Company: BCDRF
Filing Date: 2025-02-28
Form Type: 20-F
Source: 0000891478-25-000054
Chunk: 411

Company: Banco Santander, S.A.
Filing Date: 2025-02-28
Form: 20-F
Chunk 411
---
 by the landing expectations of the global economy, which was softer than anticipated, supported by the beginning of the cycle of easing monetary policy in the US and the eurozone, and the presidential elections in the US, with some occasional bouts of volatility and an increase in geopolitical risk in conflict areas.

Equity markets showed a positive trend. Gains were especially positive in the US, due to the strength of the business cycle together with expectations of tax cuts and deregulation. The technology sector stood out above all, mainly driven by the rise of artificial intelligence. In European stock markets, gains were more moderate, weighed down by weaknesses in the German growth model and the prospects of a more uncertain external environment (due to the impact of US and Chinese policies).

In the sovereign debt market, despite the fact that the Fed began the cycle of interest rate cuts, there was a rebound in long-term debt yields in the US, reflecting expectations of a pick-up in inflation. In Europe, strong interest in government bonds has reduced spreads over the German bond yields. France was an exception, weighed down by weakening macroeconomic fundamentals and political uncertainty.

The US dollar strengthened against the euro towards the end of the year, underpinned by the cyclical gap between the US and eurozone economies, by geopolitical uncertainty (which benefits the dollar as a safe-haven asset) and by the political agenda of the new administration in the US (which reduces the Fed's room for additional interest rate cuts).

In commodities, gold led gains, driven by geopolitical uncertainty and declining official interest rates. Industrial metals benefited from a revival of global manufacturing activity. In contrast, oil prices fell amid concerns regarding oversupply and slow demand growth.

Latin American markets had a volatile year, especially in the second half of 2024, due to the combination of a more uncertain international context and idiosyncratic factors in several countries. Central banks continued the monetary policy easing cycles they began in 2023, albeit gradually and still maintaining restrictive positions, while paying attention to their differentials against the Fed and the performance of their currencies against the US dollar. Latin American currencies ended the year with sharp depreciations. Volatility was most pronounced in the Brazilian market, where Brazil’s central bank decided to restart the cycle of interest rate hikes in the final months of the year, to curb pressures on the Brazilian real and contain its possible upward impacts on inflation.

The banking sector benefitted from a favourable macroeconomic environment and resilient labour markets which supported continued solid revenue performance and contained portfolio quality deterioration.

As a result, the