Banco Santander (LSE:BNC) reported a 3% increase in second-quarter net profit as strong performances in Spain and the UK helped offset higher loan-loss provisions in Brazil and Argentina, while underlying earnings exceeded market expectations.
The eurozone’s largest bank by market value posted attributable net profit of €3.52 billion for the three months to June, up from €3.43 billion in the same period last year. Results included €250 million of restructuring costs linked to the integration of TSB, which Santander completed at the end of April.
Excluding those one-off charges, underlying net profit rose 17% year on year to €3.77 billion, slightly ahead of analyst expectations of €3.75 billion.
Spain and UK deliver strongest earnings growth
Santander’s domestic business remained a key contributor, with net profit in Spain increasing 12% compared with the previous year as lending volumes expanded. In the UK, quarterly profit surged 47%, reflecting stronger operating performance and the initial contribution from the recently acquired TSB business.
Group revenue increased 9% during the quarter, comfortably outpacing a 2% rise in operating expenses. As a result, the bank maintained its efficiency ratio at 42.8%, unchanged from the previous quarter.
Higher provisions weigh on Latin American operations
Overall loan-loss provisions rose 13% to €3.35 billion, broadly in line with market forecasts. The increase was driven by higher provisioning in Brazil, where slower interest rate cuts have placed pressure on asset quality, and by a sharp rise in impairments in Argentina.
Executive Chair Ana Botín said the group’s diversified business model continued to provide resilience despite a more uncertain global backdrop.
“Our business, geographic and balance sheet diversification… remain key strengths amid heightened geopolitical uncertainty,” Botín said.
Growth strategy remains on track
Santander reaffirmed its financial targets for the 2026–2028 period, including expectations for mid-single-digit revenue growth in 2026, lower costs in constant euros, higher profits and a common equity tier one (CET1) capital ratio of between 12.8% and 13%.
The bank ended June with a CET1 ratio of 14%, even after completing the acquisition of TSB, highlighting the strength of its capital position.
Management continues to pursue expansion in developed markets through acquisitions, including TSB in the UK and Webster Financial in the United States, as part of a strategy to increase annual profit to more than €20 billion over the next three years.
Key highlights
- Attributable net profit increased 3% year on year to €3.52 billion.
- Underlying net profit rose 17% to €3.77 billion, exceeding market forecasts.
- Revenue grew 9%, while operating costs increased just 2%.
- Profit in Spain rose 12%, with UK profit jumping 47%.
- CET1 capital ratio stood at 14% following the TSB acquisition.
- Santander reaffirmed its medium-term financial targets.
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