SAN — Banco Santander, S.A.

Summary of Santander's Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Profit: Record profit of EUR 3.5 billion for Q3, marking the best nine-month period ever for the bank.
• Customer Growth: Increased customer base by 7 million year-on-year, totaling 178 million.
• Return on Tangible Equity (RoTE): Improved to 16.1%, with a target of around 16.5% for 2025.
• Capital Ratio: CET1 ratio reached an all-time high of 13.1%, exceeding the original target of above 12%.
• Total Revenue: Grew by 4% year-on-year to EUR 46 billion, driven by strong net interest income (NII) and fees.
• Earnings Per Share: Increased by 16%, supported by share buybacks.
• Total Net Asset Value (TNAV): Grew by 15% including cash dividends.

2. Strategic Updates and Business Highlights

• ONE Transformation Initiative: Progressing towards a simpler, more integrated model, leading to efficiency gains and cost reductions.
• Global Business Performance:
  • Consumer: NII up 6% year-on-year, with a focus on profitability and lower funding costs.
  • Corporate and Investment Banking (CIB): Profit up 10% year-on-year, driven by strong performance in Global Markets.
  • Wealth Management: Profit rose 21%, supported by strong commercial activity and fee growth.
  • Payments: Revenue increased by 19%, with significant growth in transaction volumes.
• Digitalization Efforts: Continued investment in digital platforms, including the rollout of the Gravity platform in key markets.

3. Forward Guidance and Outlook

• Q4 Expectations: Anticipated strong performance with seasonality expected to drive higher fees and continued revenue growth.
• 2025 Targets: On track to meet a revenue target of around EUR 62 billion, with a focus on maintaining a RoTE of approximately 16.5%.
• Shareholder Returns: Plans to distribute at least EUR 10 billion through share buybacks for 2025-2026, subject to regulatory approvals.

4. Bad News, Challenges, or Points of Concern

• Credit Quality in Brazil: While overall credit quality remains stable, there are concerns regarding high interest rates affecting corporate borrowers.
• Argentina Economic Environment: High inflation and challenging lending conditions leading to increased cost of risk, particularly in the auto sector.
• Competitive Pressures: Intense competition in the U.K. and Spain affecting loan pricing and margins, particularly in mortgages.
• Regulatory Headwinds: Anticipated regulatory charges could impact capital ratios, though recent updates suggest a more favorable outlook.

5. Notable Q&A Insights

• RoTE Target Clarification: Management emphasized that the underlying RoTE is already above the 16.5% target, with expectations for strong Q4 performance driven by increased fees and operational efficiencies.
• Credit Quality in the U.S.: Management noted stable asset quality despite some deterioration in subprime auto loans, attributing resilience to strong labor markets and effective risk management.
• Deposit Growth in the U.K.: Management expects NII to increase in 2026, driven by structural hedge repricing and anticipated rate cuts.
• Openbank Developments: Progress in Mexico and the U.S. with significant deposit growth, highlighting the strategic importance of digital banking.

This summary encapsulates the key takeaways from Santander's Q3 2025 earnings call, providing a balanced view of the bank's performance, strategic direction, and challenges ahead.