After Covid dragged Banco Santander down to its first annual loss in 2020, the Spanish group bounced back to profit in 2021. Those developed markets that previously dragged the bank down are now powering its recovery.
Group chief executive José Antonio Alvarez expects this trend to continue in 2022, with profits growing faster in Europe than South America and North America, in which it includes Mexico and the US. That will lead to a return above its cost of equity in Europe, says Alvarez, as the continent helps it to a return on tangible equity target of between 13% and 15%.
Expectations of higher interest rates help. But it’s also to do with cost cuts in Spain and the UK. By the end of 2022, the bank will have reduced its cost base in Spain by more than a quarter over the last three or four years, notes Alvarez.
