Banco Santander (BME: SAN) share price will be in the spotlight this week as the company publishes its quarterly results. The stock has pulled back recently to trade at €3.42, down by more than 10% from the highest level this year. It is hovering near its lowest level since October 1st.

The earnings season is gaining momentum. In the past two weeks, big American companies like JPMorgan, Morgan Stanley, and Goldman Sachs published mixed financial results. And on Tuesday, Barclays earnings beat narrowly estimates.

Banco Santander, the fourth-biggest European banks by assets, will deliver its results on Wednesday. It has over €1.7 trillion in assets, making it only smaller than HSBC, BNP Paribas, and Credit Agricole. It has over 164 million total customers and 99 million active ones.

Santander is mostly a global bank with operations in several countries like Spain, Brazil, Poland, and Mexico among others. It is a top 3 bank in 9 of its key markets. This diversification has pros and cons. The biggest challenge is related to some of its key markets like Argentina, which is going through a major economic meltdown.

Like other banks, Santander is benefiting from high-interest rates in its key markets. In Europe, the European Central Bank (ECB) has hiked rates to a record high of over 4%. The implication is that the company is making more net interest margin.

The most recent results showed that the company’s net interest income rose to €20.9 billion in the first half of the year. Gross income soared to €28.2 billion while its net operating income was €15.755 billion Profit before tax dropped to €5.1 billion. Santander’s profits jumped to €2.7 billion in the last quarter.

The challenge for Santander is that the European economy is recovering at a slower pace. This is important since the company makes most of its money in Europe. South America, the other big part of its business is not recovering at a fast pace either.

SAN chart by TradingView

The daily chart shows that the Santander stock price formed a triple-top pattern. In price action analysis, this pattern is one of the most bearish patterns. The neckline of this pattern is at €3.3325.

Santander shares have also crashed below the 50-day and 100-day exponential moving averages (EMA). The Relative Strength Index (RSI) has moved below the neutral point at 50. Therefore, the outlook for the stock is bearish ahead of earnings.

If this happens, the next key level to watch will be at €3.00, the lowest level on June 26th. If this happens, it means that the stock could drop by more than 11.71%. This view will be confirmed if it moves below the neckline at €3.3325.

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