Banco Santander, S.A. (SAN) FY2025 20-F and Q2 FY2026 6-K Summary

Business

Source: Annual report on Form 20-F for the year ended 31 December 2025, accession 0000891478-26-000030. The 2028 targets and payout policy are as restated in the H1 2026 report, 6-K accession 0000891478-26-000078, and results release, 6-K accession 0000891478-26-000069.

Banco Santander is a retail and consumer bank headquartered in Spain with about 180 million customers, 106 million of them active, at the end of 2025. It takes deposits from and lends to individuals, small and mid-sized businesses and large corporates across Europe and the Americas, and earns most of its revenue from the spread between what it earns on loans and securities and what it pays on deposits and wholesale funding. Net interest income and net fee income together made up about 95% of total income in 2025. Its lending spans residential mortgages, consumer and auto finance, and loans to businesses, and management describes its balance sheet as highly collateralised, made up mainly of loans, with very low exposure to market risk. At 31 December 2025 the group had total assets of $2.20 trillion.

The bank runs itself through five global businesses, which are its primary reporting segments. Their 2025 underlying revenue (a management measure that still included Santander Bank Polska) shows how the business is weighted:

• Retail & Commercial Banking ($35.24 billion, 50% of operating revenue): branch and digital banking for individuals, SMEs and corporates, with detailed reporting for Spain, the UK, Mexico and Brazil.
• Digital Consumer Bank ($14.69 billion, 21%): consumer and auto finance companies, the Openbank digital bank and the US consumer business. It was renamed Openbank from 2026.
• Corporate & Investment Banking ($9.58 billion, 13%): transaction banking, debt financing and corporate finance, and global markets for corporate and institutional clients.
• Wealth Management & Insurance ($4.79 billion, 7%): private banking, Santander Asset Management, insurance and a portfolio of investment platforms and stakes. From 2026 it is organised as Private Banking and Insurance & Asset Management Solutions.
• Payments ($6.79 billion, 9%): the PagoNxt platforms (Getnet merchant acquiring, Ebury, PagoNxt Payments) and the cards business. From 2026 the cards business is reported inside Retail, and the platform business is being renamed Payment Solutions.

Geographically, the group is spread across Europe and the Americas. Of 2025 underlying profit from the operating areas, 50% came from Europe (Spain 28%, the UK 9%), 24% from South America (Brazil 14%), 21% from North America (the US 10%, Mexico 11%) and 5% from the European consumer finance business. Secondary reporting segments are Spain, the UK, Portugal, the European consumer business, the US, Mexico, Brazil, Chile and Argentina (Poland until its sale).

Strategy rests on three themes the bank calls Think Value, Think Customer and Think Global. In practice this means a "digital bank with branches" built on shared global technology platforms (the ONE Transformation programme), using scale in each market to cut cost per customer. Branches fell to 7,124 and employees to 198,403 at the end of 2025, while 70% of products became available digitally. At its 25 February 2026 Investor Day the bank set 2028 targets of a return on tangible equity above 20%, profit above €20 billion (about $22.86 billion at the 30 June 2026 rate), more than 210 million customers and an efficiency ratio of about 36%. It also set a policy to distribute about 50% of underlying profit, moving to about 35% in cash dividends and 15% in buybacks from 2027 results.

The group's shape has been changing quickly through deals. It sold control of Santander Bank Polska to Erste Group in January 2026, bought the UK's TSB from Banco Sabadell in April 2026, and completed the acquisition of Webster Financial in the US in August 2026, after the period covered here.

Risk factors

Source: Form 20-F for 2025, accession 0000891478-26-000030, supplemental information section 4, updated with the H1 2026 interim statements, accession 0000891478-26-000078, where noted.

The risks that matter most for Santander follow from its geography, its regulation as a global systemically important bank and its acquisition programme:

• Exposure to volatile economies. Results depend heavily on Spain, the UK, Brazil, Mexico, the US and Argentina. The bank flags tariff escalation, a weaker US dollar, German recession risk, Chinese slowdown and structural weakness in Latin America (infrastructure, inequality, inflation). Net sovereign debt exposure was $264.54 billion at the end of 2025, 12.05% of total assets, concentrated in Spain and Portugal in the eurozone.
• Interest rates. Net interest income is the majority of revenue. Falling rates cut the 2025 average yield on interest-earning assets to 6.42% from 7.03%, and the sharp fall in Argentine rates was the main reason statutory net interest income declined in 2025.
• Legal and conduct exposure. Provisions for taxes, legal contingencies and other items were $5.87 billion at the end of 2025 and $6.62 billion at 30 June 2026. The bank says these are well below the total amount claimed and could be exceeded. The largest live matters are:
  • UK motor finance commissions. The provision was $619.91 million (GBP 461 million) at the end of 2025 and $826.04 million (GBP 623 million) at 30 June 2026, after the FCA's final redress scheme (H1 interim statements).
  • A UK Commercial Court judgment over legacy payment protection insurance (PPI). It ordered Santander entities to pay AXA France GBP 515 million ($691.59 million) plus GBP 162 million ($217.55 million) of interest, and is under appeal (H1 interim statements).
  • Spanish Supreme Court rulings on revolving credit cards and mortgage expenses.
  • Labour claims in Brazil.
• Capital and resolution requirements. As a G-SII, Santander must meet capital buffers and a binding MREL requirement of 31.92% of risk-weighted assets (10.95% subordinated). Falling below the combined buffer would restrict dividends, buybacks and AT1 coupons. The bank also notes that its combined US operations averaged more than $250 billion of assets in Q4 2025, and that adding Webster takes Santander Holdings USA above that threshold. Either route brings stricter US "Category III" requirements after a transition period.
• Credit quality. Loan losses could exceed reserves if borrowers weaken, particularly in consumer and Latin American portfolios. Argentina drove the rise in loan-loss provisions in H1 2026.
• Credit ratings tied to Spain. The bank's ratings are linked to Spain's sovereign rating. The bank estimated that a one-notch downgrade of Banco Santander would require up to $171.70 million of extra collateral. A one-notch downgrade of Santander UK could trigger about $1.88 billion (GBP 1.4 billion) of liquidity outflows.
• Acquisition and integration risk. Integrating TSB and Webster carries execution, systems and legal-liability risk. Expected synergies may not materialise, and divestiture indemnities can be uncapped.
• Technology, cyber, AI and third parties. Operational failures, cyberattacks, reliance on vendors and the growing use of AI could disrupt service or create liability.
• Dependence on subsidiary dividends. Upstream payments can be restricted by local regulation, and repatriation from Argentina has been limited in the past.
• Competition from fintechs and non-bank providers, and industry consolidation.
• ADS holders have different rights from direct shareholders, and Spanish corporate law and disclosure practice differ from US norms.

Management's discussion of 2025

Source: Form 20-F for 2025, accession 0000891478-26-000030, Economic and financial review, sections 2 to 4.

2025 was a fourth consecutive year of record profit. Profit attributable to the parent was $15.92 billion, up 17.0% in US dollar terms (12.1% in euros, 16% in constant euros), and earnings per share were $1.03, up 23.3% in US dollar terms (17% in euros as reported), helped by buybacks. The bank met all its 2025 targets: an efficiency ratio of 41.2%, a 17.1% return on tangible equity (16.3% after AT1 coupons), a 1.15% cost of risk and a record 13.5% phased-in CET1 ratio. Customers grew by 8 million.

Because the Polish business was being sold, the statutory income statement moved its results to a single line, discontinued operations. That line contributed $1.74 billion of profit in 2025. Continuing operations showed the following:

• Revenue was flat in euros. Total income was $66.24 billion, up 4.9% in US dollar terms but only 0.5% in euros. Net interest income was $47.81 billion, up 0.9% in US dollar terms but down 3.3% in euros, as the sharp fall in Argentine interest rates and lower Wealth income offset growth in Payments and Consumer. Average liability costs fell 45 basis points to 3.97%. Net fee income was $14.65 billion, up 9.4% in US dollar terms (4.8% in euros), led by Wealth and Payments.
• Costs fell in euros. Operating expenses were $27.90 billion, up 2.5% in US dollar terms but down 1.7% in euros, which the bank credits to ONE Transformation.
• Credit and other charges. Impairment of financial assets was $14.16 billion, up 7.9% in US dollar terms (3.4% in euros). Provisions fell to $3.08 billion, down 17.8% in US dollar terms (21.2% in euros), from a 2024 figure inflated by the closure of Superdigital. They still included a $249.13 million fourth-quarter charge for UK motor finance complaints. A $261.99 million gain on the sale of the remaining 30.5% stake in CACEIS was booked in Q2 2025.
• Profit before tax from continuing operations was $21.09 billion, up 12.4% in US dollar terms (7.7% in euros). Tax was $5.33 billion, including $398.54 million for Spain's tax on bank income.

Corporate activity in 2025 set up the 2026 changes. Santander agreed in Q2 to sell about 49% of Santander Bank Polska, and in Q3 to buy TSB from Banco Sabadell. In Q4 it announced the Openbank and Santander Consumer Finance merger. It also bought CrediScotia Financiera in Peru.

For 2026, management guided to mid-single-digit revenue growth and lower costs in constant euros and profit above 2025's $15.92 billion, all excluding the Poland, TSB and Webster deals, and to a year-end CET1 ratio of 12.8% to 13% that already allows for the expected Webster acquisition. It also said it would distribute at least €10 billion ($11.43 billion at the 30 June 2026 rate) through buybacks against 2025 and 2026 results and excess capital.

Current period: first half and second quarter of 2026

Sources: H1 2026 interim directors' report and unaudited condensed consolidated financial statements, 6-K accession 0000891478-26-000078 (filed 24 July 2026; the management report is the same as in the half-year financial report, 6-K accession 0000891478-26-000071, filed 22 July 2026); results press release, 6-K accession 0000891478-26-000069; the TSB legal-merger timing is from the H1 2026 earnings presentation, 6-K accession 0000891478-26-000073.

Two one-off items dominate the statutory numbers, so the bank leads with "underlying" profit, which excludes them:

• A $2.22 billion net capital gain on completing the Poland disposal in Q1.
• A $290.80 million after-tax restructuring charge for integrating TSB in Q2 ($391.99 million before tax).

TSB has been consolidated from 1 May 2026, which flatters growth by about one percentage point across the income statement.

Profit. On a statutory basis, profit attributable to the parent for the half was $10.46 billion, up 40.2% in US dollar terms (31.3% in euros), and earnings per share were $0.70. Q2 statutory profit was $4.09 billion, below Q1's $6.38 billion, which included the Polish gain. Underlying profit was $8.54 billion for the half, up 22.7% in US dollar terms (14.9% in euros, 14% in constant euros), and a record $4.38 billion in Q2, up 5.2% on Q1 in US dollar terms (5.8% in euros). Underlying earnings per share were $0.56, up 28.1% in US dollar terms (20% in euros). Underlying return on tangible equity was 15.6%, up 0.7 points; on a statutory basis it was 17.4%.

Revenue. Underlying total income was $35.97 billion, up 13.7% in US dollar terms and 6% in constant euros (5% excluding TSB), in line with the full-year target. Statutory total income was $35.94 billion, up 13.6% in US dollar terms (6.4% in euros). The components moved as follows:

• Net interest income was $26.48 billion, up 14.3% in US dollar terms (7.1% in euros, 6% in constant euros). It grew 4% in both Retail and Openbank on higher volumes and margin management, and 36% in CIB on financing activity in Global Markets.
• Net fee income was $7.99 billion, up 15.3% in US dollar terms (8.0% in euros, 7% in constant euros), with growth in every business: in constant euros Wealth was up 11%, and Retail, Openbank and CIB were each up 6% to 7%.
• Gains on financial transactions fell 29% in euros, hurt by currency hedges in the Corporate Centre and calmer markets in CIB, and fell sharply in Q2 on lower Global Markets results.

Costs. Underlying total costs were $15.40 billion, up 6.5% in US dollar terms but flat in euros and down 1% in constant euros (2% excluding TSB, and 5% in real terms). The efficiency ratio improved about 3 points to 42.8%, with improvements in every business.

Credit quality. Underlying net loan-loss provisions were $7.67 billion, up 15.9% in US dollar terms and 7% in constant euros. The increase came mainly from Argentina, plus a few large corporate exposures in Europe and Brazil; excluding Argentina, provisions were broadly flat. The cost of risk was 1.15%, the NPL ratio 2.93% and NPL coverage 64%. Loan-loss reserves totalled $27.67 billion at 30 June 2026.

Other charges and tax. Other provisions and losses included a further $285.67 million ($226.20 million after tax and minorities) for UK motor finance complaints, mostly in Q1, after the FCA published final redress scheme rules on 30 March 2026. Santander UK decided not to challenge the scheme and raised its provision to $834.55 million (GBP 633 million); after costs used, it stood at $826.04 million (GBP 623 million) at 30 June. Statutory tax was $2.85 billion, including $202.88 million for the Spanish bank tax.

Global businesses. H1 underlying profit by business, with changes in constant euros:

• Retail: $4.81 billion, up 12% (10% excluding TSB). Costs fell 3%, and return on tangible equity was 17.1%.
• Openbank: $964.28 million. Profit before tax excluding motor finance was $1.93 billion, up 15%, but the motor finance provisions and the end of US electric-vehicle tax incentives held down profit. Return on tangible equity was 7.7%.
• CIB: $2.03 billion, up 17%, on 16% revenue growth. Return on tangible equity was 20.3%.
• Wealth: $1.26 billion, up 19%. Assets under management were at a record and fees grew 11%.
• Payments: $90.95 million, up from a small base, with an EBITDA margin of 32.6%.

Balance sheet and capital. At 30 June 2026, total assets were $2.23 trillion, loans and advances to customers $1.31 trillion, customer deposits $1.30 trillion and total equity $132.47 billion. In constant euros, loans grew 9% and customer funds 11% year on year (5% and 7% excluding TSB). The phased-in CET1 ratio was 14.0%, down from 14.4% in March: the TSB purchase cost 55 basis points, partly offset by 27 basis points of net organic capital generation. The total capital ratio was 18.8%. Management expected Webster to absorb about 150 basis points of CET1 in the second half and still guided to a year-end CET1 ratio of 12.8% to 13%. Tangible book value per share was $7.22. Including dividends, it rose 19% year on year in euros.

Transactions in the period:

• TSB. Santander bought 100% of TSB Banking Group on 30 April 2026 for $3.89 billion (GBP 2,867 million) in cash and booked $911.34 million of goodwill. TSB brings about $60.58 billion of assets, a $48.01 billion loan book that is more than 90% residential mortgages, over 4 million customers, about 180 branches and 4,700 employees. It is being folded into Santander UK, with at least GBP 400 million ($530.36 million) of cost synergies targeted and a legal merger expected in Q2 2027.
• Poland. The sale to Erste closed on 9 January 2026 for $8.18 billion (EUR 7,035 million) for about 49% of Santander Bank Polska and 50% of its asset manager. The deal added about 95 basis points to CET1. Santander keeps a 9.7% stake, valued at $1.52 billion when control was lost.
• Webster. The acquisition was agreed on 3 February 2026 for about USD 12.2 billion, and Webster shareholders approved it in May. It was still pending at 30 June.
• Capital instruments.
  • In January the bank prepaid $1.20 billion (EUR 1,033.4 million) of euro AT1 securities.
  • In April it issued $1.17 billion (EUR 1 billion) of 12-year Tier 2 debt at 4.25%.
  • On 3 June it issued USD 1.5 billion of 7.25% contingent convertible preferred securities.
  • On 11 June it bought back USD 701.6 million of an older US-dollar contingent convertible issue, leaving USD 298.4 million outstanding.

Shareholder returns. A final 2025 dividend of 12.5 euro cents ($0.15) per share was paid in May, bringing the cash dividend for 2025 to 24 euro cents (about $0.27 at the 2025 average rate), 14% more per share in euros than for 2024. A buyback programme approved in February ran through the period. It combined the ordinary buyback against H2 2025 results with an extraordinary buyback returning about half of the capital released by the Poland sale; its completion is covered under Subsequent events.

Outlook. In July management reaffirmed all 2026 targets: mid-single-digit revenue growth and lower costs in constant euros and profit above 2025's $15.92 billion, all excluding M&A, and a year-end CET1 ratio of 12.8% to 13% that already allows for the expected Webster acquisition. It also reaffirmed its 2028 plan. On the economy, management expected a moderate slowdown and higher inflation, driven by the Middle East conflict; the ECB raised its deposit rate to 2.25% in June.

Subsequent events

Sources: H1 2026 interim statements, accession 0000891478-26-000078, notes 1.h and 10; later 6-K reports as cited.

According to the interim statements, no significant events occurred between 1 July 2026 and the date they were authorised for issue (the board approved the report on 21 July 2026), other than those the statements themselves describe. The litigation note records one such development: on 1 July 2026 the UK Upper Tribunal partially suspended the FCA's motor finance redress scheme, including customer communications and compensation payments, pending challenges brought by other lenders and a consumer group. The substantive hearing is expected by Q1 2027.

Material developments the bank has reported since the statements were issued:

• Webster Financial acquisition completed on 20 August 2026 (6-K accessions 0000950103-26-011921 and 0000950103-26-012672). Webster is a US retail and commercial bank. The price was about USD 12.2 billion at announcement: USD 48.75 in cash plus 2.0548 Santander shares (delivered as ADSs) per Webster share. Santander issued 329,846,438 new shares for the share component. Webster is not in the H1 statements, and the bank had estimated a capital cost of about 150 basis points of CET1.
• Proposed exchange offer for Santander Brasil minorities, announced 30 July 2026 (6-K accession 0000950103-26-011481). Santander intends to offer newly issued shares for the roughly 10% of Banco Santander (Brasil) it does not own. The terms are 0.4056 Santander shares per unit or ADS, a 15% premium, worth up to $2.20 billion (EUR 1,908 million) and about 156 million new shares (about 1.1% of capital). There is no minimum acceptance condition. The offer needs regulatory and shareholder approvals before it can start.
• Buybacks (6-K accessions 0000950103-26-012763, 0000950103-26-013701 and 0000950103-26-012104).
  • The $5.88 billion (EUR 5,030 million) programme was completed on 21 August 2026 with the purchase of 462,683,139 shares (about 3.08% of capital). The cancellation of those shares was registered on 9 September, leaving 14,556,482,801 shares.
  • A new $2.11 billion (EUR 1,825 million) programme against H1 2026 results began on 24 August 2026. It may be paused during the Brazil offer's acceptance period.
• Interim dividend (6-K accession 0000950103-26-014666). On 29 September 2026 the board declared 12.7 euro cents ($0.14) per share against 2026 results, payable from 2 November 2026.
• Funding (6-K accessions 0001193125-26-365115, 0000950103-26-013322 and 0000950103-26-015545). The bank:
  • issued USD 2.0 billion of senior non-preferred notes on 25 August 2026: USD 1.0 billion at 5.005% due 2030 and USD 1.0 billion at 5.624% due 2034;
  • redeemed USD 1.5 billion of 1.722% senior non-preferred notes due 2027 on 14 September 2026;
  • will redeem the remaining USD 298.4 million of its 4.750% contingent convertible securities at par on 12 November 2026.