Banco Santander S.A. (LSE:BNC) reported third-quarter results that modestly exceeded market forecasts, supported by lower provisions and stable contributions from its main geographic segments. Shares were little changed following the release.
The Spanish lender posted a net profit of €3.5 billion, coming in about 1% above analyst expectations. Revenue was broadly consistent with projections, down 1.3% quarter-on-quarter, while pre-provision operating profit edged 1% above estimates. Operating costs fell 1%, and provisions were 6% below forecasts from both Morgan Stanley and the broader market.
Morgan Stanley described the outcome as “an in-line set of results at a group level.” The brokerage noted that net interest income was slightly softer—0.3% below consensus—mainly due to weakness in Argentina, while fee income exceeded expectations by 1%.
Santander also recognized a €181 million legal provision at its corporate center related to ongoing legal matters in the UK. According to Morgan Stanley, the impact “was offset by lower taxes and profit was in-line.”
The bank’s CET1 capital ratio improved to 13.1%, up 10 basis points from the prior quarter, despite minor model and market headwinds.
In Spain, net interest income rose 1.3% quarter-on-quarter, “3% better than expected, with provisions also 12% lower,” according to Morgan Stanley. Spanish net profit reached €975 million, about 10% below expectations, affected by weaker trading and restructuring charges.
In the UK, Santander reported €398 million in profit, exceeding the €322 million estimate. Net interest income remained stable in pounds, while fees rose 4% and costs declined 4%.
The U.S. division posted a 2% increase in pre-provision operating profit, driven by 4% growth in net interest income and 5% higher fees. Provisions met expectations, but a higher tax rate led to an 8% drop in profit.
In Brazil, net interest income slipped 2% in local currency, in line with consensus. Pre-provision profit was 6% below forecasts due to softer trading and fees, though lower costs and taxes pushed net profit up to €593 million, 5% ahead of expectations.
Morgan Stanley commented that “revenue performance in Spain, and the US, with no asset quality issues uncovered in the US and Brazil which were a concern into the quarter, should come as somewhat of a relief.”
Santander reaffirmed its 2025 return on tangible equity (ROTE) target of around 16.5% after Additional Tier 1 instruments, based on a tangible book value of €82.4 billion. This implies full-year profit of approximately €13.5 billion, or 3% above Morgan Stanley’s forecast. As the brokerage summarized, “guidance of 16.5% ROTE post AT1s maintained, implies c. €13.5bn profits for the full year, 3% above MSe.”
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