Banco Santander (SAN.MC): Updating estimates post Q2‘26

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Banco Santander (SAN.MC): Updating estimates post Q2‘26

Goldman Sachs Banco Santander (SAN.MC)

commercial activity with growth in customers, positive sensitivity to rates, ALCO

portfolio and tailwinds). For the FY, we model 9% y/y NII growth in Spain supported

by volume growth (both loans and deposits, growing on the back of strong

performance of the Spanish economy and continued solid commercial activity),

ALCO contribution, good deposit management trends and SAN’s positive sensitivity

to rates in the geography. We also a model a 17% y/y improvement in the UK

supported by underlying growth in volumes, lower deposit costs and hedging

tailwinds while also noting positive contribution from TSB.

Turning to the US, we model NII slightly up y/y with the recovery in volumes and

improving consumer business dynamics only partly offset by the FX headwinds due

to USD depreciation. For Brazil, we expect low-to-mid single growth in loan volumes

(in constant €) to support a 5% NII growth y/y on a constant € basis (given Brazil NII

has negative sensitivity to policy rates, noting slightly lower level of Selic rates vs.

2025), and ~11% growth in current € basis (given the improved BRL FX outlook).

Finally, for Mexico, following a better than expected Q2 print, we expect NII to

increase by 14% y/y to reach €5.2bn in 2026E, supported by a combination of

volume growth on the back of positive customer activity and FX related tailwinds

(given the expectation for MXN to appreciate vs. 2025 levels) which more than

offsets the reduction in policy rates. Looking ahead to 2028E, we model c.€71.7bn in

Group revenues for 2028E (lower vs. their implied revenue target of c.€75bn based

on <€27bn of costs and c.36% efficiency ratio guidance), noting that our estimates