Sunday, April 21, 2024

US Becomes The New Big Booty For Santander

The US has become the new big booty for Santander . The North American market has become its main market for the first time, due to the contribution of profits, displacing the Brazilian , which until now was the engine of the group.

In addition, the expectations of the Spanish bank on the other side of the Atlantic are very positive, due to the recovery of the economy more than expected and the commitment it is making to grow on several fronts through increased business and through pursuit of acquisitions, such as the recently sealed deal to acquire the broker Amhrest Pierpoint , or the buyback of 20% of its consumer affiliate to hold all the capital.

Although the strategy involves organic growth, as the CEO, José Antonio Álvarez, assured a little more than a week ago, Santander does not rule out carrying out corporate operations on the other side of the Atlantic, unlike Spain in order to gain a larger scale. “It is not our motivation, but we want to grow there,” he made clear. In our country, the bank has reiterated by active and passive that it has no intention of undertaking acquisitions of entities.

The US, with the boost from the car leasing business and the economic improvement, has contributed 1,291 million euros to the group’s semi-annual accounts , at constant rates. A figure that exceeds the profits achieved by the entity in Brazil, which has reported 1,180 million.

The result obtained in the world’s leading power, also experienced a substantial increase, of more than almost 600%, due in part to a release of provisions against losses, of 156 million, and an increase in income.

The interest margin of the franchise, which operates with the traditional bank and with the consumer finance company, improved by 0.8%, although in terms of constant interest rates the advance was 8%. The franchise commissions, meanwhile, increased 1.7%, but at constant rates, 14%.

Álvarez highlighted the importance of car leasing and vehicle financing, an activity in which the bank operates and which is behaving much better than forecast . In fact, this factor has facilitated the release of a part of the special provisions made a year ago by the pandemic.

“The price of second-hand cars has risen 25%, we have cars on our balance sheet, and if the price rises there is more profit,” said the CEO of Santander in the presentation of the accounts at the end of June. The bank, including losses in the corporate area, recorded a half-year profit of 3,675 million , compared to historical losses in the same period of 2020.

In automobile financing, Santander already has a market share in the US of more than 4.5%, well above its dominance at a global level, and is also the seventh most relevant agent. In traditional bank loans, its weight is 3% and in deposits, 2.4%.

Contrast with BBVA
Santander’s commitment to the other side of the Atlantic contrasts with the departure of the retail activity of the other large Spanish bank, BBVA , at the beginning of June it executed the sale of its subsidiary for individuals . The blue bank has maintained its corporate and investment banking operations in fintech (through the Propel Ventures fund), which it intends to boost with a new plan .

BBVA has decided to get rid of this division for various reasons, despite the good expectations for growth and recovery in the North American country. One of them, and the most important, is the offer received, which has allowed the entity to achieve succulent capital gains and reinforce its capital levels with an excess of 8,000 million. Money that it will use to grow in other markets and to buy back up to 10% of the shares to remunerate its shareholders .

Another reason has been the lack of necessary quota both globally in the US and by the states where it was centered, mainly the southern ones. With a low scale, entities lose efficiency, since the capacity to generate income is lower to face high fixed costs.

Other markets
For Santander, Spain is the fourth country by contribution of benefits, but a very short distance from Mexico, which contributes almost the same profits, of almost 400 million. The United Kingdom, for its part, is the third by far, after the rise experienced in the last six months, also partly as a consequence of a greater recovery in the economy and a release of provisions.

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