ii view: how Santander delivered a record-breaking quarter

Second-quarter results to 30 June

• Revenue up 9% to €15.7 billion (£13.4 billion)
• Adjusted profit up 17% to €3.8 billion
• CET1 capital ratio of 14%, up from 13% a year ago

Guidance:

• Continues to expect mid-single-digit revenue growth over the full year
• Continues to expect annual profit to beat last year's €14.1 billion
• Committed to distributing at least €10 billion through share buybacks for 2025 and 2026

ii round-up:

Banco Santander SA (LSE:BNC) today detailed record quarterly profits, with the Spanish bank maintaining hopes for growth in annual revenue and earnings.

Second-quarter revenues up 9% to €15.7 billion pushed adjusted profit up 17% to €3.8 billion, marginally exceeding City forecasts and marking the bank's best quarterly profit. Management predicts annual 2026 profit to be above last year’s €14.1 billion, potentially helped by the recently completed acquisition of UK bank TSB and its four million customers.

Shares in Madrid headquartered Santander rose 1% in European trading having come into these latest results up by close to a fifth so far in 2026. That’s similar to UK banking giant Lloyds Banking Group (LSE:LLOY). The Euronext 100 index is up 12% year-to-date.

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Santander operates across Spain, Portugal, the UK and parts of Latin America, as well as in the USA. Earlier in the year the group agreed the $12.2 billion (£9.2 billion) acquisition of Webster Bank to bolster its US operations, as well as completing the disposal of Polish operations.

Total customers of 182.5 million is up 7% from a year ago, with active customers climbing 6% to 105.7 million and digital customers expanding 8% to 62 million.

Adjusted attributable profits rose across all regions, led by a one-quarter gain for North America and its US and Mexican units.

Management’s ongoing efficiency drive, the 'One Transformation’ programme, drove currency adjusted costs down 2% over the first half. As such, an efficiency ratio of 42.8% as of late June was up 2.9% year on year.

A capital cushion, or CET1 ratio of 14% is up from 13% a year ago but down from 14.4% in late March.

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results, flagging Santander as a ‘top pick.’

ii view:

With history dating back more than 100 years, Santander today employs around 185,000 people. Group operations span across almost 6,500 branches. Its five divisions include Retail, Corporate and Investment Banking (CIB) and Wealth.  

For investors, war in the Middle East pushing energy prices higher now potentially pressures spending for both corporate and retail customers, dampening economic growth and possibly increasing bad debts. A price-to-net asset value above the three-year average may suggest the shares are not obviously cheap. Loan-loss provisions rose 9% during the period, mainly reflecting broader market trends in Argentina, while acquisitions never come without risk.

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On the upside, growing customer numbers are expected to feed into increased annual profits. Diversity of both operations and geographical regions exists. The balance sheet remains robust with a capital cushion of 14%, while a forecast dividend yield of close to 2% is not to be overlooked.

In all, and despite continued risks, strong returns and the bolstering of existing operations via acquisitions looks to give grounds for longer-term optimism.

Positives:

• Product and geographical diversity
• Continuing share buybacks

Negatives:

• Uncertain economic outlook
• Exposure to higher risk Latin America

The average rating of stock market analysts:

Buy