Earnings Analysis October 30, 2026

Banco Santander SA ADR ($SAN) Q3 2026 Earnings Analysis: Revenue and EPS Miss Expectations, Shares Fall 6.3%

Earnings Report

Revenue: €15.96 billion (up 12% YoY, vs. expected €16.257 billion) ❌ Miss

EPS (Earnings Per Share): $0.28 (down 4.1% vs. expected $0.29) ❌ Miss

Guidance: Maintained · Mid-single-digit revenue growth in 2026, cost reduction (constant currency), net profit exceeding €14.1 billion, Common Equity Tier 1 (CET1) ratio of 12.8~13%

Stock Price Reaction: -6.3% (based on BMO closing price)

Highlights

19% increase in non-IFRS net profit: Third-quarter non-IFRS net profit rose 19% YoY to €3.848 billion.

Efficiency ratio of 42.6%: Improved by 2.8 percentage points compared to the same period last year.

Surge in US and UK performance: Non-IFRS net profit increased by 48% in the US and 40% in the UK.

The customer base grew by 17 million in one year, reaching 189 million. Due to the effects of the TSB and Webster acquisitions, both loans and customer deposits increased by 16%. The capital ratio, which decreased due to the Webster acquisition, is also expected to enter the year-end target range.

Lowlights

2% decrease in attributable net profit: Third-quarter attributable net profit was €3.432 billion, reflecting €416 million in acquisition integration costs.

22% increase in loan loss provisions: Reached €3.486 billion, primarily driven by worsening credit loss outlooks in Argentina.

15% decrease in Brazil net profit: Loan loss provisions in Brazil increased by 23%, and the cost-to-income ratio rose to 4.25%.

Results were mixed, falling below expectations in Latin America while exceeding them in developed markets. Net interest income slightly missed market expectations, and Spanish deposit costs were distorted by one-off transactions with public institutions. Non-performing indicators in Brazil worsened compared to the previous quarter.

What the Company Said

Executive Chair Ana Botín stated that the nine-month results were robust and that the momentum toward the 2028 targets is continuing. The company maintained its 2026 targets while anticipating that the effects of the Webster and TSB acquisitions will grow further in the future.

Market Reaction and Future Outlook

Shares fell as net income for the third quarter decreased by 2% and loan loss provisions increased by 22%, compounded by sluggish performance in Brazil. Despite growth in developed market operations, credit costs in Latin America remained a burden.

It is necessary to confirm whether Brazil's loan loss provisions and credit cost ratios stabilize in the fourth quarter.

A key factor is whether the Common Equity Tier 1 (CET1) ratio returns to the year-end target of 12.8-13% following the Webster acquisition.

It is worth monitoring whether the company's announced proposal to acquire a 10% stake in its Brazilian subsidiary proceeds as planned.

Earnings Call Summary

Once the company script is released following the earnings call, the key takeaways from the call will be added here. We will select and summarize only the most important points, such as how management explained performance and outlook, and what analysts inquired about.