SANTANDER: 1Q’21 RESULTS (ANÁLISIS BANCO SABADELL)
1Q'21 vs. 1Q'20 ResultsN.I.I.: € 7.956 Bn (-6.3% vs. -7.0% BS(e) and -7.0% consensus);
Total Revenues: € 11.39 Bn (-3.6% vs. -7.8% BS(e) and -7.5% consensus);
Operating Profit: € 6.272 Bn (+0.6% vs. -5.3% BS(e) and -6.1% consensus);
Net Profit: € 1.608 Bn (+385.8% vs. +208.9% BS(e));
1Q'21 vs. 4Q'20 Results
N.I.I.: € 7.95 Bn (-0.8% vs. -1.6% BS(e) and -1.5% consensus);
Total Revenues: € 11.39 Bn (+3.6% vs. -1.0% BS(e) and -0.6% consensus);
Operating Profit: € 6.27 Bn (+9.0% vs. +2.7% BS(e) and +1.8% consensus);
Net Profit: € 1.608 Bn (+13.0% in 4Q’20 vs. -28.2% BS(e)).
The 1Q’21 results were slightly better than expected from NII (-6.3% vs. 1Q’20 and around -7% expected) and fee revenues (-10.7% vs. 1Q’20 and vs. -13.7% expected). The most positive reading comes from the good commercial dynamism in the UK, the US, and Brazil, especially. This and the high trading revenues on the quarter (which were unusually high at levels of € 650 M; ~2x vs. expectations) explain the rise in PPP (+0.6% vs. 1Q’20 and vs. -5.3% BS(e) and -6.1% consensus), despite the slightly worse cost performance than expected (-8.2% vs. 1Q’20 and vs. -9.1% consensus). That said, we are not concerned, as we believe that SAN will capture the new synergies coming from Europe in subsequent quarters (some € 1 Bn), with associated restructuring costs ranging from € 1.5 Bn and € 1.7 Bn.
CoR beat expectations in all main divisions (Spain, Brazil, US), hitting levels of 108bps vs. 128bps in 4Q’20 and ~115bps BS(e)). Thus, the results show a good performance in credit quality and mortgage moratoriums, and a NPL ratio stable at levels of 3.20%. We believe that in its results conference call SAN might be more specific as regards its CoR’21 guidance 7 Bn vs. the current guidance of €~6.5 Bn. This would mean ~+22%. We expect a positive share price reaction, although we must point out that the stock rose +5% yesterday. Conference Call at 10:00 (CET). BUY. T.P. € 3.30/sh. (+7.84% upside).
Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.
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