By Xavier Fontdegloria
Banco Santander SA third-quarter earnings beat expectations as an increase in revenue due to rapidly rising interest rates outweighed higher provisions and inflation-related costs.
The Spanish bank, one of eurozone’s largest, posted a net profit of 2.42 billion euros ($2.41 billion) from July to September, up 11% from the same period a year earlier. The figure tops analysts’ expectations of a EUR2.15 billion profit for the period, according to a consensus provided by FactSet.
Santander posted a leap in revenue as the lender was boosted by the current interest-rate hiking cycle. Net interest income–the difference between what banks earn on loans and pay clients for deposits–increased 19% to EUR10.05 billion. Overall revenue was EUR13.51 billion.
Profit was weighed by higher loan-loss provisions, which increased 24% on year to EUR2.76 billion.
Santander said Wednesday that it is on track to meet its financial targets for the year, including an underlying return on tangible equity–a key measure of profitability–of more than 13%, a cost-to-income ratio of 45%, and revenue growth around the mid-single digits. In the first nine months of 2022, the bank’s underlying ROTE stood at 13.6%.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
