Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Santander Bank Polska SA (STU:BZI) reported a gross profit of 7.3 billion PLN for 2024, with a net profit of 5.2 billion PLN, indicating strong financial performance.
• The bank experienced significant growth in digital and mobile banking customers, with digital customers increasing by nearly 8% and mobile banking customers by 13%.
• Customer deposits grew by 11% to 232 billion PLN, and the gross loan portfolio increased by 9% to 180 billion PLN, showcasing robust growth in core banking activities.
• The bank's net interest income rose by 6% year-on-year to 13.9 billion PLN, demonstrating effective interest income management.
• Santander Bank Polska SA (STU:BZI) maintained a strong capital position with a total capital ratio of 20.4% and excellent liquidity, with an LCR of 215% at the end of December 2024.

Negative Points

• The bank faced significant tax and regulatory costs, with total charges amounting to 3.1 billion PLN in 2024, impacting overall profitability.
• Legal risks associated with CHF loans resulted in additional charges, affecting the net profit for the fourth quarter.
• Interest expense increased by 4% in the fourth quarter, which could pressure future net interest margins.
• The cost of risk in the fourth quarter was approximately 60 basis points, indicating potential challenges in maintaining credit quality.
• The bank's operational costs increased by 6% year-on-year, driven by high contributions to the banking guarantee fund and inflationary pressures, which could affect future cost efficiency.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with STU:BZI.

Q: What is the current status of Swiss franc-denominated loans and settlements? A: We have made 13,000 settlements by the end of the year, including 3,700 in Q4. Settlements were offered to 98% of active customers. The group has claims totaling 7.9 billion PLN, and 15% of claims are from customers who have fully repaid their loans. (Unidentified_1)

Q: How did the bank manage to grow corporate loans above the market rate? A: It was a deliberate strategy to strengthen our position in corporate banking. We focused on building a proper business model and strategy, which has yielded positive results. We aim to continue this growth and become a leader in the corporate market. (Unidentified_2)

Q: What is the outlook for interest rates and net interest margin? A: We expect the first interest rate cuts in mid-2025, with a reduction of 100-125 basis points. The cuts are expected to continue into 2026. Our hedging strategy has increased, with fixed rates now at 50% of our balance sheet. The sensitivity to a 100 basis point change is approximately 340 million PLN. (Unidentified_2)

Q: What are the expectations for operating costs in 2025? A: We aim to maintain discipline and keep costs aligned with inflation, targeting a cost-to-income ratio over 30%. We do not plan to exceed inflation levels. (Unidentified_1)

Q: What is the bank's approach to capital and dividend policy? A: Our dividend policy is consistent, and we aim to share earnings with shareholders. We are in discussions with the regulator for dividend approval. We focus on organic growth and have no plans for non-organic expansion. (Unidentified_2)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.