Banco Santander (NYSE:SAN) executives highlighted record profitability and continued progress on the group’s “One Transformation” initiative during the company’s latest results presentation and Q&A, while also detailing a major strategic move in the United States through the planned acquisition of Webster.
Record profit, stronger profitability and capital
Management said the customer base grew by 8 million to 180 million, while quarterly profit reached a new record. For 2025, the bank reported what it called its “best ever annual results,” with profit of EUR 14.1 billion, up 12% year over year (or 15% excluding Argentina).
Banco Santander also emphasized balance sheet strength, ending the year with a fully loaded CET1 ratio of 13.5%, described as an all-time high and above its 12%–13% target range. The company said it generated capital organically even after investing for growth, remunerating shareholders, and absorbing regulatory impacts.
Revenue growth, fees and expense discipline
Management said revenue increased 4% in constant euros, supported by customer activity across the group. Fee income rose 9% in constant euros, which the bank linked to customer growth and “network benefits” from global businesses.
Expenses were cited as a key positive, with costs down 1% in absolute terms, enabling record net operating income of nearly EUR 37 billion. The cost of risk finished the year at 1.15%, which management said was in line with its 2025 guidance.
The company also pointed to resilience in net interest income (NII). Excluding Argentina, group NII grew 3% year over year, while the consumer business posted NII growth of 5%.
Business highlights: Retail, Consumer, CIB, Wealth and Payments
Executives said diversification across geographies and business lines continues to support “profitable and resilient growth,” with different parts of the group benefiting under different interest rate environments.
- Retail: Active customers grew about 2% while cost to serve fell about 4%. Management reported a 39% cost-to-income ratio and said retail profit grew 9% year over year, with costs declining in real terms. Gravity and One App were described as deployed across key markets.
- Consumer: The bank highlighted Openbank’s expansion in the U.S., Mexico and Germany, saying it attracted customer and deposit inflows and supported deposit gathering to lower funding costs. Zinia was said to have reached more than 2 million customers via partnerships including Amazon and Apple. Santander also integrated Santander Consumer Finance and Openbank in Europe into a single legal entity under the Openbank brand. Consumer profit rose 8% year over year, supported by NII growth and improved cost of risk.
- CIB, Wealth and Payments: Management said these businesses are driving double-digit fee growth through network effects and global platforms. Wealth profit rose 27% in 2025 on strong commercial activity and double-digit fee growth, while CIB reported another record year in revenue with high single-digit fee growth and a “low-risk profile.” In payments, volume grew 9% and PagoNXT EBITDA margin ended above 34%.
Shareholder returns and buybacks
Banco Santander said shareholder value creation remained a priority, with full payout dividend per share up 14%. Earnings per share rose 17%, supported by profit growth and a lower share count following buybacks. Management reiterated an upgraded target to distribute at least EUR 10 billion to shareholders through buybacks for 2025 and 2026, subject to regulatory approvals.
The board approved a new buyback program of up to EUR 5 billion, including EUR 3.2 billion generated from the sale of Poland and EUR 1.8 billion related to second-half 2025 results. The bank said the ECB approved the program and it would begin “tomorrow.”
U.S. strategy: Webster acquisition details and outlook
In the U.S., management said profits grew more than 30% over 2023–2025 and 2025 profit after tax reached $1.7 billion, delivering the 15% adjusted RoTCE guided at the Investor Day. Openbank in the U.S. was said to have reached about EUR 5 billion in deposits and more than 200,000 customers.
Executives then outlined a planned acquisition of Webster intended to “accelerate” the U.S. transformation and make the franchise “best in class” among major U.S. banks in profitability and efficiency. Key terms and targets disclosed on the call included:
- Purchase price: $12.2 billion, described as 6.8x P/E including identified synergies.
- Synergies: Close to $800 million in pre-tax cost synergies (about 19% of the combined cost base), fully phased in by end-2028. Management broke this down as $480 million from headquarters efficiencies and branch optimization, $280 million from technology and operations, and $35 million from other initiatives.
- Profitability impact: Santander U.S. RoTCE expected to rise to 18% and deliver 7%–8% EPS accretion in 2028.
- Funding benefits (not included in accretion): Management said the combined cost of deposits would fall to 2.4% from 2.7%, aided by Webster’s health savings accounts (HSA) franchise, and the loan-to-deposit ratio would improve to around 100%.
- Consideration mix: 65% cash (from excess capital) and 35% in newly issued Santander shares. Management disclosed an exchange ratio of 2.0548 Santander shares per Webster share.
- Timing and leadership: Closing expected before year-end 2026. A joint integration team will be led by Webster CEO John Ciulla, who is set to become CEO of Santander Bank, N.A., while Christiana Riley remains country head of Santander U.S.
On capital, management said the acquisition would reduce the group’s CET1 ratio by roughly 140 basis points, and that CET1 would be around 12.8% at closing, with a return above 13% expected in 2027. The company said the 110 basis-point portion of the capital impact reflects the cash component, with the remaining difference tied to DTAs and risk-weighted asset model translation.
Executives repeatedly emphasized that funding and revenue synergies were not included in the 7%–8% EPS accretion, describing them as upside. They also said they expect no further bolt-on acquisitions over the next three years, citing that the group will be “at scale” in core markets after the U.K. TSB deal and the Webster transaction.
Looking ahead, management characterized 2026 as a “transition year” due to corporate transactions. Excluding M&A effects, the bank guided for mid-single-digit revenue growth in constant euros, costs lower in absolute terms, broadly stable cost of risk, and higher attributable profit in 2026 versus 2025. For 2027, management indicated revenue growth of double digits, mid-teens net profit growth, and CET1 above 13%. After integrating TSB and Webster, executives said they expect to achieve RoTE “in excess of 20%” in 2028, with additional detail to be provided at the Investor Day on Feb. 25.
About Banco Santander (NYSE:SAN)
Banco Santander, SA (NYSE: SAN) is a Spanish multinational banking group headquartered in Santander, Spain. Founded in 1857, the bank has grown from a regional institution into one of Europe’s largest banking groups, operating a diversified financial services platform that serves retail, small and medium-sized enterprises, and large corporate clients. Santander is publicly listed in Spain and maintains American Depositary Receipts on the New York Stock Exchange under the ticker SAN.
The group’s core activities include retail and commercial banking—offering deposit accounts, payment services, mortgages, personal and auto loans, and small business financing—alongside corporate and investment banking services for larger institutional clients.
