Customer funds grew 5%, with deposits up 4%, supported by both individuals and Corporate and Investment Banking (Santander CIB). Customers continued to utilize excess deposits to pay down debt in the quarter, particularly mortgages. For that reason, as well as a reduction in demand in some markets due to higher interest rates, total loans were down 2%, with consumer lending up 7%. The bank’s loan book and deposits remain well diversified across both business lines and geographies. Deposits maintain a stable structure: approximately 75% are transactional, and more than 80% of retail deposits are insured with deposit guarantee schemes.

In total, income increased 13% to €43,095 million as the bank added nine million customers, taking total customers to 166 million. The rise in both customer activity and interest rates supported a 16% increase in net interest income. Net fee income was up 6% driven by sales of high value products – particularly within the bank’s global businesses. The global businesses represent 38% of total income and 42% of net fee income. Net interest income and net fee income accounted for 96% of the group’s total income, reflecting the quality of the bank’s earnings.

The group continues to make progress in simplifying its product offering and accelerating its digital transformation to provide better services to customers and improve efficiency. As income growth (+13%) outpaced growth in costs (+10%), the efficiency ratio improved by 1.5 percentage points to 44.0%. This was driven by the group’s transformation towards a simpler, more digital and integrated model, as the bank continued to reduce costs in real terms (-0.5%).

Loan-loss provisions were up 21% year-on-year, reflecting an expected increase following higher interest rates and inflation, the normalization in the US, as well as additional provisions to cover the Swiss franc mortgage portfolio in Poland. Overall credit quality remained robust, with cost of risk lower than target for the year at 1.13%, and markets such as Brazil are improving its cost of risk for the second quarter in a row. The non-performing loan (NPL) ratio remained broadly stable at 3.13%.

(1) The target payout will be approximately 50% of the group net attributable profit (excluding the impacts that do not affect cash or capital ratios directly), split approximately 50% in cash dividends and 50% in share buybacks. Implementation of the shareholder remuneration policy is subject to future corporate and regulatory decisions and approvals.

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