Business Context and Reporting Period
This Form 6-K filing covers Banco Santander, S.A.'s financial results for the first quarter ended March 31, 2026. The period was defined by the completion of the sale of Santander Bank Polska to Erste Group Bank AG and the announcement of an agreement to acquire Webster Financial Corporation. The Group also implemented changes to its reporting structure effective Q1 2026 to improve transparency and align with management practices, reclassifying certain costs and excluding Poland-related results from underlying metrics.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 | Change (YoY) |
|---|---|---|---|
| Profit Attributable to Parent | EUR 5,455 million | EUR 3,402 million | +60.3% |
| Underlying Profit Attributable to Parent | EUR 3,560 million | EUR 3,165 million | +12.5% |
| Total Income | EUR 15,140 million | EUR 14,579 million | +3.8% |
| Net Interest Income | EUR 11,019 million | EUR 10,621 million | +3.7% |
| Net Operating Income | EUR 9,010 million | EUR 8,306 million | +8.5% |
| Efficiency Ratio | 42.8% | 45.8% | -3.0 pp |
| Cost of Risk | 1.14% | 1.12% | +2 bps |
| NPL Ratio | 3.00% | 2.98% | +2 bps |
| CET1 Ratio (Phased-in) | 14.4% | 12.9% | +1.5 pp |
| Return on Tangible Equity (RoTE) | 17.3% | 15.8% | +1.5 pp |
| Underlying RoTE | 15.2% | 14.6% | +0.6 pp |
| EPS (Basic) | EUR 0.36 | EUR 0.21 | +69.3% |
| Underlying EPS | EUR 0.23 | EUR 0.20 | +17.3% |
Material Changes vs. Prior Period
- Poland Disposal: The sale of Santander Poland to Erste Group was completed on January 9, 2026, for approximately EUR 7 billion. This generated a net capital gain of EUR 1,895 million, which significantly boosted statutory profit and increased the CET1 ratio by 95 basis points. Poland results are now reported as discontinued operations.
- Webster Acquisition: On February 3, 2026, Santander announced an agreement to acquire 100% of Webster Financial Corporation for approximately USD 12.2 billion (EUR 10.3 billion). The deal is subject to regulatory and shareholder approval.
- Reporting Changes: Effective Q1 2026, the Group reclassified certain recurring operating charges (labor, legal) from "other results and provisions" to "total costs" in the underlying income statement. Additionally, the Cards business was moved from Payment Solutions to Retail & Commercial Banking.
- Segment Performance: Underlying profit grew across most segments. Retail & Commercial Banking profit rose 9% (constant euros), and Corporate & Investment Banking (CIB) profit increased 16% (constant euros). Openbank underlying profit declined 38% (constant euros) primarily due to a EUR 207 million provision for UK motor finance complaints and the end of US EV tax benefits.
Guidance, Outlook, and Risks
- Strategic Targets (2028): Management announced targets to increase total customers to >210 million and active customers to ~125 million. The Group aims to reduce the cost base to below EUR 27 billion and improve the efficiency ratio to ~36%. The target RoTE is >20%.
- Capital Management: The Group intends to maintain a CET1 ratio between 12.8% and 13% by year-end 2026, accounting for the Webster and TSB acquisitions. Shareholder remuneration policy targets a 50% payout of underlying profit (split between dividends and buybacks) for 2026, shifting to 35% cash dividends and 15% buybacks from 2027.
- Shareholder Returns: A final cash dividend of EUR 12.50 cents per share for 2025 was approved. A share buyback program of up to EUR 5,030 million was launched, including an extraordinary buyback of EUR 3,200 million funded by the Poland disposal proceeds.
- Risks and Contingencies:
- Geopolitical: Escalation of conflict in the Middle East has increased market volatility and energy prices, creating inflationary pressures.
- Argentina: Continued hyperinflation and sector-wide credit deterioration impacted provisions in the Retail segment.
- Legal: A EUR 207 million provision was recorded for potential complaints regarding motor finance dealer commissions in the UK.
- Integration: Risks associated with the integration of Webster and TSB, including execution delays and synergy realization.
Investor Verification Checklist
- Verify the regulatory approval status and closing timeline for the Webster Financial Corporation acquisition.
- Confirm the impact of the Poland disposal on the Q1 2026 capital ratios and the exclusion of Poland from underlying metrics for comparability.
- Monitor the execution of the EUR 5,030 million share buyback program and the timing of the final 2025 dividend payment.
- Assess the sustainability of the efficiency ratio improvement (42.8%) given the ongoing transformation costs and investments in AI/technology.
- Review the credit quality trends in Argentina and the UK, specifically regarding the motor finance provision and sector-wide loan loss provisions.
- Validate the "constant euro" growth figures for underlying profit, as exchange rate fluctuations significantly impacted reported euro figures.