SKN | Banco Santander Reports 16% Profit Growth and Maintains 2026 Targets as Customer Base Reaches 189 Million

Key Points

• Banco Santander reported underlying profit of €11.176 billion for the first nine months of 2026, an increase of 16% year over year, while attributable profit rose 20% to €12.405 billion.
• The bank reaffirmed its 2026 guidance and continues to target more than €20 billion in annual profit and return on tangible equity above 20% by 2028.
• Santander added 17 million customers over 12 months, bringing its total to 189 million, while maintaining dividend distributions and a substantial share buyback programme.

Record Profit Reflects Broad-Based Revenue Growth

Banco Santander reported record underlying profit of €11.176 billion for the first nine months of 2026, representing a 16% increase compared with the same period last year. The results, released on October 28, reflect stronger revenue generation, improved operating efficiency, and continued customer expansion across the group’s international businesses.

Attributable profit increased 20% to €12.405 billion. However, this figure included a €1.9 billion net capital gain from the disposal of Santander Bank Polska, partly offset by €666 million in charges, including costs associated with the integration of TSB and Webster. Underlying profit excludes these non-recurring items and provides a more consistent measure of operating performance.

Group revenue increased 8% to €46.807 billion. Net interest income rose 10% to €34.614 billion, while net fee income increased 9% to €10.349 billion.

The expansion reflects stronger customer activity, higher business volumes, and deeper client relationships. For a banking group operating across multiple international markets, the ability to generate growth through both lending and fee-based services remains an important contributor to earnings resilience.

Customer Expansion Strengthens the Group’s Revenue Base

Santander’s customer base increased by 17 million over the 12 months to September, reaching 189 million. The additions included eight million customers contributed through the TSB and Webster acquisitions.

The expansion strengthens the group’s potential revenue base across retail banking, commercial services, payments, and other financial products. A larger customer network can also create opportunities to deepen existing relationships and increase the contribution of fee-generating activities.

Net fee income growth of 9% indicates that the bank is expanding revenue beyond traditional interest-based activities. This diversification is particularly relevant in an environment where interest-rate movements and funding costs can influence net interest income across banking markets.

The longer-term challenge will be converting customer growth into sustainable business relationships, higher engagement, and improved profitability while managing the operational requirements associated with acquisitions.

Operating Efficiency Improves Despite Integration Costs

Santander reported a 14% increase in net operating income to €26.882 billion. Costs declined 1% when excluding the impact of the TSB and Webster acquisitions, contributing to an improvement in the efficiency ratio to 42.6%.

Underlying return on tangible equity reached 16.0%, while statutory earnings per share increased 25%.

These figures indicate that revenue expansion has been accompanied by improvements in operating efficiency. The reduction in costs, excluding acquired businesses, is particularly relevant as Santander continues integrating its recent acquisitions.

However, integration expenses and the additional operational requirements of a larger customer base remain important considerations. The bank’s ability to maintain cost discipline while investing in technology, customer services, and international operations will influence the sustainability of its profitability improvements.

Santander Maintains 2026 Financial Guidance

Management reaffirmed its full-year 2026 targets, excluding the impact of mergers and acquisitions.

The bank continues to expect mid-single-digit revenue growth, lower costs in constant euros, underlying profit above the €14.1 billion reported in 2025, and a year-end Common Equity Tier 1 (CET1) capital ratio between 12.8% and 13%.

At the end of September, the CET1 ratio stood at 12.7%, with the Webster acquisition weighing on the capital position.

The gap between the September capital ratio and the year-end target range makes capital generation and balance-sheet management important areas to monitor through the final quarter.

Maintaining the guidance despite acquisition-related integration and capital considerations suggests that management remains confident in the group’s operating trajectory. Nevertheless, achieving the targets will depend on economic conditions, business performance, and the evolution of credit costs.

The 2028 Ambition Extends Beyond €20 Billion in Profit

Santander’s longer-term strategy remains focused on expanding profitability and its international customer base. By 2028, the group targets return on tangible equity above 20%, annual profit exceeding €20 billion, and more than 210 million customers.

These objectives represent a substantial step beyond the bank’s current operating scale. Achieving them will require continued revenue growth, disciplined cost management, and effective integration of acquired businesses.

The targets also depend on market conditions and assume a stable cost of risk. This qualification is important because credit quality remains a central variable in determining whether higher lending volumes translate into sustainable earnings.

For international banking groups, growth across different markets can provide diversification, but it also introduces exposure to varying economic conditions, regulatory frameworks, and currency movements.

Dividends and Buybacks Reinforce Shareholder Remuneration

Shareholder distributions remain an important component of Santander’s financial strategy.

The bank paid an interim cash dividend of €0.127 per share on November 2, representing a 10% increase compared with the corresponding payment in 2025.

Total shareholder remuneration linked to first-half 2026 results is expected to amount to approximately €3.660 billion. This includes a share buyback programme worth up to approximately €1.8 billion.

The combination of cash dividends and repurchases provides shareholders with different forms of capital return. However, the sustainability of these distributions will remain connected to earnings generation, regulatory capital requirements, and the group’s ability to fund its strategic priorities.

With the CET1 ratio at 12.7% at the end of September, the bank’s capital trajectory will be particularly relevant when assessing its capacity to maintain shareholder remuneration alongside continued business expansion.

Closing Insights

Santander’s first nine months of 2026 demonstrate strong operating momentum, supported by double-digit underlying profit growth, higher net interest and fee income, and an expanding international customer base. Improved efficiency and unchanged full-year guidance further reinforce management’s confidence in the group’s financial trajectory.

The central strategic question is whether Santander can sustain this performance while completing its acquisition integrations and strengthening its capital position. Its 2028 ambition of exceeding €20 billion in annual profit will require continued execution across revenue growth, operating efficiency, and customer expansion.

Investors will be watching the year-end CET1 ratio, credit costs, underlying profitability, and shareholder distributions as the next indicators of progress. The group’s international diversification provides multiple sources of earnings, but consistent execution across these markets will determine whether its longer-term targets remain achievable.

 

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