Banco Santander, S.A.

Santander said quarterly profit hit a record EUR 3.8 billion, making H1 2026 the best half ever. Underlying profit grew 14% year-on-year, revenue rose 6% in constant euro, NII increased 6%, fees rose 7%, and underlying RoTE reached 15.6%; efficiency improved by 3 percentage points, the CET1 ratio was 14%, underlying EPS grew 20%, and TNAV plus cash dividend per share increased 19%. José García Cantera said the group remains on track to deliver more than EUR 14.1 billion of profit in 2026, excluding M&A, and CET1 is expected to end the year in line with the 12.8% target, despite roughly 15 to 20 basis points of negative supervisory/regulatory impact expected in H2. Management also guided to a broadly stable cost of risk around 115 basis points, with H2 improvement in Argentina partly offset by usual U.S. seasonality, and said the average 2026-2028 cost of risk should be 1%-1.1% after TSB and Webster mix effects.

Héctor Grisi framed the quarter as proof that Santander’s strategy and ONE Transformation are working, emphasizing a simpler, more integrated model that is still producing growth while lowering costs. He repeatedly highlighted customer growth, deeper relationships, and diversification across Europe and the Americas, and said the group is on track or slightly ahead of its 2026 targets. His tone was confident and constructive, with optimism around Spain, the U.K., the U.S., Mexico, and the long-term goal of RoE above 20% by 2028.

José García Cantera focused on the durability of the financial profile: revenue up 6%, cost down 1% year-on-year, efficiency at 42.8%, and net operating income up 11%. He detailed an ALCO portfolio of EUR 60 billion at a 3.3% average yield and six-year duration, with rate sensitivity kept below EUR 500 million per 100 basis points, currently around EUR 450 million. On capital, he said CET1 stood at 14% after a 55 bp TSB impact, with 27 bp of net organic capital generation in the quarter, and reiterated the 12.8% year-end target even after Webster and expected second-half regulatory charges.

Analysts focused on Spain NII sustainability, activity trends, cost of risk, Brazil margins and credit risk, Mexico competition, the U.K. deposit war, headcount, Webster timing, and capital/regulatory headwinds. Management said Spain’s NII trends should continue in H2, that the ALCO portfolio will stay around EUR 60 billion, and that the first-half drivers of NII—transactional deposits, balance-sheet management, and mortgage repricing—should persist. On risk, they said Argentina should improve in H2, Brazil’s cost of risk should stay around 4.2% for the year, and the U.S. remains strong with seasonally higher provisions in Q3 and Q4. On TSB/Webster, they said the integration and closing are proceeding as expected, with TSB synergies of at least EUR 400 million and the Webster deal still expected to close in H2.