FINANCIALS: Santander Results 24-Jul: Spanish Mortgages, UK & Corporate Banking

Santander (SANTAN: Baa1 pos/A-/A-) results are 24-Jul. Spanish mortgage competition, a first look at UK banking performance and the success of the corporate bank build-out could be areas of interest, in our view.

• Previous results (30-Apr) were only 1-2% better than consensus but a good (4%) NII beat was an important feature and mgmt indicated it may “overdeliver” on some areas of guidance. Not quite a formal upgrade, but close to. The UK performance was relatively weak, but group was rescued by Spain – this is going to be the first indication of 2Q24 from any UK banking business.
• BBVA’s bid for Sabadell has started any number of M&A rumours but Santander has managed to remain rather apart from the fray. Spain is raising the counter-cyclical buffer (CCyB) which should underpin spreads over the longer-term. Competition in Spanish mortgages has also been in the news – margin performance and guidance there could be important.
• SANTAN spreads have beaten the peers since last results (-13bp vs. -1.6bp) but the equity has underperformed (by c.9%). This could be a result of the Spanish CCyB news, we feel.
• Revenues have been upgraded (c.2%) on that NII beat and that’s followed through to 3-4% earnings upgrades.

Results are due pre-market with conf call at 0900 (London time) at https://wavedw.santandergroup.net/WS/2407PRANA/?ln=en