Banco Santander(SAN) - 2022 Q4 - Annual Report

Financial Performance - Banco Santander reported a net profit of €8.1 billion for the fiscal year ending December 31, 2022, representing a 10% increase compared to the previous year[10]. - Banco Santander's consolidated financial statements report significant growth in net profit, reaching €8.1 billion, a 20% increase compared to the previous year[22]. - In 2022, the company achieved a record attributable profit of EUR 9.6 billion, representing an 18% increase year-on-year[51]. - Total revenue increased by 12%, with a mid-single digit growth of 6% in constant euros[53][54]. - The Return on Tangible Equity (RoTE) was reported at 13.4%, with Earnings Per Share (EPS) increasing by 23%[53]. - The Group achieved a record year in 2022, with a payout policy of approximately 40% of attributable underlying profit, split equally between cash dividends and share buybacks[79]. - The total shareholder remuneration for 2022 is projected to be €3,842 million, representing about 40% of the underlying profit[133]. Asset and Loan Growth - The bank's total assets reached €1.5 trillion, with a return on equity (ROE) of 12.5%[10]. - The bank's total assets increased to €1.6 trillion, reflecting a 10% year-over-year growth[22]. - Customer loans increased by 5% year-over-year, totaling €1.1 trillion, while customer deposits grew by 6% to €1.2 trillion[10]. - Customer deposits rose by 12% to €1.1 trillion, indicating strong customer confidence and retention[22]. - Total loans outstanding reached EUR 1,036,004 million, with EUR 562,078 million allocated to households[96]. Digital Transformation and Innovation - Banco Santander's digital customer base expanded to 40 million, reflecting a 15% increase year-over-year[10]. - The bank plans to invest €1.5 billion in technology and digital transformation over the next three years[10]. - The bank is investing €1 billion in technology and innovation to enhance digital banking services and improve customer experience[22]. - New product offerings include enhanced digital banking services and sustainable finance solutions[10]. - The bank has initiated a strategic partnership with fintech companies to accelerate digital transformation and enhance service offerings[22]. Market Expansion and Strategy - The bank is focusing on expanding its presence in Latin America, targeting a 20% growth in that region's profits[10]. - Banco Santander plans to expand its market presence in Latin America, targeting a 15% increase in market share over the next three years[22]. Risk and Asset Quality - The bank's non-performing loan (NPL) ratio improved to 3.1%, down from 3.5% in the previous year[10]. - Non-performing loans (NPL) ratio decreased to 3.1%, down from 3.5%, indicating improved asset quality[22]. - The bank's cost-to-income ratio improved to 45%, down from 48%, reflecting better operational efficiency[22]. - The Cost of Risk (CoR) was contained at 0.99%, demonstrating sound credit quality[54]. Environmental, Social, and Governance (ESG) Initiatives - The Group raised and facilitated EUR 28.8 billion in green finance in 2022, contributing to a commitment of EUR 220 billion from 2019 to 2030[98][101]. - The company achieved 88% of its electricity usage from renewable energy sources, aiming for 100% by 2025[104]. - The company met its goal of financially empowering 11.8 million people cumulatively by 2022, surpassing the target of 10 million by 2025[104]. - The company launched Santander Prosperity, its first social investment fund classified under article 9 of the Sustainable Finance Disclosure Regulation[102]. - The Group's responsible banking agenda includes a commitment to achieve net zero emissions by 2050 and integrate ESG criteria into all operations[129]. - In 2022, the Group's ESG ratings improved, with Sustainalytics rating at 22.4 points, indicating medium risk, and CDP achieving an A rating, reflecting leadership in climate change[139]. Diversity and Inclusion - The workforce comprises 54% women, with 29.3% of women in senior positions[98]. - The Santander Women's Network grew year-on-year, aiming to increase female representation in senior positions[196]. - The target for women on the board is 40-60%, with current representation at 40%[200]. - The company aims for 30% of senior positions to be held by women, currently at 29.3%[200]. - Mandatory training for top managers included sessions on "Cultural connection" and "Listening to everyone" to raise awareness of diversity and inclusion[193]. Shareholder Engagement and Governance - The Group's engagement with shareholders included 201 events and 862 engagements with institutional investors, focusing on transparency and communication[136]. - The Group's risk culture, known as Risk Pro, was emphasized in 2022, with mandatory risk training for Corporate Centre employees and a focus on integrating risk management into daily operations[144]. - The Group's updated Corporate Framework on Financial Crime Prevention addresses bribery and corruption risks, with enhanced controls and training implemented in 2022[158].