Banco Santander's Q4 2024: Contradictions in Capital Strategy, ONE Transformation, and U.S. Growth Prospects

These are the key contradictions discussed in Banco Santander's latest 2024Q4 earnings call, specifically including: Capital Allocation Strategy and Regulatory Impacts, ONE Transformation and Cost Savings, Capital Allocation and Growth Strategy, and U.S. Strategy and Opportunities:



Record Financial Performance:
- Santander reported profit of €12.6 billion for 2024, marking a third consecutive year of record results, with revenue up 10% in constant euros.
- The growth was driven by strong customer activity and fee income, which increased by 11%, supported by significant customer growth of 8 million.

Efficiency and Cost Management:
- The ONE Transformation initiative resulted in a 5 percentage point improvement in efficiency, reducing costs despite growing revenues by 9% in Retail and Consumer.
- This was achieved by leveraging global platforms, reducing the number of products offered, and improving digital onboarding and sales.

Diversification and Profitability by Division:
- Retail and Consumer contributed 70% to the group's profits, with Wealth and CIB improving profitability and fee income growth.
- CIB revenues increased by 14%, and Wealth revenues grew by 15%, driven by solid commercial activity and strong network effects across businesses.

Capital and Shareholder Returns:
- Santander's CET1 ratio grew to 12.8%, with a plan to distribute €10 billion in share buybacks to shareholders for 2025 and 2026.
- This reflects the company's strong capital generation and strategic focus on maximizing shareholder value through disciplined capital allocation.