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 second-quarter earnings presentation.
EFFICIENCY GAINS ACCELERATE
The efficiency ratio, which measures operating expenses as a share of revenue, improved to 42.8% from 45.3% a year earlier, an improvement of 250 basis points that management highlighted as evidence that its multi-year efficiency programme is gaining traction. A lower ratio means each euro of revenue is producing more operating profit.
The combination of 15% underlying profit growth and a 250-basis-point improvement in efficiency reflects positive operating jaws across the group, with revenue growing faster than costs. Santander has been targeting this dynamic as part of its plan to lift profitability across its five global businesses spanning retail, consumer, corporate and investment banking, wealth management and payments.
The 20% rise in underlying EPS, ahead of the 15% expansion in profit, reflects the impact of the group's ongoing share buyback programme, which reduces the share count and mechanically boosts per-share metrics for a given level of earnings.
CAPITAL AND CREDIT METRICS HELD FIRM
The group's common equity tier 1 capital ratio stood at 13.0% at the end of the first half, keeping the bank comfortably above regulatory requirements and its own stated capital targets. That capital position underpins Santander's ongoing shareholder distribution policy of dividends and buybacks.
Cost of risk, which measures loan-loss charges as a proportion of average customer loans, came in at 1.15% for the first half. That level is broadly consistent with the credit trends the group has been reporting across its diversified global footprint, which spans Europe, North and South America and consumer finance businesses across multiple markets.
The second-quarter contribution of €3.8 billion in underlying profit, up 17% year on year, indicates that momentum in the group's earnings continued into the June quarter rather than being weighted towards the earlier part of the half.
The H1 2026 outturn represents a record underlying profit for the group at the half-year stage, in line with executive chair Ana Botin's stated ambition of lifting Santander's structural profitability through the ONE Transformation programme and its five-global-business operating model.
Santander said the first-half performance reflected the benefits of its diversified footprint across markets and business lines, combined with continued execution on efficiency and capital discipline. The group is expected to provide further colour on regional performance and forward-looking priorities in its accompanying investor communications.
Taken as a package, an underlying return on tangible equity of 15.6%, an efficiency ratio of 42.8%, a CET1 ratio of 13.0% and a cost of risk of 1.15% represent a set of key ratios that keep Santander tracking towards the medium-term profitability, efficiency and capital targets that management has communicated to investors over recent reporting cycles. The record H1 underlying profit outturn of €7.3 billion, up 15% year on year, provides an anchor for that broader narrative at the half-year stage.