Banco Santander reported a record first-half 2026 underlying profit of €7.3 billion, up 15% year on year, as the Madrid-based group delivered a second-quarter underlying profit of €3.8 billion, an increase of 17% on the same period a year earlier.
Underlying earnings per share advanced 20% year on year, outpacing the growth in absolute profit, while underlying return on tangible equity climbed 70 basis points to 15.6%, according to the bank's first-half results release.
EFFICIENCY RATIO IMPROVES
The efficiency ratio, which measures operating expenses as a share of revenue, improved by 2.9 percentage points to 42.8% from a year earlier, which Santander attributed to efficiency gains from its ONE Transformation programme. A lower ratio means each euro of revenue is producing more operating profit.
Revenue rose 6% to €30.8 billion while total costs were flat, and down 2% in constant euros excluding TSB.
During the half the bank continued executing the €5.0 billion share buyback programme announced in February, and it expects a further c.€1.8 billion buyback against first-half 2026 results, already approved by the ECB.
CAPITAL AND CREDIT METRICS HELD FIRM
The group's common equity tier 1 capital ratio stood at 14.0% at the end of the first half; Santander said it remains well positioned to meet its year-end CET1 target of 12.8% to 13% once the expected impact of the Webster acquisition is taken into account. Excluding a 55 basis point impact from the TSB acquisition completed on 30 April, the group generated 20 basis points of capital in the quarter.
Cost of risk, which measures loan-loss charges as a proportion of average customer loans, stood at 1.15%. Santander said credit quality remained solid, and the non-performing loan ratio improved 7 basis points from the previous quarter to 2.93%.
The second-quarter contribution of €3.8 billion in underlying profit, up 17% year on year, was above the €3.6 billion reported for the first quarter.
"Revenue grew 6% and costs fell, with ONE Transformation driving further improvements in operating leverage and supporting record profits," said executive chair Ana Botín.
Santander said the first-half performance was driven by strong customer activity and the continued execution of its ONE Transformation programme, which is resulting in lower costs. Santander reiterated all its 2026 targets, including higher profit than the €14.1 billion reported in 2025 and a year-end CET1 ratio of 12.8% to 13%.
Botín said the bank reaffirmed all its 2026 and medium-term targets.