Banco Santander Investors Day has been quite a declaration of intent. Unlike the previous ones, the guides that the entity has given have not focused on countries, but on regions and, above all, it has focused on the four global businesses around which the new strategy of the bank that he presides will revolve Ana Botín: SCIB (Santander Corporate and Investment Banking), Santander Auto, Santander Wealth Management and Insurance and, especially, PagoNxt, the great bet of the president of the entity, and which aspires to be among the ten most important payment platforms world level.
There was a lot of expectation that he would have the platform for the guide for the next three years. To begin with, PagoNxt will have a vital role in the commission income that the entity expects. Specifically, the bank estimates that charges will experience growth of between 8-9% per year, but with a very different composition than in past years. According to the bank’s financial director, José García Cantera, there will be a turnaround compared to 2022. Thus, retail banking commissions will go from representing 59% of the total to 48%, and commissions from global businesses, such as PagoNxt or Auto, will account for 52%, compared to the previous 41%.
What’s more, these four global divisions will contribute by 2025 more than 40% of the entity’s income and 50% of commission income. Although this will not mean that the bank abandons its traditional activity. Botín has made it clear that it will allow the entity to reduce its weight, less sensitive to economic cycles, that is, it will be less influenced by the rise in rates, but also by the decreases, which will come when inflation is contained. And the numbers for 2022 seem to indicate that the bank is on the right track, since in 2022 these four large business areas will contribute 30% to revenue and 50% to profit.
Main levers of growth
During the presentation of its new roadmap, Santander reiterated that it aims to make PagoNxt a world leader in payments and to do so, the platform relies on different segments, ranging from offering payment solutions to physical and electronic businesses, taking advantage of the rise of e-commerce, which was already there, but the pandemic came to reaffirm it; encourage international trade payments for companies and process direct account-to-account payments for large customers and instant connectivity to payment systems in multiple geographies. This already allowed the division’s income to grow by 72% last year, although it is still in the red, since it presented a loss of 215 million, even so it is a 10% drop compared to 2021.
Something that the market has valued, especially after this Monday Banco Sabadell sells 80% of its Paycomet platform to Nexi for 280 million euros, but which could be increased to 350 million euros if 20% is incorporated remaining, an amount that according to sources in the sector is in the upper part of the valuation. In fact, in the past there was talk that this Santander business could end up being listed on the stock market (which could be addressed with Grisi as CEO).
Among the entity’s plans, the launch of a global card payment platform for the PagoNxt business stands out. For its SCIB division, the bank plans to launch new products and expand its degree of penetration globally, while the Wealth Management area has also set itself the goal of growing globally. In the Auto Santander section, promote its development in the main areas.