MADRID — Spanish banking group Santander reported stronger underlying earnings in the third quarter of 2026, with growth in Britain and the United States helping offset weaker performance in Brazil as recent acquisitions bolstered its operations in developed markets.
Underlying net profit before restructuring charges increased 19% year on year to €3.85 billion ($4.29 billion), surpassing the €3.75 billion expected by analysts in a Reuters poll.
The euro zone’s largest bank by market value also posted an 11% increase in underlying fee income and 12% growth in revenue. However, lower profits in Brazil partly offset the gains generated by its other businesses.
Santander’s results highlight both the advantages and challenges of operating across multiple markets. Geographic diversification can reduce reliance on a single economy, but it also exposes the bank to currency depreciation, political uncertainty and financial-market volatility in individual countries.
The lender has been expanding its operations in developed economies, particularly Britain and the United States, to strengthen earnings from those markets. Recent acquisitions have contributed to the improved performance.
However, underlying earnings differ from reported net profit because certain expenses, including restructuring and impairment charges, affect the final results.
After accounting for €416 million in impairment and restructuring expenses, primarily linked to its acquisition of Webster, Santander’s attributable net profit fell 2% from a year earlier to €3.43 billion.
Even with the decline, reported profit exceeded the €3.23 billion forecast by analysts.
Brazil remains a significant factor in evaluating the bank’s overall financial performance. Political developments have added to volatility in the country’s financial markets, with the surprise re-election of President Luiz Inácio Lula da Silva triggering a sharp reaction in Brazilian assets.
Santander shares dropped 3% on Monday following the election outcome, as Brazilian stocks and the country’s currency recorded substantial losses.
Exchange-rate fluctuations can affect multinational banks by changing the value of overseas earnings when converted into their reporting currency. Economic weakness and market instability can also influence lending conditions, customer activity and borrower risk.
Stronger underlying earnings in Britain and the United States demonstrate how growth in some regions can help compensate for weaker conditions elsewhere. At the same time, the gap between underlying and reported profit underscores the importance of accounting for acquisition-related expenses when assessing the bank’s financial results.
For investors, a key question is whether Santander can maintain its improved performance in developed markets while managing its exposure to Latin America and integrating its recent acquisitions.
The latest results indicate stronger underlying profitability, although the decline in reported net profit shows that restructuring and impairment costs continue to affect the bank’s overall earnings.
Original article
Comments