Business Context and Reporting Period
This Form 6-K filing covers Banco Santander, S.A.'s financial results for the period ending September 30, 2025 (9M 2025), with specific quarterly data for Q3 2025. The report was approved by the Board of Directors on October 28, 2025. A significant event during the period was the announcement of an agreement to sell approximately 49% of Santander Bank Polska S.A. to Erste Group Bank AG for approximately EUR 7 billion. Consequently, Poland-related assets and liabilities are classified as "held for sale" in the statutory balance sheet, and results are reported as "discontinued operations" in the statutory income statement. However, management metrics and underlying results continue to include Poland to maintain comparability.
Key Financial Metrics
| Metric | Q3 2025 | 9M 2025 | 9M 2024 |
|---|---|---|---|
| Profit Attributable to Parent (EUR mn) | 3,504 | 10,337 | 9,309 |
| Total Income (EUR mn) | 14,325 | 43,507 | 43,259 |
| Net Interest Income (EUR mn) | 10,348 | 31,559 | 32,543 |
| Net Fee Income (EUR mn) | 3,159 | 9,501 | 9,191 |
| Operating Expenses (EUR mn) | (6,015) | (18,379) | (18,600) |
| Cost of Risk (%) | 1.13% | 1.13% | 1.18% |
| Efficiency Ratio (%) | 41.1% | 41.3% | 41.7% |
| Return on Tangible Equity (post-AT1) (%) | 16.2% | 16.1% | 15.4% |
| CET1 Ratio (%) | 13.1% | 13.1% | 12.5% |
| Non-Performing Loan (NPL) Ratio (%) | 2.92% | 2.92% | 3.06% |
| Total Assets (EUR mn) | 1,840,668 | 1,840,668 | 1,802,259 |
| Loans to Customers (EUR mn) | 1,027,209 | 1,027,209 | 1,067,419 |
| Customer Deposits (EUR mn) | 1,026,130 | 1,026,130 | 1,045,911 |
Note: Statutory figures exclude Poland from continuing operations. Underlying figures (used for management metrics) include Poland. Loans and deposits shown above are statutory figures; underlying gross loans including Poland were EUR 1,065,294 million.
Material Changes vs. Prior Period
- Profit Growth: Profit attributable to the parent for 9M 2025 increased 11% year-on-year (16% in constant euros) to EUR 10.3 billion, driven by strong net fee income, controlled costs, and improved cost of risk. Q3 2025 profit reached a record EUR 3.5 billion.
- Revenue Mix: Net interest income (NII) declined 3% year-on-year in statutory terms due to the impact of falling interest rates in Argentina and lower yields in Wealth. However, net fee income grew 3% year-on-year, supported by growth in CIB, Wealth, and Payments.
- Cost Management: Operating expenses decreased 1% year-on-year. The efficiency ratio improved to 41.3%, the best reported in over 15 years, driven by the "ONE Transformation" program.
- Balance Sheet: Total assets grew 2.1% year-on-year. Gross loans to customers (excluding reverse repos and including Poland) grew 2% in constant euros, while customer funds grew 7% in constant euros.
- Capital: The phased-in CET1 ratio increased to 13.1%, exceeding the Group's operating range of 12-13% and the 2025 target.
Guidance, Outlook, and Risks
Outlook and Guidance: Management states the Group is on track to meet its 2025 targets. The RoTE (post-AT1) is advancing toward the c.16.5% target for 2025. The Group expects to distribute approximately 50% of reported profit to shareholders via dividends and buybacks. An interim cash dividend of EUR 11.50 cents per share was approved, and a share buyback program of up to EUR 1.7 billion commenced in July 2025.
Strategic Transactions:
- Poland Disposal: Sale of ~49% stake in Santander Bank Polska to Erste Group (approx. EUR 7 billion) is subject to regulatory approval. Completion is expected in the coming months.
- TSB Acquisition: Agreement reached to acquire 100% of TSB Banking Group plc from Banco de Sabadell for approx. EUR 3.1 billion. This transaction does not impact current reported results.
- Openbank Merger: Merger of Openbank and Santander Consumer Finance into a single legal entity announced post-Q3.
Risks and Contingencies:
- Macroeconomic Environment: Moderate global economic slowdown, falling interest rates, and geopolitical tensions (Ukraine, Middle East, US trade policies) remain key risks.
- Argentina: Significant exchange rate volatility and hyperinflation continue to impact results, though the Group has adjusted its reporting methodology to use the official exchange rate from Q2 2025.
- Regulatory: Transactions are subject to customary closing conditions and regulatory approvals (e.g., Polish Financial Supervision Authority).
- Operational Risk: Focus remains on cyber risk, technology, and supplier risks, though operational losses decreased quarter-on-quarter.
Key Facts for Investor Verification
- Poland Disposal Impact: Verify the distinction between statutory results (Poland as discontinued operations) and underlying results (Poland included) when analyzing segment performance and year-over-year growth.
- Argentina Exchange Rate: Confirm the methodology used for Argentina (official rate vs. alternative rate) as it significantly impacts reported NII and profit in the region.
- Shareholder Remuneration: Verify the execution of the EUR 1.7 billion buyback program and the payment of the interim dividend against 2025 results.
- Cost of Risk: Monitor the cost of risk in the Payments segment (7.73%), which is significantly higher than the Group average due to loan growth and model updates.
- Regulatory Approvals: Track the status of regulatory approvals for the Poland sale and the TSB acquisition, as delays could impact capital generation and strategic integration.