Santander (SAN) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Investor Relations – Raul Sinha
• Héctor Grisi
• José García Cantera

TAKEAWAYS

• Underlying Profit — EUR 11.2 billion for the first nine months of 2026, representing 14% growth year over year in constant euros driven by strong customer activity.
• Efficiency Ratio — 42.6%, an improvement of almost 2 percentage points and the best level reported in 17 years due to simplification and automation.
• Underlying RoTE — 16%, reflecting progress toward the 2028 target of above 20% while absorbing integration impacts from TSB and Webster.
• Common Equity Tier 1 (CET1) Ratio — 12.7%, representing 59 basis points of organic capital generation in the quarter offset by a 147 basis point impact from the Webster acquisition.
• Customer Growth — 189 million active customers, including 17 million new customers added over the last 12 months, driven by higher engagement and digital adoption.
• Net Interest Income (NII) — grew 8% year over year, or 5% excluding M&A, supported by profitable volume growth and active balance sheet management.
• Fee Income — increased 7% year over year, outpacing NII growth excluding M&A due to higher connectivity across Wealth and Payments segments.
• Corporate and Investment Banking (CIB) Profit — rose 15% year over year, with new business originating at a return on tangible equity of approximately 22%.
• Santander US Profit — grew 24% year over year, excluding Webster, supported by strong operating leverage and a 3% decline in provisions.
• Wealth Management Profit — increased nearly 20% year over year, driven by strong client inflows and double-digit growth in fee income.
• Ebury Revenue — grew 15% year over year, with an EBITDA margin improvement to 34% as the business accelerates international expansion.
• Shareholder Distributions — totaled approximately EUR 9 billion in share buybacks to date, nearing the goal of EUR 10 billion for the 2025 to 2026 period.
• Cost of Risk — 1.09% excluding the impact of Argentina, remaining broadly stable due to resilient labor markets and prudent risk management.
• Non-Performing Loan (NPL) Ratio — 2.9%, an improvement of 3 basis points quarter over quarter as credit quality remained solid in most core geographies.
• Getnet Transaction Volume — processed 2 billion transactions per month, enabling a 39% reduction in the cost per payment transaction.
• UK Cost Performance — expenses declined 11% year over year, reflecting the benefits of the ONE Transformation program and structural cost discipline.
• Spain Loan and Deposit Volumes — both increased 5% year over year, supported by the addition of 445,000 new customers in the last 12 months.
• US Digital Bank Deposits — raised approximately EUR 11 billion in deposits since launch, improving the regional funding profile and liquidity.
• UK Structural Hedge — GBP 119 billion with an average duration of 2.6 years and a yield of 3.34%, providing a constructive outlook for future interest income.
• Mexico RoTE — 21.2% for the first nine months, with fee growth of 11% year over year despite pressures from a lower-rate environment.

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RISKS

• Grisi stated, “LLPs remain impacted by Argentina, reflecting sector-wide trends in the country,” as the bank navigates regional economic volatility.
• Grisi noted that profit in the mobility finance segment reflects “the end of the electric vehicle tax incentives in the U.S.,” identifying a specific regulatory headwind.
• Cantera stated, “The only country where we had a slight increase in betas in the quarter was Spain, from 26.4% to 28%,” noting localized pressure on deposit margins.
• Grisi indicated that management is taking a “prudent” stance on unsecured lending in Mexico, leading to an intentional reduction in that specific loan portfolio.

SUMMARY

Banco Santander, S.A. (SAN +0.17%) reported record underlying profit for the first nine months of the year, driven by strong customer activity and the ongoing execution of its ONE Transformation strategy. Management stated that the group is on track to exceed its full-year profit guidance and achieve its long-term return on tangible equity targets. The group highlighted its structural diversification, with 80% of its loan portfolio located in developed markets to provide resilience against emerging market volatility. The integration of TSB in the United Kingdom and Webster in the United States remains a central focus, with the acquisitions already contributing to improved funding profiles and scale across global corridors.

• Management reported that the group’s efficiency ratio reached its best level in 17 years, supported by structural simplification and automation across global platforms.
• Grisi stated, “Insurance is one of the biggest growth opportunities across the group,” noting a 20% premium growth across core insurance businesses.
• The company indicated that the migration of core banking systems to the Gravity digital platform remains on track for completion by the end of 2026 or early 2027.
• Cantera noted that interest rate sensitivity in Brazil has been reduced by half over the past six months through active balance sheet management.
• Management reported that data center exposure represents less than 1% of the total balance sheet, primarily consisting of project finance with high-quality off-takers.
• The integration of Webster is expected to put Santander US on a clear path to an 18% return on tangible equity by 2028.

INDUSTRY GLOSSARY

• CET1: Common Equity Tier 1 capital ratio, a key measure of a bank’s financial strength and its ability to absorb losses.
• RoTE: Return on Tangible Equity, a profitability ratio that measures the return on tangible common shareholders’ equity.
• NII: Net Interest Income, the difference between the interest income a bank earns on its assets and the interest expense paid on its liabilities.
• LLP: Loan Loss Provisions, funds set aside as an expense to cover potential losses from uncollectible loans.
• ONE Transformation: Santander’s global strategic initiative focused on simplification, automation, and the integration of digital platforms.
• Part VII: A legal process in the United Kingdom used to transfer banking business, such as from TSB to Santander, between legal entities.
• Gravity: Santander’s proprietary project for migrating core banking systems to a cloud-native, digital platform.
• HSA: Health Savings Account, a tax-advantaged account in the U.S. used to pay for medical expenses, often part of a bank’s deposit base.
• Selic: The benchmark interest rate in Brazil, set by the Special System for Settlement and Custody of the Central Bank.
• FiCoD: Financial Conglomerates Directive, a European regulatory framework for the supervision of diverse financial groups

  Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.