Santander’s profits dented by €224mn hit from windfall tax

Santander stated it paid a €224mn windfall tax invoice as a controversial levy launched by the Spanish authorities value the nation’s largest financial institution a sum equal to just about 10 per cent of its first-quarter income.

The fee left the Spanish financial institution with internet income that rose simply 1 per cent yr on yr to €2.57bn within the first three months of the yr. Rising rates of interest boosted its revenue in Europe but in addition pushed up mortgage loss provisions within the US and South America.

The figures have been higher than anticipated by analysts, who had forecast a drop in earnings. However with out the windfall tax invoice, which lined the entire of 2023, Santander stated its internet revenue would have risen by 8 per cent.

Spain’s Socialist-led authorities imposed a 4.8 per cent levy on banks’ revenue from curiosity and commissions for 2 years, arguing that rising rates of interest have led to “extraordinary” income to the sector. Spanish banks are difficult the short-term tax within the courts.

Within the US market, which analysts are watching intently, Santander reported a 49 per cent drop in internet revenue to €300mn because it needed to set more cash apart for potential defaults on shopper automobile loans, a key pillar of its enterprise. Revenue in Brazil fell by 25 per cent as a result of greater mortgage loss provisions.

However the financial institution’s efficiency was higher in its house market Spain, the place income elevated by 28 per cent to €466mn due to rising curiosity revenue. Within the UK, the place shopper loans and buyer deposits fell, revenue edged up 5 per cent to €395mn.

Ana Botín, Santander’s government chair, hailed “a robust begin for the yr” and highlighted how rising rates of interest, new clients and extra loans had pushed a 13 per cent rise in revenue worldwide. The financial institution stated its return on tangible fairness, a key metric, had climbed to 14.4 per cent from 13.4 per cent in 2022.

Bankinter grew to become the primary Spanish lender to report the price of the windfall tax final week when it stated it paid €77mn for the complete yr. The short-term tax is due for 2023 and 2024.

María Dolores Dancausa, Bankinter’s chief government, stated: “If we had not needed to pay the extraordinary tax, revenue would have been . . . 60 per cent greater as a substitute of 20 per cent, in comparison with the identical quarter in 2022.”

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