Banco Santander (SAN) Q2 2025 earnings summary

Executive summary

• Achieved record first-half attributable profit of €6,833 million, up 13% year-over-year, with five consecutive quarterly records and 8 million new customers added, bringing the total to 176 million.

• ROTE (post-AT1) improved to 16.0%, with EPS up 19% year-over-year to €0.435, supported by profit growth and share buybacks.

• Strategic transformation (One Transformation) and disciplined capital allocation drove efficiency gains, cost reductions, and improved profitability.

• CET1 capital ratio reached 13%, at the top end of the operating range, with robust credit quality and solid balance sheet.

• Announced a new €1.7 billion share buyback, reaffirming commitment to at least €10 billion in buybacks for 2025–2026.

Financial highlights

• Total income for H1 2025 was €31,010 million, flat year-over-year (+5% in constant euros), with record net fee income (+3% reported, +9% in constant euros).

• Net interest income (NII) was €21,211 million, down 4% year-over-year due to Argentina; excluding Argentina, NII rose 4%.

• Operating expenses fell by 0.4%, improving the efficiency ratio to 41.5%, the best in over 15 years.

• Cost of risk improved by 7 bps to 1.14%, and the NPL ratio dropped to 2.91%, the lowest in over 15 years.

• EPS: €0.43 for H1 2025 (+19% year-over-year); TNAV plus cash DPS increased 16%.

Outlook and guidance

• On track to meet 2025 targets: revenue of ~€62 billion, mid-high single-digit net fee income growth, cost base down in euros, cost of risk ~1.14%, CET1 at 13%, and ROTE ~16.5%.

• Shareholder remuneration policy targets a 50% payout, split equally between cash dividends and share buybacks, with at least €10 billion in buybacks for 2025–2026.

• Expects TSB acquisition to deliver >20% return on invested capital and increase UK ROTE to 16% by 2028.

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

• Advanced economies forecast to grow steadily, with emerging markets expected to grow ~3%.