ii view: Santander shaken but not stirred by Brazil

Third quarter results to 30 September

• Revenue up 12% to €15.96 billion
• Adjusted profit up 19% to €3.8 billion
• Capital cushion, or CET1 capital ratio of 12.7%, down from 14% in Q2

Guidance:

• Continues to expect mid-single digit revenue growth over the full year
• Continues to expect full-year profit will exceed 2025’s €14.1 billion

ii round-up:

Banco Santander SA (LSE:BNC) today detailed profit that broadly matched City forecasts, with acquisitions in the UK and the US helping counter challenges in Brazil.

Third-quarter revenue up 12% to €15.96 billion aided a near one-fifth increase in adjusted profit to €3.8 billion. Takeovers of TSB and Webster bank pushed respective UK and US profit up 17% and 21%, more than offsetting a near one-quarter fall in Brazilian profits.

Shares in the Madrid headquartered Santander retreated 3% in European trading having come into these latest results up by just over a tenth so far in 2026. That’s similar to banking giant HSBC Holdings (LSE:HSBA) during that time. The Euronext 100 index is up almost 8% year-to-date.

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Total customers of 189 million rose 17 million from a year ago, with the bank remaining on target to achieve over 210 million customers by 2028.

Management reiterated guidance for mid-single digit revenue growth over the full year, fuelling annual 2026 profits above the €14.1 billion achieved in 2025.

The bank’s ongoing efficiency or ‘One Transformation’ programme pushed currency adjusted costs down 2% over the nine-month period. An efficiency ratio of 42.6% as of late September improved from 45.3% at the start of the year.

Broker UBS reiterated its ‘buy’ stance on the shares post the results, flagging target price of €14 per share.

ii view:

Started in 1857 in the Bay of Santander, the bank today employs around 185,000 people. Group operations span across almost 6,500 branches. The group’s Its five divisions include Retail, Corporate and Investment Banking (CIB) and Wealth.  

For investors, wars driving energy prices higher and pressuring both corporate and retail spending could yet dampen global economic growth, raising bad debt provisions. Exposure to politically volatile Latin America is not to be overlooked. A price-to-net asset value above the three-year average may suggest the shares are not obviously cheap, while acquisitions such as Webster bank in the US are not without risk.  

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To the upside, bolt-on acquisitions are feeding into expected higher annual profits. Diversity of both operations and geographical region exist. The balance sheet remains robust with a capital cushion, or CET1 ratio of 12.7%, while a forecast dividend yield of just over 2% is not to be ignored.

On balance, and despite ongoing risks, acquisitions and a consensus analyst fair value estimate above €13.5 per share look to provide reasons for continuing longer-term optimism.

Positives:

• Product and geographical diversity
• Performance improvement plan

Negatives:

• Uncertain economic outlook
• Exposure to higher risk Latin America

The average rating of stock market analysts:

Buy