Santander convierte los depósitos en su arma para impulsar los beneficios

Santander is transforming deposits into its greatest asset to boost profitability, according to recent wire material. The bank's strategy hinges on this approach, and several investment banks confirm that deposits are a key factor in achieving this goal. Santander has consistently managed deposits meticulously, allowing it to keep costs under control.

However, this strategy's benefits were not clear to the market until recently. Three recent developments have changed that. The expansion of Openbank, especially in the US and Mexico, as well as the acquisitions of Webster and TSB, have put deposits in the spotlight. Despite this, the improvement in Santander's funding profile is often underestimated and contributes to the stability of profits.

Openbank, along with the additions of TSB and Webster, is helping the group build a broader, more diversified, and cheaper deposit base in key markets. The bank's differential advantage lies in its ability to use deposits to reduce financing costs. Santander has found a cheap source of money, as the remuneration is closely monitored to be as low as possible without hindering capture intensity.

With these funds, the bank avoids costly wholesale markets for resources. The result is a direct support that boosts interest rate margins and, from there, with better cost control, it has more room to spare on the profit. Investors continue to focus on macroeconomic and interest rate risks while undervaluing the benefits of strengthening Santander's deposit franchise, which should support resilient interest rate margin growth until 2028, warns Citi.

The US is one of the markets where the strategy is yielding fruit. Even before Webster's absorption (expected towards year-end), Openbank has already reduced operating costs for the subsidiary. Santander has highlighted that US ROE reached approximately 12%, one of the highest levels in recent years, thanks to Openbank's capture of €11 billion in deposits and generating €150 million in annual finance cost savings.

Webster joins an increasingly strong franchise, rather than being the sole driver of future profitability improvements. The same applies in Mexico, where the subsidiary has reduced deposit costs by over 100 basis points in the last 12 months, thanks to improved funding composition and growing contributions from retail deposits. Openbank is transitioning from a digital distribution platform to a strategic financing and profitability engine for the group, according to analysts.

With Webster and TSB, Santander will have an over 10% deposit market share in all relevant countries where it operates, providing a key competitive advantage that underpins the balance sheet's solidity. Even in Spain, where the share is 19%, deposit inflows growth exceeds the market average, so the influx of cheap resources is expected to continue at a firm pace.