Santander profits rise ‘high in the longer term’ amid interest rate warning.

Santander’s third-quarter profits rose 20 percent as the Spanish bank benefited from the strength of its European business, which offset weakness in the Americas.

The London-listed group posted a net profit of €2.9 billion (£2.41 billion), beating forecasts of €2.77 billion, and achieved record earnings per share of €0.17, in line with expectations and rose from 0.14 euros in the previous quarter.

The group’s UK arm showed strength but bosses warned of the impact that “prolonged high” interest rates will have on the country.

According to the latest results, Santander is on track to achieve its 2023 targets

Santander boasted nine million new customers in the three months, helping to boost net interest income – the difference between what lenders pay borrowers and savers and a key measure of profitability – by 16 percent.

The bank told investors it expects to meet its 2023 targets, including double-digit income growth and a return on tangible equity, a measure of profitability, of more than 15 percent.

Ana Botín, CEO of Banco Santander, said: “As the external environment becomes increasingly uncertain, it is in these times that the strength of our model and our team is most evident.”

“Given the positive momentum that we also expect through 2024, I am confident that we will achieve our goals for 2023.”

Third quarter gains were driven by Europe, where attributable profit rose 49 percent to 4.18 billion euros, with Spain leading growth across all markets.

Attributable profits in Spain rose 68 percent to 1.85 billion euros, while the UK business rose 12 percent to 1.24 billion euros.

In a separate statement, the bank’s UK division warned it expects “longer-term high interest rates will have a greater impact on households and businesses.”

It also expects the UK’s NIM to peak this year “driven by base rate increases and disciplined pricing actions”, but told investors that cost-cutting efforts should help offset pressure on operating costs.

Mike Regnier, CEO of Santander UK, said: “We delivered good results despite a difficult macroeconomic environment.”

“We have put our customers’ needs first, offering them the right products and services and helping them with their finances when they need it.”

“We provided savers with competitive interest rates, including a premium, easy-to-access savings account, and helped homeowners struggling with rising interest rates through the government’s mortgage charter.”

Strength in Europe offset weakness in America, with North American profits falling 19 percent to 1.9 billion euros.

Buoyant trading in Mexico was overwhelmed by “the normalization of loan loss provisions in retail portfolios and seasonality in the auto business in the US,” the group said.

Attributable profits in South America fell 16 percent to 2.33 billion euros due to rising costs and higher provisions for loan losses.

Santander has previously relied on Latin America, but higher interest rates in Europe mean it has joined rivals in getting better deals on the continent.