Banco Santander (SAN) Q2 2025 earnings summary

Executive summary

• Attributable profit reached €6.8 billion in H1 2025, up 13% year-over-year, marking a record first half and supported by strong revenue growth, efficiency gains, and a growing customer base of 176 million, up 8 million year-on-year.

• Strategic transformation (One Transformation) delivered efficiency gains, cost reductions, and improved profitability, with post-AT1 ROTE at 16.0%.

• Solid balance sheet with CET1 ratio at 13.0%, robust credit quality, and disciplined capital allocation.

• Diversified business model and geographic footprint support resilience and sustainable growth in a challenging macro environment.

• Significant strategic moves included the Poland disposal and TSB acquisition, both expected to be EPS accretive.

Financial highlights

• Total revenue stable at €31.0 billion for H1 2025, with NII at €21.2 billion (down 4% YoY, up 4% excluding Argentina) and net fee income at €6.7 billion (+3% YoY).

• Attributable profit rose 13% YoY to €6.8 billion; EPS up 19% YoY to €0.435; TNAV plus cash DPS increased 16% YoY.

• Cost of risk improved to 1.14% (down 7 bps YoY); NPL ratio at 2.91% with coverage ratio at 67%.

• Efficiency ratio improved to 41.5%, the best in over 15 years.

• Operating expenses flat YoY in current euros, down 1% in real terms.

Outlook and guidance

• On track to meet 2025 targets: revenue of €62 billion, ROTE post-AT1 of approximately 16.5%, and CET1 in the 12-13% range.

• Cost base expected to decline versus 2024 in real terms; mid-high single digit fee growth targeted.

• Cost of risk expected to remain stable at 1.14%, supported by resilient labor markets.

• Shareholder remuneration policy targets a 50% payout, split equally between cash dividends and share buybacks, with at least €10 billion in buybacks for 2025-26.

• Capital generation expected to accelerate in H2, with excess capital above 13% CET1 to be distributed via share buybacks, subject to approvals.