MADRID (dpa-AFX) - The major Spanish bank Santander earned more than ever before last year thanks to higher interest rates. The bottom line was a profit of just under 11.1 billion euros, 15 percent more than a year earlier, as Spain's largest financial institution announced in Madrid on Wednesday. In the new year, bank boss Ana Botín wants to further increase earnings. At the same time, the return on equity is to increase further.

The news was well received on the stock market in Madrid. Santander shares rose by around two percent by lunchtime, making them one of the strongest stocks in the EuroStoxx 50 eurozone index, just behind the shares of Italian competitor Unicredit.

Santander intends to return around half of its 2023 profit to shareholders - either in the form of dividends or share buybacks. With its record surplus, the bank is in good company: the largest US bank JPMorgan also posted the highest profit in its history last year with almost 50 billion US dollars (around 46 billion euros). Only on Tuesday, the Spanish bank BBVA reported a record profit of eight billion euros.

Santander gained around five million new customers across the Group last year. Net interest income grew by twelve percent to 43.3 billion euros; total income increased by ten percent to 57.4 billion euros. The fact that the bank set aside almost a fifth more money (12.5 billion euros) for impending loan defaults was offset by the higher income.

However, some customers found their loans too expensive due to the rise in interest rates. They therefore used surplus credit balances to repay real estate loans in particular, the Group reported. Deposits in customer accounts increased by a good four percent year-on-year. The credit volume, on the other hand, stagnated.

Santander generated around half of its consolidated profit in Europe, where it is active in the UK and Germany as well as Spain. At almost 5.5 billion euros, the European business generated 45 percent more than in the previous year. In North and South America, however, profits fell by a fifth. Better business in Mexico was more than offset by higher provisions in the USA and Brazil.

Santander CEO Botín is optimistic for the current year: she wants to increase the bank's earnings by a mid-single-digit percentage in 2024. Greater digitalization should help to ensure that costs consume an even smaller proportion of income. While the ratio of costs to income recently fell from 45.8 to 44.1 percent, Botín wants to reduce this ratio to below 43 percent in 2024.

This makes Santander one of the most efficient banks in Europe. At Deutsche Bank, for example, 73% of income was still spent on costs in the first nine months of last year. CEO Christian Sewing wants to reduce the ratio to below 62.5% by 2025. Commerzbank recently reached 60 percent and is aiming for around 55 percent by 2027.

Thanks to lower costs, Santander not only earns significantly more overall than the two major German banks listed on the stock exchange. The return on tangible equity is also higher for the Spanish bank: After 15.1 percent last year, it is expected to rise to 16 percent this year. Deutsche Bank has only forecast a return of over 10 percent for 2025. And Commerzbank CEO Manfred Knof has set himself a target of more than 11 percent for 2027./stw/tav/jha/