Banco Santander (SAN) investor relations material

Macroeconomic environment

• Global GDP growth for 2026 is projected at 3.0%, slightly down from 3.5% in 2025, with resilient demand and easing financial conditions offsetting geopolitical impacts.

• Spain shows robust economic growth, with GDP rising, unemployment declining to 9.9%, and inflation moderating to 2.4% by Q2 2026.

• Credit to the private sector continues to grow, with household mortgages up 3.7% YoY and deposits increasing 5% YoY in June 2026.

• Non-performing loan (NPL) ratios in Spain and across Europe continue to decline, reflecting strong economic performance and proactive management.

• Housing prices remain under pressure due to a persistent housing stock deficit, despite worsening affordability.

Business model and strategy

• The group operates a diversified business model with global and in-market scale, focusing on digital banking with branches and multichannel offerings.

• Revenue growth and cost control have driven double-digit increases in net operating income and underlying profit, with H1'26 profit up 15% YoY.

• Credit quality remains robust, with improving NPL ratios and stable cost of risk across most geographies, except for Argentina.

• The Spanish business saw loans rise 8%, deposits up 5%, and mutual funds up 18% YoY, with profit growth supported by higher NII and fees.

• Strategic priorities include customer-centric growth, digital transformation, and operational simplification.

Funding and liquidity

• The balance sheet is highly liquid and prudently managed, with a large contribution from customer deposits and strong liquidity ratios (LCR 146%, NSFR 122%).

• €30bn was issued in public markets in H1'26, with a manageable maturity profile and diversified funding sources.

• The 2026 funding plan is on track, maintaining regulatory buffers and ample liquidity.

• Outstanding debt is diversified across instruments and entities, with covered bonds representing a significant portion.