Banco Santander (SAN.MC): SAN’s funding advantage: an underappreciated earnings driver

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Banco Santander (SAN.MC): SAN’s funding advantage: an underappreciated earnings driver

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03 Jul 2026 03:23:31 ET │ 39 pages

Banco Santander (SAN.MC)

SAN’s funding advantage: an underappreciated earnings driver

CITI'S TAKE

We believe SAN's improving funding profile is an underappreciated driver of

earnings resilience. Openbank, together with the additions of TSB and Buy

Webster, is helping the group build a larger, more granular and lower-cost

Price (02 Jul 26 13:34) €12.25deposit base across key markets. In our view, investors remain focused on

the macro and interest rate risks, while underestimating the benefits of Target price €13.45

SAN's strengthening deposit franchise, which should support resilient NII Expected share price return 9.8%

growth through 2028E. This supports our underlying net profit forecasts for

SAN group, which are c.2-3% above VA consensus (post Webster). Expected dividend yield 2.9%

Expected total return 12.7%

We think SAN’s deposit franchise is improving structurally… — Following the Market Cap €179,944M

acquisitions of TSB and Webster, SAN now has meaningful deposit scale across key US$204,812Mmarkets, with local market shares of at least c.10% in most regions (Figure 7). We

view this increasingly diversified and retail-oriented funding base as a key

competitive advantage, supporting balance-sheet resilience. Spain remains the

group's strongest deposit franchise, with c.19% market share, above-average

deposit growth (c.6% YoY in 1Q26) and funding costs supported by payroll accounts. Price Performance

(RIC: SAN.MC, BB: SAN SM)… and Openbank is becoming a group-wide funding and profitability lever —

Openbank is evolving from a digital distribution platform into a strategic funding and

profitability engine for the group.