The euro zone second-biggest lender in terms of market value booked a net profit of 2.57 billion euros ($2.84 billion) despite an impact of 224 million euros from a new tax on banks in Spain. Analysts polled by Reuters expected Santander to post a net profit of 2.45 billion euros.

Excluding the effect of the tax, profit rose 10% year-on-year in the quarter.

Higher revenues also helped Santander increase its return-on tangible equity ratio (ROTE), a measure of profitability, to 14.4% from 13.37% at the end of 2022.

In a higher interest rates environment, the bank reaffirmed its ROTE target of above 15% by the end of 2023.