Banco Santander Sa reports 44.0% CAPEX growth in 2018 while 2.0% Revenue decline
30 Jan 2019 • About Banco Santander Sa (
$BNC) • By InTwits
Banco Santander Sa reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Banco Santander Sa has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.6%. At the same time it's a lot of higher than industry average of 2.8%.
- CAPEX is quite volatile: ₹3,588m in FY2018, ₹1,382m in FY2017, ₹1,545m in FY2016, ₹1,792m in FY2015, ₹2,037m in FY2014
- The company has potentially unprofitable business model: ROIC is 2.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.7x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased slightly on 2.0%.
Net Income margin increased slightly on 1.8 pp from 8.9% to 10.7% in 2018. Net Income margin followed a growing trend at 0.69 pp per annum in 2014-2018. The efficient tax rate was 38.5% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Banco Santander Sa had CAPEX/Revenue of 14.7%. The company showed CAPEX/Revenue growth of 4.5 pp from 10.2% in 2015 to 14.7% in 2018. It's average level of CAPEX/Revenue for the last three years was 11.3%.
Banco Santander Sa has spent €730m on M&A in 2018 which accounts for 1.0% of revenue.
Return on investment
The company operates at low ROIC (2.3%) and ROE (8.2%). ROIC showed almost no change in 2018. ROE increased slightly on 1.5 pp from 6.7% to 8.2% in 2018. ROIC stuck to a growing trend at 0.16 pp per annum in 2014-2018. During 2014-2018 ROE bottomed in 2017 at 6.7%.
Leverage (Debt)
Debt increased on 9.2% while cash dropped on 17.2%.
Banco Santander Sa has short term refinancing risk: cash is only 60.9% of short term debt.
The company paid 39.9% of Net Income as dividends in 2018.
Management team
The company's CEO is Jose Antonio Alvarez Alvarez. Jose Antonio Alvarez Alvarez has 1 year tenure with the company. CEO total compensation was €8,645,000 in 2018 which included €2,541,000 salary and €1,582,000 annual bonus. Banco Santander Sa's CFO Jose Antonio Garcia Cantera has spent 5 years with the company.
Insider ownership is 0.78%.
The company has 202,713 employees. Average revenue per employee in 2018 was €359,370.
Financial and operational results
FY ended 31 Dec 2018
Banco Santander Sa ($BNC) key annual financial indicators| mln. € | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 75,046 | 74,920 | 72,578 | 74,326 | 72,849 | -2.0% |
| Tax | | | | | 4,886 | |
| Net Income | 5,816 | 5,966 | 6,204 | 6,619 | 7,810 | 18.0% |
Balance Sheet
|
|---|
| Cash | 69,428 | 77,751 | 76,454 | 137,273 | 113,663 | -17.2% |
| Inventory | | | | | 147 | |
| Short Term Debt | 155,369 | 175,373 | 149,398 | 232,902 | 186,702 | -19.8% |
| Long Term Debt | 214,021 | 226,160 | 228,869 | 163,823 | 246,619 | 50.5% |
Cash flow
|
|---|
| Capex | 6,695 | 7,664 | 6,572 | 7,450 | 10,726 | 44.0% |
| Dividends | | | | | 3,118 | |
| Acquisitions | | | | | 730 | |
Ratios
|
|---|
| Revenue growth | 2.8% | -0.2% | -3.1% | 2.4% | -2.0% | |
|
|---|
| Net Income Margin | 7.7% | 8.0% | 8.5% | 8.9% | 10.7% | 1.8% |
| CAPEX, % of revenue | 8.9% | 10.2% | 9.1% | 10.0% | 14.7% | 4.7% |
|
|---|
| ROIC | 1.7% | 1.9% | 2.0% | 2.3% | 2.3% | 0.0% |
| ROE | 7.7% | 7.1% | 6.9% | 6.7% | 8.2% | 1.5% |
People
|
|---|
| Insider ownership | | | | | 0.8% | |
| Employees | | | | | 202,713 | |
| Revenue/Employee, th. € | | | | | 359 | |
Peers in Banks
Below you can find Banco Santander Sa benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| European Islamic Investment Bank ($EIIB) | 42.3% | -4.1% | -63.9% | 232.5% | |
| Halyk Savings Bank Of Kazakhstn JSC ($HSBK) | 16.3% | 19.5% | 16.4% | 59.5% | |
| Zenith Bank ($ZENB) | | 6.8% | 17.9% | 46.7% | |
| Commercial Intl Bank(Egypt)S.A.E ($CBKD) | 18.9% | 26.8% | 27.0% | 46.4% | |
| TCS Group Holding ($TCS) | 11.5% | 10.6% | 34.0% | 33.7% | |
| |
|---|
| Median (43 companies) | 15.7% | 4.0% | 3.9% | 4.5% | 12.2% |
|---|
| Banco Santander Sa ($BNC) | | -0.2% | -3.1% | 2.4% | -2.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Lloyds Banking Group ($LLPC) | 13.1% | 13.6% | 14.5% | 14.5% | |
| Bcb Hldgs Ltd ($BCBW) | 5.4% | 2.5% | 3.0% | 7.3% | 5.9% |
| Royal Bank Of Scotland Group ($RBS) | 4.1% | 4.6% | 5.6% | 7.1% | |
| Diamond Bank ($DBPA) | 6.0% | 6.7% | 6.2% | 7.0% | |
| Commerzbank Ag ($CZB) | 4.6% | 1.6% | 2.5% | 6.3% | |
| |
|---|
| Median (39 companies) | 2.0% | 2.5% | 2.0% | 1.8% | 1.0% |
|---|
| Banco Santander Sa ($BNC) | 8.9% | 10.2% | 9.1% | 10.0% | 14.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TCS Group Holding ($TCS) | 6.7% | 3.4% | 22.5% | 31.8% | |
| Commercial Intl Bank(Egypt)S.A.E ($CBKD) | 30.1% | 30.3% | 28.0% | 25.3% | |
| Guaranty Trust Bank ($GRTB) | 17.8% | 16.0% | 17.4% | 18.3% | |
| Sberbank Of Russia ($SBER) | 4.8% | 4.0% | 9.4% | 13.0% | |
| Zenith Bank ($ZENB) | 15.0% | 11.2% | 11.1% | 11.4% | |
| |
|---|
| Median (43 companies) | 4.4% | 3.5% | 4.6% | 4.6% | 4.5% |
|---|
| Banco Santander Sa ($BNC) | 1.7% | 1.9% | 2.0% | 2.3% | 2.3% |
