Banco Santander (SAN) — Q3 2026 Earnings Preview
Key Factors to Watch This Quarter
| Factor | Details & What to Watch |
|---|---|
| Revenue Growth | Consensus expects $18,883M (+7% QoQ, +4% YoY). Track NII and fee growth vs. guidance for mid/high-single digits. |
| Net Income | Consensus: $4,308M (+4% QoQ, +10% YoY). Assess margin sustainability and cost discipline. |
| EPS | Consensus: $0.22. Monitor for upside from operational leverage and buybacks. |
| NII/NIM | Management guides for low to mid-single-digit NII CAGR through 2028. Watch for continued resilience in Spain, UK, Openbank, and Brazil. |
| Cost-to-Income Ratio | Targeting improvement to ~36% by 2028; Q2 2026 at 42.8%. Look for further sequential improvement. |
| Cost of Risk | Guidance: 1.0–1.1% average for 2026–28. Q2 2026 at 1.15%. Monitor for normalization, especially in Argentina and Brazil. |
| CET1 Ratio | Q2 2026: 14.0% (post-TSB). Guidance: 12.8%+ post-Webster. Watch for capital deployment and SRT activity. |
| Fee Growth | Guidance: Fees to outpace NII, high single-digit CAGR. Confirm continued momentum in CIB, Wealth, Payments. |
| Integration Synergies | TSB and Webster integration underway. Look for early signs of cost and funding synergies, especially in the UK and US. |
| Deposit Growth | Strong retail deposit growth in H1 2026. Watch for continued traction, especially in Spain, UK, Mexico, and via Openbank. |
Summary and Conclusions
- Banco Santander enters Q3 2026 with strong momentum: H1 2026 delivered record profit, revenue up 6% YoY, and cost-to-income ratio improved by 3 percentage points YoY.
- Guidance remains constructive: Management reiterates >$14.1B net profit ex-M&A for FY26, with cost and revenue trends running ahead of plan. NII and fee growth are both tracking above initial targets, especially in Spain and CIB.
- Comparables are not especially tough: Q3 2025 was a record quarter, but Q2 2026 results showed further acceleration, suggesting the company is not facing a particularly difficult YoY comp.
- Key focus areas for Q3: Margin sustainability (especially in Spain and UK), cost discipline, cost of risk normalization (Argentina, Brazil), and progress on integration synergies (TSB, Webster).
- Capital position is robust: CET1 at 14.0% post-TSB, with Webster closing expected in H2 2026. Capital generation remains strong, and management signals potential for further distributions if organic growth opportunities are limited.
- Risks: Macroeconomic/geopolitical volatility, rate normalization pace in Brazil, competitive pressure in deposits (UK, Mexico), and execution risk on large integrations.
Recent Results — Quarterly Financials
Quarterly Actuals and Consensus ($M)
| Quarter | Revenue | Net Income | EPS (GAAP) | Notes |
|---|---|---|---|---|
| Q2 2026 | 17,611 | 4,158 | 0.24 | Includes 2 months of TSB; record profit |
| Q1 2026 | 17,421 | 4,949 | Record profit, strong NII/fees | |
| Q4 2025 | 18,303 | 3,897 | 0.24 | Best-ever annual results |
| Q3 2025 | 18,115 | 3,946 | 0.24 | Record quarterly profit |
| Q2 2025 | 18,151 | 3,817 |
Source: Company consensus data, restated as per latest reporting structure.
Forward Consensus — Next Two Quarters
| Quarter | Revenue (Consensus) | Net Income (Consensus) | EPS (Consensus) |
|---|---|---|---|
| Q3 2026 | 18,883 | 4,308 | 0.22 |
| Q4 2026 | 19,131 | 4,410 | 0.28 |
Full-Year Actuals and Consensus ($M)
| Fiscal Year | Revenue | Net Income | EPS (GAAP) |
|---|---|---|---|
| 2025 | 72,206 | 15,336 | 1.03 |
| 2026E | 71,599 | 17,069 | 1.21 |
How Did They Report Last Year? (Q3 2025)
- Revenue: $18,115M
- Net Income: $3,946M
- EPS: $0.24
- YoY Growth (vs. Q3 2024): Not provided, but Q3 2025 was described as a record quarter.
- Key drivers: Strong fee growth, disciplined cost control, solid NII performance, and robust capital generation.
Guidance and Management Commentary
FY 2026 Guidance (as of Q2 2026)
| Metric | Guidance / Target | Context Notes |
|---|---|---|
| Net Profit (ex-M&A) | >€14.1B (~$15.3B) | "Firmly on track" after H1; expect to exceed |
| Revenue Growth | Mid-single digit (constant euros, ex-M&A) | H1 up 6% YoY; tracking ahead |
| Fee Growth | Faster than NII, mid/high-single digit CAGR | CIB, Wealth, Payments driving momentum |
| NII Growth | Low to mid-single digit CAGR through 2028 | Spain, UK, Openbank, Brazil key contributors |
| Cost-to-Income Ratio | Improve to ~36% by 2028 | Q2 2026 at 42.8%; cost down 1% YoY, -5% in real terms |
| Cost of Risk | 1.0–1.1% avg (2026–28); 1.15% in Q2 2026 | Argentina elevated, offset by TSB/Webster mix shift |
| CET1 Ratio | 12.8%+ post-Webster closing | Q2 2026 at 14.0% post-TSB |
| Buybacks | ≥€10B for 2025–26 earnings | €9B already approved/in progress |
| TSB Synergies | ≥€400M by 2028 | Integration on track |
| Webster Synergies | $800M pre-tax cost synergies by 2028 | Closing expected H2 2026 |
Segment/Geography Highlights
- Spain: NII up 8% QoQ in Q2 2026; strong customer growth, cost down 3%, efficiency ratio 33.6%. Management expects similar trends in H2.
- Brazil: NII up 2% YoY/QoQ in Q2 2026; cost of risk stable at ~4.1–4.2%. Mix shift toward higher-quality, lower-risk segments.
- Mexico: Loan growth 8% YoY in June; focus on CIB, SMEs, auto, and mortgages. Conservative on credit cards/personal loans.
- UK: Deposit competition remains intense; TSB integration progressing, cost savings on track.
Management Commentary — Recent Calls
- On Activity Levels: "We are on track to exceed some of our targets set up for the year. NII outlook is looking better for the retail and commercial businesses in Europe as well as for Openbank."
- On Cost of Risk: "Acquisition of TSB and Webster will improve the cost of risk towards 1.0–1.2% range over '27, '28."
- On Capital: "CET1 ratio rose to 14%, on track to achieve our year-end target comfortably above our 12% to 13% operating range."
- On Deposits: "Openbank will use those deposits to fund the consumer business, the auto business and it's helping us out also to use a lot less of wholesale expensive funding and increase the margins and help us in the NII."
- On Integration: "TSB gave us 4 million customers more... We do believe that the cost savings that we promised about EUR 400 million are in line of what we're going to be able to deliver."
What Changed / Intra-Quarter Developments
- TSB acquisition closed April 30, 2026: Now included in group results; integration underway.
- Webster acquisition: Regulatory approvals progressing; expected to close H2 2026.
- Deposit franchise: Retail deposit growth outpacing peers, especially in Spain, UK, Mexico, and via Openbank.
- Cost actions: Early retirement plan in Spain signed; restructuring charges booked in H1.
- Capital generation: Strong organic capital build continues; SRT and asset rotation activity robust.
- Macro: Rate expectations have moved higher in core markets, providing a tailwind to NII, offsetting slower normalization in Brazil.
Conclusion
Banco Santander is entering Q3 2026 earnings with strong momentum, having delivered record profits and robust operational leverage in H1. The company is not facing a particularly tough YoY comparable, and consensus expects continued growth in revenue and net income. Key areas to watch are margin sustainability (especially in Spain and UK), cost discipline, cost of risk normalization, and progress on integration synergies from TSB and Webster. Capital position is robust, and management signals potential for further distributions if organic growth opportunities are limited. Risks include macro/geopolitical volatility, rate normalization pace in Brazil, deposit competition, and integration execution. Overall, the setup for Q3 2026 is positive, with upside potential if current trends persist.
