Bankinter | Banco Santander (SAN) achieves its 2023/2025 targets with controlled non-performing loans and solid fundamentals (capital, efficiency and profitability). Santander is enjoying a good run in terms of results (17.0% in EPS) with a diversified business across geographies and businesses and an attractive remuneration plan for shareholders (estimated return on dividends & share buybacks >8.5%). The acquisition of Webster Financial in the United States makes strategic sense and improves the risk profile with an attractive return on investment (ROI ~15% estimated). We reiterate our Buy recommendation with a target price of €12.35/share (versus €10.25/share previously).
2025 results: SAN meets its 2023/2025 targets after beating expectations in Q4 2025 with a net profit of €3,764 million (up 15.0%; 7.4% quarter-on-quarter versus €3,410 million expected). In 2025, it achieves record net profit of €14.101 billion (up 12.0%), and the management team issues positive guidance for 2026/2028 after acquiring Webster Financial in the US for $12.2 billion.
The Webster acquisition improves the group’s risk profile, makes industrial sense due to economies of scale (€800 million in synergies) and the acquisition multiples are attractive (2028e PER ~10.0x & 6.8x post-synergies with an estimated return/RoTE of ~18.0% in 2028). The transaction is expected to close in 2H 2026 with a payment of 65% in cash and 35% in SAN shares.
Main geographical areas: 2025 in constant euros:Spain (EBITDA: €4,272 million; up 13.5% versus €4,210 million estimated) improvement in commercial activity (up 5.0% in loans) and efficiency with a low Cost of Risk/CoR (0.44%; down 7 bp) and a return/RoTE of ~24.3% (+3.4 pp); Brazil (NBE: €2,168 million; down 2.9% versus €2,146 million estimated) shows pressure on margins and a rise in CoR (4.73%; up 22 bp); Mexico (NAI: €1,705 million; up 12.0% versus €1,619 million estimated) maintained a high pace of activity (up 8.0% in lending) with a reasonable CoR (2.69%; up 5 bp) and rising profitability/RoTE (22.0%; up 2.3 pp); The US (NAF: €1,541 million; up 45.0% versus €1,511 million estimated) surprised positively in fees (up 15.3%) with low CoR (1.63%; down 19 bp); United Kingdom (NIB: €1,307 million; up 1.3% versus €1,257 million estimated), improved activity (up 9.1% in net margin) with a return/RoTE of 10.2% (lower than the group).
We maintain our Buy recommendation because: (1) SAN maintains a high growth rate (17.0% in EPS), with improvements in profitability/RoTE (16.3% against 15.5% in 2024), good credit quality ratios (delinquency ~2.91%) and excess capital (CET1~ 13.5%; 0.7 pp versus 12%/13% target), (2) the management team has issued positive guidance for 2026/2028 – revenue growth, lower costs and net banking income >€14.1 billion in 2026 – with a CET1 capital ratio of ~12.8%/13.0% and profitability/RoTE >20.0% in 2028.
