The profit of the foreign subsidiaries of the large Spanish banks increased by 8% year-on-year until September. In the first nine months of this year, these divisions reported profits of 11,963 million in constant euros, compared to 11,082 million a year ago. However, there are clear differences. Thus, Mexico, mainly, and the United Kingdom and Turkey, to a lesser extent, compensated for the declines experienced in business in Brazil and the United States.
The two large financial groups, Banco Santander and BBVA, benefited from a more restrictive policy of the central bank in Mexico, where the price of money stands at 11.25%. Thus, the Central American country became the first driver of the income statement for the second entity. The bank chaired by Carlos Torres saw how Mexico closed the first 9 months of the year with a profit of 3,987 million euros, which represents an improvement of 36.7% compared to the previous year, when it earned 2,918 million. Banco Santander, which also has a presence in the country, achieved its profit in the region by 33%, exceeding 1.1 billion euros.
The European subsidiaries of Spanish entities have also increased their contribution to the results of Spanish groups due to the boost provided by the new cycle of high rates in the Old Continent. In this regard, the European Central Bank (ECB) promoted a shift in its monetary policy in July 2022 and carried out, until the October pause, ten consecutive increases in the price of money, placing it at 4.5%.
And this has translated into double-digit increases in profits thanks to the boost in net interest income. Thus, Banco Santander’s subsidiaries in Poland and Portugal closed the third quarter with a combined profit of 1,133 million, which represents an improvement of 92.3%. Santander Portugal experienced a 68% increase in profits, while in Poland the increase was 229%. Caixabank, which is present in the neighboring country through BPI, has also benefited from this new environment. The Portuguese bank closed the first nine months of the year with an attributable result of 308 million, 53.4% more.
This same path in monetary policy has also been followed by the Bank of England, which has placed interest rates at 5.25%, its highest level since February 2008. Which has had a positive impact on the accounts of the subsidiaries present on the islands. Santander UK has increased its profit by 9.2% to 1,243 million euros, although it has been Banco Sabadell that has benefited the most from the new rate scenario since TSB has increased its result by 48.1% to 152 million euros. euros thanks to a cost containment policy and a very active mortgage commercial campaign.
Turkey, which is in a de-dollarization process, and with a change in its monetary policy to control hyperinflation, has also improved its contribution since the result grew by 10.2% until September, improving on the 333 million euros from ago. one year.
Latin America and the United States stumble
South America and the United States will be the two regions that obtained a lower profit than that registered in the first 9 months of last year. South America would be impacted by negative sensitivity to interest rates in some countries, such as Brazil, while in the United States it was affected, in the case of Santander, by lower leasing income and an increase in business provisions. . of car.
For BBVA, the profit recorded in South America in the first nine months of 2023 was 20.6% lower than the same period in 2022, 496 million euros compared to 625 million euros. In the case of the entity chaired by Ana Botín, Brazil saw its results fall by 30% to 1,426 million euros. However, the bank expects it to improve in the coming months after the Brazilian central bank begins to cut rates. In Chile the decrease would be 24% to 417 million euros, while the exception would be Argentina, where it would have increased 74% to 406 million euros.
Regarding the business in the United States, the region has gone from leading Banco Santander’s results in 2021 to becoming the fifth region. Profit has fallen 42% to 865 million euros.
