SKN | Santander Reports Record €11.2 Billion Underlying Profit as Revenue and Efficiency Improve

Key Points:

• Santander’s underlying profit reached a record €11.2 billion in the first nine months of 2026, with underlying profit growing 14% year over year in constant euros.
• Revenue increased 7%, net interest income rose 8%, and fees climbed 7%, reflecting customer activity across the bank’s global businesses.
• Santander reported a 12.7% CET1 capital ratio and 16% underlying return on tangible equity, while integrating TSB and Webster into its expanding international franchise.

Banco Santander reported another strong quarter, with record underlying profit for the first nine months of 2026 and continued improvements in revenue generation and operating efficiency. During its October 28 earnings call, Chief Executive Officer Héctor Grisi highlighted the resilience of the bank’s business model, stronger customer activity, and progress under its ONE Transformation programme. The results also reflect an expanded franchise following the inclusion of TSB and Webster, making integration and capital discipline important elements of Santander’s next phase of growth.

Record Profit Reflects Broad-Based Revenue Growth

Santander’s underlying profit reached €11.2 billion during the first nine months of 2026, according to management. Underlying profit grew 14% year over year in constant euros, supported by revenue growth across the group’s global businesses. Total revenue increased 7%, while net interest income rose 8% and fee income advanced 7%.

Management attributed the performance to profitable volume growth, customer activity, and stronger connectivity across the group. Fee growth outpaced net interest income growth when mergers and acquisitions were excluded, indicating that customer-related services are contributing alongside traditional lending activities. For investors assessing Santander’s earnings quality, the mix of interest and fee income is an important measure to monitor in subsequent reporting periods.

ONE Transformation Targets a More Efficient Banking Model

Santander’s ONE Transformation programme continues to focus on creating a simpler and more integrated operating model. Management reported that efficiency improved by almost two percentage points, while underlying return on tangible equity reached 16%. Costs also declined when TSB and Webster were excluded, which the bank attributed to progress in its transformation efforts.

These developments matter because efficiency gains can support profitability without relying exclusively on additional revenue growth. However, the durability of those gains will depend on continued execution, particularly as the group incorporates newly acquired operations and seeks to capture benefits from a more connected international business.

TSB and Webster Expand Santander’s Franchise

The third quarter marked the first reporting period in which both TSB and Webster were included in Santander’s results, with Webster consolidated from August 20. Management said their impact on year-over-year trends remained limited, at approximately 1.3 percentage points across the main profit-and-loss lines. Santander’s customer base has expanded to 189 million, including customers associated with the two businesses.

The enlarged franchise creates opportunities to strengthen customer relationships and broaden the group’s reach. At the same time, integration requires disciplined execution. Santander’s underlying comparisons exclude Poland and integration costs related to TSB and Webster, an important distinction when evaluating the bank’s reported operational progress.

Capital Strength Remains Central to Santander’s Strategy

Santander reported a CET1 ratio of 12.7% and said it had generated close to 90 basis points of capital during 2026. Management stated that this capital generation helped absorb the impacts associated with TSB and Webster while maintaining a solid capital position. Credit quality was described as robust overall, although loan-loss provisions remained affected by Argentina’s sector-wide trends. Elsewhere in the group, provisions grew broadly in line with organic portfolio growth.

Going forward, investors should monitor the sustainability of fee growth, the realization of transformation benefits, integration progress, and capital generation. Santander’s latest results demonstrate strong underlying momentum, while continued execution will determine how effectively the bank converts its larger franchise into durable profitability and shareholder value.

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