ISH bank Santander expects it will take three years for profits to return to normal as higher regulatory and funding costs bite while the credit cycle gradually improves.
The Eurozone’s biggest bank expects its return on equity (RoE) to improve by between three and six percentage points over the next three years and sees profits in emerging markets growing by at least 10 per cent in the short to medium term, compared to “single-digit growth” in profit in mature markets.
Alfredo Saenz, group chief executive, said as he met investors in London: “With our solid business model and a great effort from all our units, it is within our reach to return to levels of RoE of 12-14 per cent”.
The bank’s RoE dropped to 9.4 per cent in the first half of this year. Rivals including HSBC, Barclays and BNP Paribas are also trying to lift profitability that has slumped due to the need to hold more capital.