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One of the major topics of conversation at the IMF and World Bank meetings is the state of the banking environment, specifically for European lenders. Joining us now for more on this is on a Boutein, Santander Executive Chairman, ANDIIF Chair. She is the first woman to chair THEIF board in its history, and she is joined by Bloomberg's Lisa Bromwoods, who was with her in Washington.
Lisa Scarlette, great to see you, Thank you so much. And yes, she is the chair of the Institute of International Finance. Anna Botein also the chair of Santander. And when we talk about all of the different discussions that people are having here, obviously it's the election, Obviously it's what's going on with the global economy. But how much is it the divergence between the situation right now in Europe versus a situation in the United States.
Well, it's been a very busy day, but I'd say that the topics are not very different from what they were a year ago. So we're still about how do we get growth to accelerate, And yes, Europe is growing less, but actually on a relative basis, Europe should do better next year than this year. In the US we're seeing
a slowdown. So it's about world growth. How do we get growth going again in an economy that we're very happy that it's still growing and it's soft landing it seems, but we need to get growth to be faster.
How much are people talking about the necessity of scale, of size of scope at a time of we're talking about UniCredit possibly taking over Commerce Bank, We're talking about the fact that the behemoths in the US are getting bigger. Is that something that's expected to continue now?
Absolutely, and you know sometime that is one of the biggest banks in the world by number of customers, which is what matters. We have one hundred and sixty eight million customers across Europe and Americas, so we have a scale. We have the global scale, we have the in market scale, and that is a unique combination. That's what matters. We have investments in technology that are in the billions. We
are rolling out global platforms. We set today that will have a fully digital bank by the end of twenty five in the United States we launched a few weeks ago. So yes, scale matters.
Scale matters.
But I'm curious because Lantaer hasn't made a big acquisition in years, what you're thinking about in terms of arge scale, M and A in the current environment in the near term.
We haven't made a major acquisition because we don't need it. We are growing profitably. As of June, we were growing our top line at ten percent. We have grown sixty
million customers in the last ten years. But very important, we're growing profitably, and we're rolling out our global platforms now in retail and consumer with our own tech stack, and so we're able to compete, you know, with our current size, and we're going to continue to invest in technology and people on different skills and making sure we're
there where our customers want us to be. We is launched in Germany with Apple and Amazon our digital merchant Xenia, so we feel we have what it takes to be competitive in today's.
World and in the US, sant and There is pushing really hard to grow towards corporate and investment banking unit as well as the launch of open Bank. I'm curious to hear what you think your competitive advantage is as you look to compete against the existent big investment banks and retail giants.
Here in the US, we're mostly retail commercial consumer bank, so we are at scale auto lender in the United States well, number five here nationwide, with the number one auto lender in Europe and Latin So we have the scale, we've proven that for many years. We have a retail bank that we have said a year ago we're going to make digital through the global platform, and that's what
we've done a few weeks ago. So we are bringing our global scale to benefit our regional banks so we can accelerate the past taking in the United States, and this is really unique.
Centendre has a reputation of providing consumer loans, like you say, and right now there's such a big question about what the consumer health really is, how able people are going to be to pay things back at a time where a lot of policy roomakers are saying we're reaching it, this is the off landing nirvana, and all the consumers are saying, we just don't feel it. How do you
see the performance of these loans? Are you're seeing signs of the sentiment that's more negative seeping into those loan performances.
So we're not seeing an increase in non performing loans beyond the seasonal trends. There's always seasonal trends in the consumer And so you know, if you ask me this question a year ago, beginning of this year, we actually better than we thought would be. So nothing out of the ordree absolutely in line with what we expected, even marginally better than we expected.
So if there's nothing really wrong with consumer credit, the economy is not going wild, but it's not terrible. Is it really just the concern about the election in the US that's kind of holding people back from being overly ebulliant or coming up with big plans.
So yes, inflation is hitting a lot of the consumers across the United States has been hitting. It's cumulative, right, so it's been going on even though it's coming down. It's better. But yes, we you know, we feel that both on the talking about the US now, so we feel there is pent up consumer demand. So we think there will be a pickup for example, in cop purchases. We get the feeling consumers holding back a bit, and
businesses too. I believe that you could see a pickup in investment after the election.
And I want to ask you about private credit as well, because a lot of banks are partnering with investment firms to set up private credit partnerships and thinking about City Group and Apollo for instance. What is sometimes there thinking about these kinds of tie ups and the opportunities that they may present. Are you doing anything similar or thinking.
About it now? Absolutely? We've been a leader in the originator to distribute model because banks are no longer the best holders of many of these loans because we have increased capital requirements. We have the distribution as I said, one hundred and sixty eight million customers full million corporates across the world. So we are originating a lot of loans that we are then placing with the private equities.
We work with all the major firms and we believe that is something which is you know, good for our shareholders, and we believe, you know, this is something we will continue.
Before I let you go, I do want to say, looking forward, what do you think is going to be the most important development in this next year for the banking sector. We talk about regulation, People don't want to talk about regulation like that's boring, but we talk about the geopolitical sphere and that could be something or is it the path of interest rates? And just how much they actually can go down in the divergence to the US and Europe.
So the big question is, you know, the structural trends that are inflationary, right, so if you think about demographics, you think about defence spending, you think about climate transition, those are all informationary trends. So the big question is what is the terminal or neutual interest rate that is going to you know, let's say, be more consistent going forward. Probably the US as a higher one than in Europe. Four percent is three percent. The question is can the
economy continue to grow with that level of rates? And the answer it seems yes. What we've seen in the last couple of years with relative high rates, companies have continued to invest and the economies have continued to grow, maybe not as much as we'd like. So you know, for a bank like Hours, interest rates in Europe of tour two and a half percent, high employment levels. That's why you know, our non performing loans are doing well.
We're growing, we have a very large amount of very small accounts, and so as long as interest rates are two two and a half, we're going to do pretty well on our margins and we're going to do pretty well on provisions, so it's not a bad place for banks.
Annabot it. Thank you so much for being with us an about in a bank of Santander.