Banco Santander, S.A. Sponsored ADR (Spain)
SAN · NYSE
Next quarter
Expected to report Feb 2, 2027 — estimated from last year’s reporting date.
Consensus is $0.27 EPS for Dec 2026 across 1 estimates, ranging $0.27 to $0.27.
SAN Sep 2026
- 0.00%
- $0.26
- $0.26
- —
- —
Highlights
- Earnings expectations — Q3 EPS was €0.26, in line with consensus; underlying profit for the first nine months reached a record €11.2 billion, up 14% year on year in constant euros.
- Revenue and costs — Q3 revenue rose 7% year on year, including NII growth of 8% and fee growth of 7%; costs were stable despite TSB and Webster consolidation, while costs fell 4% quarter on quarter excluding M&A.
- Efficiency and returns — The efficiency ratio improved 2.8 percentage points year on year to 42.6%, its best level in 17 years; underlying RoTE reached 16%.
- 2026 outlook — Santander expects underlying net profit above €15 billion including M&A, and remains on track to exceed its guidance of €14.1 billion excluding M&A.
- Capital position — CET1 was 12.7% after absorbing Webster’s 147-basis-point impact; the bank generated 59 basis points of capital in Q3 and expects year-end CET1 above its 12.8% target.
- Credit quality — The group’s NPL ratio was 2.9% and 12-month cost of risk was 1.16%; excluding Argentina, cost of risk was 1.09%, with provisions broadly tracking organic loan growth.
- Brazil — Santander is de-risking and reshaping its loan book amid elevated rates; management said early delinquencies improved to 3.9% in August, while the group’s sensitivity to a 100-basis-point rate move has halved to €30 million–€40 million.
- Shareholder returns — Buybacks underway are expected to bring total repurchases to around €9 billion, approaching the commitment to distribute at least €10 billion across 2025 and 2026.
Analysis
Santander’s Q3 EPS of €0.26 matched consensus, while the call emphasized record nine-month underlying profit of €11.2 billion, up 14% year on year in constant euros. Comparisons include a full quarter of TSB and 40 days of Webster; management said their effect on year-on-year trends was about 1.3 percentage points across the main P&L lines. Revenue grew 7%, led by NII up 8% and fees up 7%, while costs were stable despite the expanded perimeter. Sequentially, NII rose 2%, and costs fell 4% excluding M&A. Underlying EPS for the first nine months increased 21%.
The defining feature of the print was operating leverage: the efficiency ratio reached 42.6%, a 17-year low, and underlying RoTE rose to 16%. Santander also maintained a solid 12.7% CET1 ratio after Webster’s 147-basis-point impact, supported by 59 basis points of Q3 organic capital generation. Credit quality remained resilient outside Argentina, though Brazil’s de-risking and Argentina’s sector-wide pressures weighed on provisions. Management now expects 2026 underlying net profit above €15 billion including M&A, versus guidance of more than €14.1 billion excluding M&A, and expects year-end CET1 above 12.8%.
Revenue and efficiency
Revenue grew across all five global businesses, supported by customer growth and deeper customer relationships. The group added 17 million customers over the last 12 months. Excluding M&A, revenue increased 5%, keeping Santander on track for its mid-single-digit growth target. Stable costs alongside revenue growth produced positive operating leverage; costs in Retail and Openbank, around 75% of the cost base, declined 2% even including TSB and Webster.
- Net interest income — Up 8% year on year, or 5% excluding TSB and Webster; up 2% quarter on quarter, supported by Spain, the U.K. and Webster. Management said a roughly €5 billion public-institution transaction temporarily affected Spanish margins, which it expects to normalize in Q4.
- Fees — Net fee income rose 7% year on year. Retail fees increased 8%; CIB fees in the U.S. rose more than 30%, Wealth delivered double-digit fee growth, and Payments fees rose 6%.
- Transformation — The efficiency ratio reached 42.6%, improving 2.8 percentage points year on year. Management cited simplification, automation and digital adoption, with 73% of products digitally enabled.
- Business results — Retail profit rose 12% year on year, CIB profit rose 15%, and Wealth profit increased almost 20%. Openbank profit before tax grew 13% excluding motor finance.
TSB and Webster
The quarter included a full quarter of TSB and 40 days of Webster, acquired on August 20. Management said the acquisitions had a limited effect on reported year-on-year trends so far, but they materially affected capital and expand Santander’s customer base to 189 million. The bank is pursuing integration and funding benefits while continuing to invest in the acquired franchises.
- Webster — Its initial consolidation reduced CET1 by 147 basis points. Webster contributed €89 million of underlying profit during its 40-day contribution; Santander targets around 18% U.S. RoTE by 2028 after integration.
- TSB — The Part VII process is expected to finish in Q1 2027, followed by migration to Santander platforms targeted for Q3 2027. Management reiterated a 400 million cost-synergy target.
- Funding — With Webster included, the group’s loan-to-deposit ratio is below 100%. In the U.S., management estimated potential funding synergies at around 50 million or more as liquidity management is integrated.
Credit quality and Brazil
Group credit quality remained sound, but Argentina continued to raise provisions amid sector-wide conditions. Management said Argentina’s cost of risk improved again as slower new lending began to feed through. In Brazil, Santander is changing its portfolio mix and reducing risk rather than pursuing loan growth at any price; management said the benefits should emerge over time.
- Group risk — The NPL ratio was 2.9%, with 64% coverage. Twelve-month cost of risk was 1.16%; excluding Argentina, it was 1.09%, and provisions were broadly in line with organic loan growth.
- Outlook — Santander expects full-year 2026 cost of risk around 1.15%, easing toward 1.1% in 2027 and 2028 as portfolio mix and acquired businesses contribute.
- Brazil indicators — Santander’s 90-plus-day delinquency ratio stabilized at 4.1%, versus almost 5% for the market in August. Its early-delinquency ratio improved to 3.9% while the market rose to 4.7%.
- Rate exposure — Brazil sensitivity to a 100-basis-point rate move has fallen from €60 million–€70 million six months earlier to €30 million–€40 million. Santander said it would resume growth when market conditions allow.
Capital and guidance
Organic capital generation continued to support growth and distributions. Santander generated 59 basis points of capital from profit in Q3, and CET1 rose around 15 basis points during the quarter excluding Webster’s impact. Management expects to finish the year above the 12.8% target, despite remaining supervisory and annual operational-risk charges, with asset sales and capital mobilization also expected to contribute.
- Profit outlook — Management expects 2026 underlying net profit above €15 billion including M&A and said it is on track to exceed €14.1 billion excluding M&A.
- Returns — Underlying RoTE was 16%, or close to 17% at a normalized average CET1 ratio of 13%. The stated 2028 ambition is RoTE above 20%.
- Shareholder distributions — Buybacks underway are expected to bring total repurchases to around €9 billion, against a commitment to distribute at least €10 billion in 2025 and 2026.
- Capital target — CET1 stood at 12.7%; management expects year-end capital above 12.8%, within the stated 12%–13% operating range.
