Banco Santander (NYSE:SAN) Q3 2025 Earnings Call October 29, 2025 05:00 AM ET Company ParticipantsHéctor Grisi - CEOJosé García Cantera - CFOAndrea Filtri - Managing Director and Head of Mediobanca ResearchBorja Ramirez Segura - Director of Banks Equity ResearchMiruna Chirea - Senior Associate of Iberian BanksCarlos Peixoto - Equity Research of Banking and Other Financials and Senior DirectorPablo de la Torre Cuevas - Equity Research Assistant VP of European BanksFrancisco Riquel - Head of Equity ResearchAl ...

Banco Santander (NYSE:SAN) Q3 2025 Earnings Call October 29, 2025 05:00 AM ET Company ParticipantsHéctor Grisi - CEOJosé García Cantera - CFOBorja Ramirez - Director of Banks Equity ResearchAndrea Filtri - Managing Director and Head of Mediobanca ResearchMiruna Chirea - Senior Associate of Iberian BanksCarlos Peixoto - Equity Research of Banking and Other Financials and Senior DirectorPablo de la Torre Cuevas - Equity Research Assistant VP of European BanksFrancisco Riquel - Head of Equity ResearchAlvaro Se ...

Banco Santander (NYSE:SAN) Q3 2025 Earnings Call October 29, 2025 05:00 AM ET Speaker3Good morning and welcome to the third quarter 2025 results presentation. For the call today, we will be joined by Héctor Grisi, our Group CEO, and José García Cantera, our CFO. Héctor, over to you.Speaker0Thanks, Raul. Good morning everyone, and thank you for joining the Santander results presentation. We will follow the usual structure. First, I will go over our results with a special focus on the performance of our globa ...

Financial Data and Key Metrics Changes - The quarterly profit reached a record of $3.4 billion, making H1 2025 the best first half ever for the company, driven by strong revenue growth across global businesses [5][6] - Revenue grew by 5% in constant euros, supported by a 1% increase in net interest income (NII), or 4% excluding Argentina, and record fees up nearly double digits [6][8] - The CET1 ratio ended the quarter at 13%, at the top end of the 12% to 13% operating range, with a post-AT1 return on tangible equity (RoTE) of 16% [5][50] Business Line Data and Key Metrics Changes - Retail and consumer, representing 70% of revenue, showed significant upside potential with a 3% increase in deposits and a 16% rise in digital sales [10][13] - Wealth management reported a 14% revenue growth, driven by record assets under management and strong commercial trends [33][24] - Payments experienced a 17% revenue increase, with double-digit growth in NII and fees, fueled by higher activity levels [33][27] Market Data and Key Metrics Changes - Customer activity drove revenue growth across all businesses, with double-digit growth in Wealth and Payments, and solid performance in Corporate and Investment Banking (CIB) [11][22] - The cost of risk improved year on year, with the NPL ratio falling to 2.91%, reflecting robust credit quality trends [41][42] - Retail customer deposits grew by 10% year on year, now representing 62% of total funding [20] Company Strategy and Development Direction - The company is focused on transforming into a digital bank with branches, combining technology with personalized support [12] - The ongoing transformation aims to simplify and automate processes, improving operational leverage and efficiency [9][39] - The acquisition of TSB is expected to enhance profitability and connectivity across the group, with a target RoTE increase from 11% in 2024 to 16% by 2028 [57][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year profitability targets despite a challenging environment, with expectations for revenue growth to continue [12][50] - The company anticipates stable cost of risk supported by resilient labor markets, with a focus on maintaining profitability over volume [19][52] - Management highlighted the importance of diversification in navigating challenges, with higher interest rates benefiting some retail franchises [11][12] Other Important Information - The company announced a new share buyback program of up to €1.7 billion, with plans to distribute at least €10 billion to shareholders through buybacks for 2025 and 2026 [28][47] - The transformation efforts have led to a significant reduction in operational complexity, improving customer interactions and reducing costs [13][39] Q&A Session Summary Question: NII in the UK and top-up provisions in Brazil - Management acknowledged the UK as a work in progress, focusing on profitability and margin management, with expectations for NII to be slightly up [55][56] - In Brazil, management indicated that the cost of risk is expected to normalize, with a focus on secure lending and a conservative approach to strengthening the balance sheet [62][64] Question: Direction of costs and capital generation - Management reiterated guidance for lower costs in current euros for 2025, with ongoing investments in transformation [70][73] - Capital generation is expected to improve in the second half, with excess capital above 13% to be distributed as share buybacks, subject to regulatory approvals [76][77] Question: Benefits of transformation and consumer segment performance - Management indicated that the benefits of transformation are still unfolding, with expectations for further improvements in cost-to-income ratios [82][83] - The consumer segment is experiencing challenges due to lower car volumes in Europe, but management is optimistic about future performance as conditions normalize [88][89]