Business Context and Reporting Period
This Form 6-K filing covers the full fiscal year ended December 31, 2025, for Banco Santander, S.A. The report was approved by the Board of Directors on February 3, 2026. The period is characterized by significant strategic restructuring, most notably the completion of the sale of approximately 49% of Santander Bank Polska to Erste Group Bank AG on January 9, 2026. Consequently, Poland operations are classified as "discontinued operations" in statutory reporting from Q2 2025 onwards, though management metrics and underlying results continue to include Poland for comparability until the disposal closed.
Key Financial Metrics
| Metric | 2025 (EUR mn) | 2024 (EUR mn) | Change |
|---|---|---|---|
| Net Interest Income | 42,348 | 43,787 | (3.3%) |
| Total Income | 58,670 | 58,380 | +0.5% |
| Net Operating Income | 33,959 | 33,231 | +2.2% |
| Profit Before Tax | 18,681 | 17,347 | +7.7% |
| Profit Attributable to Parent | 14,101 | 12,574 | +12.1% |
| Earnings Per Share (EPS) | 0.91 | 0.77 | +17.3% |
| Return on Tangible Equity (RoTE) | 17.1% | 16.3% | +0.8 pp |
| Efficiency Ratio | 41.2% | 41.8% | -0.6 pp |
| Cost of Risk | 1.15% | 1.15% | 0 bps |
| NPL Ratio | 2.91% | 3.05% | -14 bps |
| CET1 Ratio | 13.5% | 12.8% | +70 bps |
| Total Assets | 1,867,515 | 1,837,081 | +1.7% |
| Customer Deposits | 1,041,200 | 1,055,936 | (1.4%) |
Note: Statutory figures exclude Poland results from continuing operations. Underlying figures (used for management metrics) include Poland. Underlying profit attributable to the parent was EUR 14,101 million, representing a 16.2% increase in constant euros.
Material Changes vs. Prior Period
- Profitability Surge: Attributable profit reached a record EUR 14.1 billion, driven by a 12.1% year-on-year increase. In constant euros, profit grew 16.2%, supported by strong fee income (+9% in constant euros) and cost discipline (costs down 1% in real terms).
- Poland Disposal: The sale of 49% of Santander Poland to Erste Group generated a net capital gain of approximately EUR 1.9 billion, increasing the CET1 ratio by roughly 95 basis points. This transaction closed in January 2026, with impacts recorded in Q1 2026.
- Balance Sheet Restructuring: Due to IFRS 5 requirements, Poland assets and liabilities are classified as "held for sale" from June 2025. Excluding Poland, loans and advances would have been EUR 1.076 trillion and customer deposits EUR 1.096 trillion.
- Shareholder Returns: The bank executed a EUR 1.7 billion share buyback program in H2 2025 and paid an interim dividend of 11.50 cents per share. Management intends to allocate 50% of the capital generated from the Poland sale to accelerate buybacks.
- Operational Efficiency: The efficiency ratio improved to 41.2%, the best in over 15 years, driven by the "ONE Transformation" and cost reductions.
Guidance, Outlook, and Risks
- Strategic Acquisitions: Santander announced agreements to acquire 100% of TSB Banking Group (valued at ~EUR 3.1 billion) and Webster Financial Corporation (valued at ~USD 12.2 billion). These transactions are subject to regulatory approval and shareholder votes and are not yet reflected in the financial results.
- Capital Management: The CET1 ratio of 13.5% is well above the 12-13% operating range. The bank targets a RoTE (post-AT1) of approximately 16.5% for 2025, which was achieved at 16.3%.
- Risks and Contingencies:
- Regulatory Approval: The TSB and Webster acquisitions face customary closing conditions, including regulatory and shareholder approvals.
- Macroeconomic Environment: Management cites geopolitical tensions, trade uncertainties, and lower interest rates as headwinds, though fee income growth offset these pressures.
- Integration Risks: Risks associated with the integration of new acquisitions and the execution of the Poland disposal.
Investor Verification Checklist
- Poland Accounting Treatment: Verify the distinction between statutory results (excluding Poland from continuing operations) and underlying results (including Poland) when analyzing year-over-year trends.
- Acquisition Timelines: Monitor the regulatory approval status and closing dates for the TSB and Webster acquisitions, which are pending as of the report date.
- Capital Allocation: Confirm the execution of the planned share buybacks funded by the proceeds from the Poland disposal.
- Argentina Exposure: Review the specific treatment of Argentina results, which are calculated using the official exchange rate from Q2 2025 onwards, differing from the alternative rate used in prior periods.
- Cost of Risk Stability: Assess the sustainability of the 1.15% cost of risk given the macroeconomic environment and the specific provisions in the UK and Brazil.