increased 18% to a record 9.6 billion euros on higher lending. However, results were overshadowed in the fourth quarter as provisions doubled on economic uncertainty.

The euro zone’s second-huge lender by market value posted a net profit in the October to December time of 2.29 billion euros, up around 1% from a year before and over the 2.07 billion euros forecast by critics in the vote.

Net profit in 2022, which is going over the 9.39 billion euros expected by analysts, improves by higher interest prices and revenues, the proliferation of 7 million recent clients to its international customer base, and a solid performance at its Corporate and Investment Bank unit.

In the fourth quarter, loan loss provisions increased 106% year-on-year to 3.02 billion euros in the United States and Brazil. However, that was slightly below analysts’ forecast of 3.08 billion euros.

Santander said that additional provision 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, increased to 99 basis points from 86 basis points at the end of September, less than the 100 basis points guided for the year.

For 2023, it hoped the cost of risk to rise but remain lesser 120 basis points.

In the beginning, Hector Grisi became the bank’s chief executive overseeing the bank’s digital transformation through the economic uncertainty rattling the whole industry.

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

Net interest income revenues on loans minus deposit costs increase 17% to 10.2 billion euros in the quarter, broadly in line with analysts’ 10.15 billion euros forecast on the back of higher interest rates. NII for the entire year grew by 16%.