BANCO SANTANDER Aktie kaufen oder nicht? SAN Analyse & Übersicht

RS

Raul Sinha executive

Good afternoon and welcome to the Santander Investor Day 2026. I'm Raul Sinha, Global Head of Investor Relations, and it's my pleasure to welcome all of you here in London and all of those who are joining us virtually. It's been 3 years since our last Investor Day, and the world is changing a lot. It's time to talk about why we're well positioned for the future. And for that, I wanted to introduce our management team, led by Ana Botin, our Executive Chair; Hector Grisi, our CEO; and Jose Garcia Cantera, our CFO.

A few logistics points to highlight before we start, we're going to have a presentation from Ana followed by a presentation from Hector. Then we'll have a short break. After that, we will have a presentation from Jose and open up to your questions. All the presentations will be available on our website shortly before the session starts. And a recording of this event will be available on our website shortly after the event is finished. And with that, Ana, over to you.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So good morning to everybody, and welcome to our Investor Day. It's the fourth for me. I think for Jose also. And I would like to first begin by giving you an overview of our strategic targets and our plans. Then Hector will follow, we'll have a coffee break, and then Jose will take you in detail through the balance sheet and also capital allocation. I will then wrap up after that at the end.

So I'd like just to take a step back and cover very briefly what has been the last 11 years. It is important. We have transformed Santander into more simple, more effective and more predictable, open global financial services platform. I'd like to highlight 4 things that I think are especially important to show what has changed in a structural way because it underlies what we believe will be an increasingly predictable performance and especially a through the cycle better performance than our peers. First of all, our operating model is now globally aligned. It's more simple. We have reduced complexity. We have fewer products, more common processes and more automation. This improves experience for our customers. You have seen that in our customer growth. At the end, that's what creates value in a company and, of course, at the same time, reducing unit cost.

By the way, this sounds easy, it is hard, and it's what people usually consider boring. It's about changing the culture, it's about changing the way we run the bank in a very structured way. Second, and the second is only possible if you do the first. We are now scaling common technology platforms. That is at the heart of one transformation. Scale in banking is not only balance sheet, it is operational scale. The ability to build once and deploy across markets, improving both time to market and cost to serve and, of course, the customer experience. We are the scale player in retail and consumer banking across Europe and the Americas, and our global platforms enable us to harness scale efficiencies at a global level, not just by country. My third point is equally important, and it's about our earnings mix. It's increasingly of higher quality and even more predictable. We're growing fee income generating more capital-light businesses, deepening customer primacy and importantly, increasing hard currency exposure, which, of course, should lead to lower cost of equity and lower volatility, lower structural cost of equity over time.

And last but not least, our capital position creates optionality. We can invest, execute selective bolt-on acquisitions where returns exceed buybacks and still maintain a sustainable distribution profile. All these are structural changes that matter because they reduce uncertainty, which is a cornerstone for assessing what ultimately drives the valuation of a bank over time. So that is what has changed. That is what is giving us a very solid foundation for the future. But it is equally important to say what has not changed. Our strategy remains the same. We aim to be the best open global financial services platform so we can help people and businesses prosper. And at the heart of that purpose is our responsibility, our responsibility to be there for 180 million customers in good times and bad, and a wider responsibility to help tackle global challenges. To help our customers transition to a green economy, to give more people access to the financial system and empower them to make prudent financial decisions, to support enterprise and give people the skills they need to get on in life and set up new businesses.

We're one of the biggest supporters of universities in the world. And all of that is what drives economic growth and ultimately, our shareholders value over time. So I want to say very clearly, the world is changing, but our principles are not, and we remain totally committed to be a responsible bank for our teams, our customers, our shareholders and our communities. So over the last decade, I think you can see that in the screen. I'm not going to spend a lot of time, but we have not just delivered the last 3 years. We have delivered on every single one of our 3-year plans since 2015. We are coming from way behind, and our profitability was relatively low. It's now higher. We've built capital. We've set the foundations. I have just explained and we are now after what we call 3 years ago, a new phase of value creation, we're not quite sure how we call this period. We haven't really given the name, I call it, it's about growth. I always allow teams, you need to earn the right to grow. We believe at 16% and going to 20% -- over 20% profitability, we now can accelerate growth.

And we are setting, of course, the bar even higher. This is also important because we are a bank. And the world is a complicated place. There's lots of uncertainty. Markets could be volatile. That is when Santander delivers better than peers. This is not about 10 years or 3 years. This goes back, as you can see in the bottom graph since 1999. That covers the global financial crisis and that compares with the best banks in Europe and the Americas. We are, as you can see, the lowest earnings per share volatility. And very important, we have multiplied by 8 our profits in that period. and accelerating, of course, the last couple of years. We are by far the least volatile bank, but we also, with one other U.S. bank, the one that has grown profits more and again, we have set the foundations to continue doing that for the next few years. The other graph is important because, again, we're a balance sheet bank. We have credit risk. Our pre-provision profit reached a level that is close to 3x our cost of risk. You can see it's going in the right direction on the graph. This shows the strength of our model and of our balance sheet. Again, in a global environment where this is going to be increasingly important.

I'd also like to point out some of you, we've spoken about is that in '25, we have delivered in spite of the macro we were anticipating in our base case scenario in Brazil, which was not the one we had. And so the high rates were a negative impact on our net interest income and cost of risk we still delivered on our target for '25. So as I mentioned before, it's about customers and customer growth. That's what makes the business sustainable. You can see here that we have grown our customer base by 13% over the last 3 years. from EUR 160 million to EUR 180 million, and we have grown revenue by 20% from EUR 52 billion to EUR 62 billion, and with fees, again, growing faster than net interest income. The key behind this progress has been the execution of one transformation and also the network businesses, network businesses. We call our Corporate Investment Bank, Wealth Management and payments, and all of these are operating increasingly as global platforms, as I explained. We can see the numbers here. In the Retail Commercial grew revenue by 16%, Open bank by 5. We'll explain later. There were some negative one-offs there. CIB by 27 well by 58% and payments by 23%.

So One transformation. This is the past. I just want to make sure I show this because this is what we showed you 3 years ago, and we have done exactly what we promised from 45.8% to 41.2% in '25. We have increased operational leverage, improving cost to income by EUR 2.5 million. That includes the EUR 300 million efficiencies, which we specified last year -- 3 years ago in the U.S. consumer and commercial. We have reduced our product offering by 61%. This is also a forward-looking indicator because that will deliver better numbers going forward, customer experience and also financial numbers. Our global and [indiscernible] businesses have reduced cost income by 1 point. We are monetizing increasingly our scale and connectivity and growing in the fee-based capital-light revenue while reducing unit cost. And Global Tech, again, a contributor to the cost income improvement as we deploy the shared platforms. And what's important, and this is the sort of headline is that we are seeing higher revenue per customer, lower cost per customer and near 0 incremental cost for growth.

Again, this is really important. And obviously, as you will see, this will make our operating jaws wider over the coming years. I want to say, and I believe the team already gave you details, but we have moved to a more conservative view on our cost. There was a line that was sometimes difficult for you to predict. It will be much easier because we're now fully allocating costs that were previously in other results. So everybody is going to be accountable, and this is very important. It will mean that our efficiency will be a big focus again for the next cycle. So the Santander of tomorrow is underway. This is our new Financial North Star. Let me just take you briefly through it. It looks about the same. But as you can see, the numbers are not the same as last time. We have made strong progress. We are raising our ambition. We still aim to deliver a compounding tangible book value per share through the cycle with accelerating growth over the next 3 years. We aim to grow our profits to above EUR 20 billion, improved ROTE to above 20% by '28 through the execution of One transformation and of course, the M&A we have done this year with the U.K. [indiscernible] U.K. and West in the U.S.

We are targeting EPS growth well into double digits from '26 to '28. We will maintain our ordinary payout of 50% and with cash dividend payout increasing to 35% from 27%. So the second half of '27 on the profits of the first half that will already be this higher payout on the cash dividend and organic capital reinvested above 20% returns. Excess capital above 13% CET1 at the end of the period by 28 will be distributed to shareholders. All of this, if you do your math and you believe the numbers, which I hope you do, cash DPS will more than double by 2028 from 25 levels. As a result of all of this value creation, which is tangible book value per share growth, including cash dividends, will accelerate to high teens, up from our previous target of double-digit growth. Again, we'll take you through that in more detail in a few minutes. And we expect to 2028, actually '27 already with the CET ratio -- CET1 ratio above 13%.

So all of this is financial. It's our North Star. Shareholders, you all, we all own the company. But this is only possible if we have clear operational targets. So we did this time, bring you what is our key targets from an operational point of view. Again, we strongly believe in our business model as a scale player in consumer and retail banking customer growth matters. And so that is what you have in the center, over 210 million customers by the end of '25, and importantly, grow active customers from 106 million today to close to 125 million by '28 . That is a big number, by the way. We aim to increase fees per active customer to 135 from 130 in '25, supporting a high single-digit CAGR in fees. A key operational commitment and what's supporting these numbers is the deployment of gravity and Gravity 2.0, including our One app. So gravity and Anup will be serving over 80% of our retail and consumer customers by end of '26. Of course, operationally went up and common journeys are essential to scale efficiently. We will be able to offer a more personalized proposition at a structurally lower cost per active customer, which we're also putting as a KPI, which should fall by [indiscernible] We aim to fall by close to 17% by '28. So again, the outcome of these operational KPIs, along with One Transformation will increase revenue mid-single digit and lower cost in absolute terms every year in constant euros. That is excluding M&A, including M&A. By the way, all the guidance we're giving today unless we say it includes M&A, it doesn't include M&A, okay? And it's in constant except for the total profit and a few other numbers, including M&A, double-digit revenue and digit growth.

So what is it that makes us different? We believe our business model is unique. It combines unmatched global and in-market scale in retail and consumer banking. We have strong customer focus. We are diversified across Europe and the Americas. More than 30% of our profit after tax now comes from high growth, highly profitable global network businesses. All of this, when combined with our 3 core pillars will deliver consistently for shareholders. So let me take one of these at a time. First, the customer, we aim to be #1 bank by number of customers in our footprint. Our customer growth taking us to above 210 million customers by '28. Second one, transformation. There is a lot of upside still in One Transformation, changing the model to using global platforms to improve customer experience with the lower cost to serve, creating a positive flywheel that will continue to drive customer growth and customer primacy and again, our network businesses, which will accelerate revenue growth, leveraging the network, increasing fees across all these businesses.

Of course, underlying all of this will continue our disciplined capital allocation, continued investments in data and AI and the integration of the bolt-on acquisitions. All of that will drive the mid-single-digit growth in revenue double digit, including M&A with lower cost. So let me just briefly go maybe not so briefly over each one of these 4 pillars. Raul? Okay. Let me start with customer growth again. As you can see, lots of focus on this. We'll drive customer growth by combining our leading local franchise built on trust with our scale and common platforms, creating the best user experience using global, not local platforms, will attract more customers and increase primacy at a lower cost to serve. Again, this is our flywheel. And that will drive growth in the future. This primary focus is clear. We will improve customer experience increasingly with AI-enabled personalization that is already being used across the bank. We will expand our customer base from today's scale to the next level. And very importantly, the integration of TSB and Webster will be a key focus for the next couple of years.

It will increase our market share in the U.K. and the U.S. and help us also to accelerate growth. So this is probably something you haven't seen until now. If we include and restate our M&A, so Webster and TSP, our cost base at the end of '25, obviously, taking Poland out would have been EUR 28.5 million. Our target for '28 is to be below 27%. And believe me, there's very detailed plans behind these numbers. And that's the reason we're showing them to you here. As we execute our plan, the benefit of One Transformation that you see here on a net basis. And I just wanted to make sure you understand the effort and what is going on behind the scenes. So there is inflation in many of our countries quite high. There is investments in tech and AI. So if you take all of that into consideration, the execution of One Transformation -- and by the way, you're going to see now with tech and AI separate, but here, you have tech and AI embedded in the One Transformation. That is an improvement in costs between EUR 4 billion to EUR 5 billion, okay? The synergies from the integrations of TSB and Webster is EUR 1.2 billion. So again, this is one way of looking at One Transformation. This is another one, and the CEO will show you a bit more detail on this, so you can understand our plans better.

So the efficiency ratio 45.3%, that is rich stated. We have been -- as I explained before, more conservative assigning other results to the businesses and countries. So that [ $45 ] million is comparable to the 36. That's 9 points of improvement basically in our efficiency over the next 3 years. So One Transformation is the operating engine. I said that, that's what turns scale into structural advantage. That will help us to reduce efficiency by 3 percentage points. We have broken out our investments in AI and tech because that is something which we're already doing. I will cover AI in a minute, but that would enable us to become more efficient, reducing cost to income by around 1 point. Our global technology platforms, Gravity, Gravity 2.0 will mean another 2 points in reduction. Again, what's important is that we can absorb growth with very limited incremental cost. And this is a key part of what we're doing in the next few years.

And finally, our network businesses. And here, we are increasing our cost, but efficiency is improving, as you can see, reducing cost income by 1 point. So again, the network business is a bit of a different model, but efficiency also improves. And last but not least, TSB and Webster, that's another 2 percentage points from these 2 integrations by the end of the period. I wanted to show when we talk about One Transformation is the whole bank, but it's really a program that is about retail and consumer. And so when you compare us with new bank and Revolut, please compare us and tell us where they're better and where we are better and we'll get closer to them, believe me, this is the numbers because this excludes the network businesses. This is only retail commercial and consumer banking. Here, the ratio will go down to 34. Actually less than 34%. Again, retail, commercial and Open bank. Digital players earn the 30% to 38% range. This is really important, okay? That is why our ambition is to be one of the scale players in retail and consumer banking. We also do this, by the way, while operating 7,000 branches and our work office. We believe in the age of AI, this is differential and this is the best way for us to have the positive flywheel but also have that physical connection, which we think will be more and more valuable as time goes by.

So if you look at, again, retail and commercial and open bank combined RoTE waterfall, how do we get from the -- around 15% to over 20%, 1 percentage point will come from the announced bolt-on percentage point from efficiencies, about 1 percentage point comes from growth and about 1 percentage point from capital allocation. Jose will go into more detail on that most of you know this, but allocating capital in a dynamic way across geographies and across global businesses is something we do better and better. And so again, every one of these levers has specific plans, and this is how we get from the 15% to the over 20%. -- our network businesses, CIB, welcome payments. A big driver of our fees. We said that 3 years ago, that will continue to be the case. We will grow fees in high single-digit CAGR and achieving a cost income of below 43% in CIB. Here, again, we are playing to our strengths. We have said, and we will keep CIB capital below 20% of the total and the ROTE will be above 20% by 28%. In Wells, again, grow fee income, double-digit CAGR, increasing private banking and asset management AUMs by about over 20% with ROTE above 60%. And last but not least, in payments, which is a cornerstone of our strategy where we aim to be a scale player as an enabler, but also as offering more and more to open markets. Revenue, again, is expected to grow double digit, actually over 15%, lowering cost per payment transaction by 40% and expanding EBITDA margin to close to 45% by '28.

So the fourth pillar, which is tech and AI, we will continue to invest. I want to just stress that this investment is starting to see the benefits. We've been investing every year for the last 10 years, over EUR 2 billion. So if you do the math, that's EUR 20 billion investments in both tech and AI, we plan to continue investing about those rates, but now together, which will be a lot more bang for the buck, as they say. But this is how we scale execution with control. Gravity is our foundation. It's a back-end system. It removes reliance on legacy system, creates a common architecture. Gravity already processed 1.3 trillion transactions per year, cover 70% of Santander's technical operations. We have gone live in many countries, but there's one big one that will happen this year, which is Brazil. And that is, again, one of the big uplifts that we have in our plan as Brazil goes on to Gravity. We have already launched actually what we call Gravity 2.0. This is really important. Gravity is not the end of the efficiencies. Gravity has already happened or is happening in our payments hub. This is a global API, an account to account that connects all our banks instantly. With Gravity 2.0, the savings we have gotten across the group as we take out literally hundreds, if not, I think, more than 1,000 applications has been 16%.

With Gravity 2.0, which means that what we're going to build on top of that, these numbers go up to 45%. So this is not a PowerPoint. This has happened already, and we have the plans. And this is only one of the platforms that will come on top of the gravity back-end solution. It is a very simple concept. It's build once and deploy everywhere. And for those of you that follow this, it means integration costs go down to close to 0. That's the aim anyway. This is huge, by the way. And this is something which reduces duplication, strengthens operational resilience. So it's really a very, very powerful concept which is on its way. In terms of AI, I think the slides are being broken up, so you could follow them there. But we believe we have a structural advantage in it's not a given, but we are going to continue to make sure that, that delivers according to our plans. We have strengthened our data and architecture governance, which according stones of AI, but AI allows you to actually leverage our data, which is in multiple places around the world without having to create a single what they used to call source of truth data lake. This is really important.

Our strategy is to use our decades-long quality data, proprietary data, our financial strength and our customer relationships to integrate AI fully into our banking platform. We see this at 2 levels. One is a defensive, i.e., embedding AI for productivity reasons. We are already doing this across different parts of the bank. And we're also taking what we call an offensive stance where we want to use AI to expand our reach. I like to think of what we've done over the last 10 years. I'm not allowed to say LEGOs, I'm not saying LEGO. No, I'm saying building blocks, but let's call it like a Lego-like. Sorry, I had to say it. I didn't say LEGO I said, building blocks. So the building blocks are very simple. We have a company called Ebury. Ebury is already building its own agents processes that are very similar to what we have in our banks today. And these are the results, okay? Again, think of this as a building block that you can then scale and if you think about AI at Santander in '26 and '27 is about a lot of initiatives that are going on that have not yet scaled.

But once they scale the numbers are very well, I would say, very big. So these are back-end processes, operational processes, 10% of the processes. This is a company that's cross-border FX for SMEs globally, 30 countries, single onboarding based in London, 10% of the processes meant 60% of the cost. They're building -- we are building our own agents and getting to numbers. It's early days that could leaders to 50% reduction of cross-border payment costs. This is something that is not just Ebury that we're now working and we have here our Head of Retail, Daniel and Borja, Head of Commercial. I think he's here and Jose Luis, Head of Payments, please talk to them because they know this well. But all these initiatives, if you take everything together over the year of the plan, we're aiming for EUR 1 billion, of which cost reduction around EUR 700 million, I think, and EUR 300 million in revenue enhancements. Again, this is happening across the bank, but this is the year where we start to scale. Okay. So the road map to over EUR 20 billion profit. Again, there's different ways of looking at this. This is one that I think is important.

If you think about hard currency, soft currency, separating the bolt-ons, hard currency ex the bolt-ons grows by EUR 3 billion, soft currency by 2% and the bolt-ons by 2. This will take our profit from a like-for-like $13.1 million excluding Poland, to more than EUR 20 billion by the end of '28. This is, again, important because of the tangible book creation, the leakage will be reduced, and Jose will take you through that later. Again, this EUR 20 billion in profit translates into RoTE exceeding 20% by 28%. And we believe we have further upside after 28. So we are confident that our model is not ending at '28 by the way. I want to make sure I make that point. In retail, our RoTE will increase above 21%. In Openbank, the delta is very big. [indiscernible] to circa 16%. And of course, you know already the U.S. as a country, we have said over no, not over 18%, and Brazil RoTE will also improve to around the 20s. If you look at the network businesses, I already said CIB above 20%, wealth above 60 and payments I mentioned already the numbers.

So again, One Transformation, revenue growth and further cost synergies, together with Gravity 2.0, which is only just beginning, and I we see further upside from 28 in terms of our profitability. So I'd like to end by our capital discipline. Our capital allocation framework in hierarchy will be a fundamental pillar of our strategy as it has been for the last few years as we move into this new phase, following the bolt-on acquisitions of TSB in the U.K. and Webster. We are now at scale in all our co markets, when you combine the in-market and global scale, we will be adherent to the capital hierarchy that prioritizes profitable organic growth, above 20% at the moment, followed by shareholder distributions with a floor on distributions corresponding to a 50% payout. This means that throughout the plan, we will generate over EUR 50 billion in capital to fund both profitable growth and shareholder distributions and we will return excess capital above 13% at the end of our plan, again, following this hierarchy. A brief reminder on our M&A this year, which will add 9% to our EPS -- growth or synergies, 9%, these 2 bolt-ons. We have refocused our footprint.

As we said, when we exited Poland, it's a great bank, a great business, but they were better owners. We the network effects were not as powerful as they should be, and the country happens with TSB and Webster. They were consistent with our capital hierarchy at the time when we did TSB at the time we did Webster, roughly the difference between buybacks and the return on investment capital was about the same, a very significant 5 to 6 percentage points. it will allow us, in the case of TSB to take our local RoTE to close to 16 with a return on invested capital of close to 20 million increasing our market share in the U.K. near the top 3 market players in mortgages and to top 3 in personal current accounts which is the relevant metric in this business. Webster will enhance our local RoTE to 18 in '28 for return on invested capital around 15%. It will accelerate our strategy. It's a high-quality franchise. This is a very good bank. It would put us top 5 by deposits in the Northeast and top 5 among the 25 largest banks in the U.S. in terms of profitability in '28.

As I mentioned already, our hard currency exposure will rise to 80% of the group's loans. And we expect this mix shift to lower the group's cost of equity. This is a bit more detail in what I just mentioned. You can see there, we're going from 75 to 80 in hard currency. This is really important. We think this is a structural shift in our model, and we expect, therefore, lower earnings volatility and higher value creation. It's important that post TSB and Webster, all geographies or countries will be above the 15% RoTE again, which is something we had not achieved before. So I'm going to do the closing twice right? Okay.

Fine. So bear with me, please. Our investment case is solid. We'll increase EPS well into double digits from '26 to '28. We'll accelerate value creation to the high teens, up from a previous double-digit growth, which at the time, 3 years ago, was considered ambitious and will more than double cash dividend per share by 28% from 25 levels, again, assuming we deliver which we will, all the numbers we're telling you today. What does this mean for shareholders? This will lead to, again, cash EPS more than doubling by 28% from the M25. We'll continue to compound growth in shareholder value and tangible book value per share through the cycle. We aim CNAs earnings per share accelerating to high teens -- increase RoTE to 17% to 20% on average. We do expect lower FX headwinds as we continue hedging excess capital in subsidiaries. We'll continue to be very disciplined in upstreaming dividends and increasing the proportion of TNAV denominated in hard currencies to around 60%. That's up from about [indiscernible] -- in short, the plan is to compound tangible value per share while continuing to return capital and accelerating shareholder value creation through '26 '28. So just to end, we have a clear financial note start. We are lifting our ambition for profitable growth and value creation. And now you'll get a lot more detail from Hector, please, the floor is yours.

HC

Hector Blas Grisi Checa executive

Hello. Good afternoon. Thank you for joining us today. It's a pleasure. As you have seen, Anna has outlined the ambition, a not small one, by the way. So today, I will focus on how we're going to deliver it with this great team that I have in front of me and why we are so confident that we're going to be able to make it. This, as you can see, you have seen it before, -- this is a go-to model of the group. What we have built is a scalable operating architecture, scale, customer focus and diversification are the foundation of this. This is not complexity. This is one integrated platform. The architecture is built and the engines are running.

Now this is about executing with precision to deliver higher royalty and accelerate value creation. Let me restate our financial ambition very clearly today. Our North Star is to deliver an RoTE of about 20% by 28. This is not about volume, it's not about financial engineering. It's not about capital. It is about capital allocation. It's about One Transformation and how we skill our business to accelerate value creation. This, as I said, is pure execution. These are not stand-alone targets. There are tangible outcome of our model with scale, primacy and productivity, reinforcing each other. This is how we become best-in-class for our customers. Three years ago, we set a clear plan focused on value creation, capital discipline and above all centered in our customer. Today, the message is simple. We are [indiscernible] and we have delivered, not partially, not selectively, we delivered on growth, on efficiency, on capital and on shareholder returns and credibility, as you know, is only built on execution and Santander has sent that credibility.

Since our last Investor Day, we have accelerated our plan. We prioritize the customer to push One Transformation further and to focus on the entire organization on driving higher value creation. We moved from improving performance to fundamentally reshaping the model. As Ana just mentioned, we have met every commitment we made at Investor Day on growth, efficiency, capital strength, profitability and shareholder returns. This is how long-term credibility is built for our organization. The reason we delivered is simple. We changed the model. We moved from operating as a federation of banks to become One Santander, a global customer-driven platform. Today, everything starts with the customer. We combine global scale with deep local knowledge. We simplify what we offer. We connect capabilities across countries, and we scale what works. That is why we operate with One global way of working. We will platform once and deploy them everywhere. We develop data and centrally and embedded it across all their businesses. We industrialize process instead of duplicating them by market. This is what makes us a one-stop shop financial partner.

The objective is clear: grow our customer base and then primacy becoming the main bank for our customers. With more than 180 million customers, primacy drives engagement. Engagement improves revenue quality and revenue quality drives sustainable returns [indiscernible] doing an experience, you win on primacy and primacy, as I said, drives returns. As you know, we operate through 5 global businesses with a strong local presence. Our brand is powerful, but it's not just about the brand recognition. This is about relevance, trust and daily customer choice. We compete at the scale typically with minimum full market share and strong customer engagement, we rank among the top 3 NPS in 8 out of the 9 countries. Deep local presence gives us relevance and global capabilities gives us scale. Together, they allow us to compete head-to-head with both global and domestic peers with better operational leverage.

Scale means faster time to market, lower unit cost, more consistent pricing discipline and a better customer experience. Our local success comes from empowered local teams, with local decision-making close to customers, not from centralized dynamics. Growth does not require proportional cost growth, and this is fully supported by our robust balance sheet. CET1 stands at 13.5%, underpinned by organic capital generation and disciplined capital allocation. Cost of risk is stable. Asset quality continues to improve, and pre-provision profit covers the cost of risk 3x over. A strong capital gives us optionality to support customers, invest in growth and return value to our shareholders. In short, this is a franchise built not just to compete but to lead across cycles. Since our last Investor Day, a key priority has been improving the quality of our revenue and reducing the dependence on capital-intensive growth. This is not simply about fees versus NII, it's about shifting the model towards more recurring capital-light activities across the whole group.

Retail, Openbank, CIB, wealth and payments are driving this transition, increasing transactionality, advisory and other value-added solutions. Around 60% of future revenue will come from these capital-light businesses. This improves our revenue mix, lowest RWA consumption and essentially strengthens the returns. At the same time, we actively rotate the balance sheet, securitizing assets, selling portfolios and reallocating capital to high-return segments. Capital allocation is global. Execution is locally. This gives us resilience and earnings stability across every single cycle and in every different market. This is not 5 separate growth stories. Our businesses reinforce each other, sharing capabilities, avoiding duplication and scaling faster across all markets. This is one integrated model becoming more profitable by design, and this is the first half of the equation. Between '22 and '25, costs remained broadly flat in real terms. That did not happen by accident. It happened because of simplification, network effects and global technology.

One Transformation is not a cost-cutting program. It is already signed of our operating model. The consequence is that cost comes down. As we [indiscernible] October 26, cost per active customer declines materially. We continue converging platforms, embedding data and AI and industrializing all processes. Let me give you a concrete example. In Portugal, after implementing a unified CRM and embedding AI into our contact center, conversion rates improved materially more than 10x. Same teams, same market, better tools, higher productivity that is a structural operational leverage. On top of that, bolt-ons at tangible synergies, TSB and Webster, as Ana saidm integrate into one operating model, one technology and one cost base. And then the network effect reinforces everything. As our global businesses work together, we share capabilities, avoid duplication and we scale faster. When you combine higher quality, capital-light revenue, with lower cost per customer, network scale and disciplined M&A synergies, the result is structural operational leverage. The model becomes more profitable by design.

Over the past 2 years, we focused on 3 things: number one, improving margins. Number 2 is shifting the mix towards lighter capital revenues. Number three, structurally simplifying the cost base and the foundations are built. Moving above 20% RoTE is now a question of disciplined execution business by business. And now let me show you how. The path to above 20% RoTE is not driven by one single lever. This is the result of every business improving its profitability and is country by country. Our ambition is simple, to be leaders in profitability in every market where we operate. We achieved that consistently at close of our businesses being above 20% at group level is the natural outcome. In retail, we're improving growth by combining primacy with operational leverage. Higher engagement drives fees and deposit strength. AI-driven pricing and simplification lower the cost to serve and this increases returns market by market.

In Openbank, we serve 24 million out of customers globally. That customer base is not only about financing vehicles. It is a natural engine for cross-selling increasing customer deposits and also lower the unit cost. This is what makes OpenBank ROTE sustainable. In CIB, we are increasing returns by shifting decisively towards fee-intensive capital-light activities, advisory, capital markets and transactional banking. This improves revenue and organic capital generation, thereby improving profitability. In wealth, we will structurally enhance profitability by growing recurring advisory and protection income, and improving product manufacturing capabilities. In payments, we have scaled transaction volumes on shared infrastructure as volume increase, margins spend that is pure operational leverage. One Transformation laid the foundation, gravity, our next-generation platform and AI now we scale it across the whole group.

This is a layered effect, a stronger revenue mix, better capital allocation and disciplined cost execution reinforced across all businesses. After seeing how each business contributes to ROTE expansion, let me start with the largest and most important engine of the group, retail and commercial. Retail is becoming a digital bank with branches. It is a structural redesign of how we serve our customers. We are moving from a traditional distribution product-driven bank to a scalable customer-centric digital platform. And court on strong local franchises and powered by global capabilities. The idea is very simple: deliver the best digital experience at scale, combined with the physical infrastructure and the best personal advice at the moments that matter most, integrated in an orchestrated omnichannel model.

Digital is our primary channel for daily banking with speed and simplicity powered by data and AI. Branches evolving to advisory and community hubs focused on mortgages, investments, SMEs and complex needs. They become relationship centers that sell value-added businesses, not service counters. This transformation activates 2 forces. First, customer primacy through deeper engagement, resulting in higher transactionality and stronger fee generation. Second, operational leverage, simplifying and automating processes and shared platforms, this basically lowers cost to serve. This is about growing faster and growing better. Now let me show you how this translates into the execution. By 28, retail RoTE moves to above 21%. That's basically contributing clearly to the group's ambition of above the 20%. The improvement is measurable and driven by multiple levers. First is revenue quality. Fee income will grow in high single digits, supported by deeper penetration, a stronger advisory capabilities and expansion of insurance and investment products.

Second, funding strength Transactional deposits will continue to increase, improving mix and supporting the margins. Third, scale and engagement. Total customers will grow steadily, reinforcing revenue per customer. Fourth, structural efficiency. The cost-to-income ratio will fall below 35%. This is basically enabled by One Transformation based on, again, simplification, automation, global platforms and the productivity gains. Profitability improvement is not just driven by higher leverage or additional risk. It's driven by a much better mix, stronger productivity and a very disciplined capital allocation. This is the natural outcome of our really stronger model. Now part of this improvement also comes from a disciplined execution on our bolt-ons.

Let me turn to the bolt-on acquisitions. In the U.K. about integration and simplification. We expect more than EUR 400 million of run rate cost synergies, on cost based on operating model. This is disciplined execution, and it drives a structurally higher profitability, moving ROT from around 10% to over 16%. In the U.S., Webster is even more transformational. It strengthens our commercial franchise, improves funding scale and enhances capital-light fee growth. We expect around $800 million of run rate cost synergies through technology integration and operational simplification. It meets a strict return criteria, and it improves ROTE substantially from roughly 10% to around 18%. Together, these bolt-ons represent over EUR 1.5 billion in additional sustainable profit. These integrations are being executed under a single governance framework with clear milestones, technology conversions and already underway with experienced and dedicated teams.

Now let me show you how this same discipline applies at the country level. Let's talk about Brazil. As you know, Brazil is a key market for us and is entering a new phase of transformation. We are evolving the model in Brazil. The objective is clear first of all, improve the business quality and reinforms primacy to strengthen the profitability. Over time, growth in Brazil was heavily driven by credit expansion. We are now rebalancing the portfolio. We're redeploying capital towards select that the affluent customers, SMEs, commercial and corporates. These are segments where relationships are deeper fee intensity is higher and returns are structurally stronger. This is disciplined capital allocation again. At the same time, we're strengthening primacy we're sitting for pure credit growth to relationship-driven growth, more deposits, more transactionality, a stronger share of wallet, and that basically improves the funding mix and stabilizes the earnings.

We're also simplifying the operating model, reducing product complexity, automating processes and improving cost to serve, and we are leveraging our global capabilities. Brazil has been also very strong in CIB and corporates. We are reconnecting those capabilities for our global factories to improve the franchise. This is not a short-term adjustment, it's an evolution of the model, from volume-driven growth to quality-driven capital-efficient growth. The path is clear move towards 20% RoTE as the business normalizes and then continue improving through transformation towards stronger returns. Brazil is not just about the cycle, it's about evolving the model and strengthening the returns. Now let's talk about commercial, which is one of the key drivers and 1 of the biggest deltas.

Commercial is for primacy. Advisory debt and capital discipline come together. We are moving from a product-led model to our relationship-led data-driven approach focused on high-growth SMEs and mid-market clients. And the difference is material. A high-growth SME can generate multiple times the margin of standard and when served with higher-value solutions like direct lending or structured products, margins increased significantly. In Spain, use 7% of high-growth clients account for around 20% of total income. That is the power of segmentation. For example, let's talk about the genetics sub sector. Nine companies generated around EUR 7 million in total income in 25 million because the required sophisticated advisory solutions. So we will primacy in 2 ways. First, through transactionality, embedding Santander in daily activities, we have payments, collections, trade, payrolls and cash management; and second, through advisory, deploying specialized teams and sector expertise to deepen these relationships. All in all, becoming a trusted adviser of the customer. This shifts a conversation from lending to a strategic partnership. It increases recurring fee income, strengthens deposit primacy and it improves capital allocation. Commercial becomes a capital-light advisory-driven growth engine and a key contributor to higher retail profitability.

Now let me turn to Openbank, which is not a volume story. It's about profitability. By 2018, we expect Openbank Rote to reach around 16%. And we do this by fully integrating automobility, consumer lending and digital banking under one platform, evolving from a monoliner business to a multiproduct digital banking model. First, Auto and mobility. We are already #1 in auto lending in Europe and South America and #3 in North America, and we operate in 26 markets. That global presence allows us to serve manufacturers and partners at scale. Now we expand beyond lending into leasing infrastructure and the broader mobility ecosystem serving manufacturers, dealers and new mobility partners. Second is consumer lending. Through Openbank Pay, we continue adding merchants and entering new markets in 25 a long reach 2 million customers. Third, in digital banking, we're scaling the platforms in Mexico, Germany, Spain and the U.S., Greater scale drives revenue increase and strengthens funding through deposit growth that is up 26% over the last 3 years.

Across our businesses, AI and platform consolidation, improve engagement and productivity. And as we progressively replace legacy systems and simplify our architecture cost to serve declines by around 30%. In short, Openbank is evolving into a fully integrated and scalable digital banking platform that is capital efficient and structurally much more profitable. And when we translate that into numbers, the path becomes very clear. So by '28, Openbank scales materially, reaching around 35 million customers. At the same time, cost per active customer declines at double-digit pace, driven by platform convergence, simplification of legal entities and the embedding of AI across all the processes. As we remove legacy complexity and operate on 1 unified platform, productivity improved substantially, bringing the efficiency ratio towards the low 30s. This improvement is not volume driven. It comes from cost discipline, a better funding mix and a stronger deposit generation, not from increasing the risk. This is digital scale with capital discipline, a fully integrated platform becoming structurally more profitable as it grows.

Now let's turn to CIB. Our ambition is to move CIB ROTEs beyond 20% by '28. By combining value-added solutions with scalability while maintaining our low risk profile. Our strategy in CIB is working. It has been very successful because we combine global factories with disciplined capital deployment and consistent low risk profile. First, growth based on value-added solutions we are accelerating the shift towards advisory solutions led and capital-light activities across the 3 business lines. We will continue strengthening global industry groups and product capabilities, connecting clients across regions, offering integrated solutions rather than isolated local products. Connectivity is a clear factor for this business. Clients increasingly require cross-border capabilities, global liquidity solutions and integrated capital markets access and our global footprint enables us to deliver at scale. In North America, we operate through a uniquely integrated platform connecting the U.S. with Latin America and Europe, strengthening our crossover capabilities. We deployed capital with discipline only where returns exceed the cost of capital, and we prioritize capital light and recurring revenue streams.

Let me give you a concrete example. [indiscernible] a listed North American company covered by our wealth team required a tailored equity-linked solutions, well-originated the opportunity, Global Banking structure it and market executed through our U.S. platform. This is our model. One integrated solution delivered globally. The result multimillion capital-light fee income. Second, scalability. We leverage our global platforms, data and AI to enhance pricing discipline, improve execution speed and simplify operating models. We are not changing the risk profile. We're scaling high-value capital-efficient solutions globally. When we translate this strategy into targets, that direction is clear. So by '28, we expect efficiency to improve to less than 3%. As our global businesses collaborate more closely, sharing client flows, FX capabilities, trade solutions and cross-border origination, the network effect becomes increasingly tangible. Fee income grows at high single digits, outpacing balance sheet growth. At the same time, we're actively rotating the portfolio where we allocate capital away from lower return exposures towards higher-value fee-intensive solutions and solution-led businesses.

Over the last years, we have significantly reduced RWAs, improving capital efficiency and strengthening the overall mix. That portfolio rotation improves mix, strengthen the capital efficiency and supports revenue growth without proportional RWA expansion. Collaboration revenue across businesses is expected to grow meaningfully reinforcing the network effects across the group. Revenue relative to RWA increases by more than 8%, reflecting better capital allocation and improved mix. In the U.S., we expect continued revenue expansion supported by enhancing connectivity and scale. The [indiscernible] is simple, sustained robot 20% improving revenue quality, capital efficiency and operating scalability. CIB's growth is not about size, it's about connectivity, fee intensity and disciplined capital deployment. Now let's talk about growth, which is about recurring high-quality capital-light growth. The objective here is very clear. It's accelerated growth while maintaining a strong ROTE and a strong ROTE level. We do this by focusing on fee-based scalable businesses, expanding capital-light recurring revenue through a model that scales efficiently across all our markets.

How do you deliver this? Number one, we focus on high value-added revenue pools. So we're intensifying our focus on insurance, probably one of the biggest deltas, retirement solutions and protection benefiting from structural demographic trends and generating a stable recurring fee income. We're also reinforcing our global alternatives franchise responding to client demand for diversification. Number two, we elevate advisory through personalization. We are moving from product-led conversations to gold-based financial journeys. This increases loyalty, share of wallet and long-term value creation. Beyond wealth, our global family office service is a great example of it. Number three, we built an integrated and scalable operating model. We are integrating insurance and asset management under a global platform-based model industrializing solutions, and we leverage on AI to improve productivity and margins.

Number four, we expand our global footprint. We continue expanding in the U.S. and Middle East while investing in our core markets; and number five, leverage our network business model. We deploy global capabilities to increase penetration across Santander's client base and expand investment capacity via shared expertise. And when we translate that model into execution metrics, the trajectory becomes very clear. So assets under management, will grow more than 20%, moving towards EUR 650 billion. This is structural growth driven by deeper relationships and stronger distribution, not market timing. Private Banking will exceed EUR 350 billion in AUMs with a strong diversification across geographies, Spain remains score and of our offshore booking centers attract international customers. Our combination of local presence U.S. and offshore booking capabilities and sophisticated products position us strongly in Lat Am and beyond.

Asset Management reaches around EUR 370 billion. With diversified clients and continued penetration supported by our savings, our investment platform. Product expansion has driven strong growth particularly in Spain and LatAm. Distribution fees grow above 30%, that's supported by deeper penetration across existing client base. Our deposit base represents an opportunity to shift balances towards investments, improving the customer outcomes and increasing fee generation. Premiums will grow above 70% as protection and life platforms mature, and we penetrate our client base. The key point is not just growth, it's quality of growth, more recurring income, more fee generation and more scalability. And within wealth, insurance is one of the most powerful drivers of growth, as I said, one of the biggest delta. We are building integrated an integrated insurance platform that brings together life, pensions, investment-linked products and protection under one single execution model. At the same time, we're strengthening our role as a trusted financial adviser, deepening lifetime client relationships. Our opportunity is not starting from 0. It's monetizing a large, loyal and underpenetrated customer base.

First, Santander Retirement Solutions, we are building a global platform for long-term savings and retirement driving more than 50% growth in AUM-related activity. In Spain alone, by focusing on life savings and pensions, we increased premiums by 55% versus 2% in narrowing the gap with our bancassurance peers. Second, embedded protection. we are integrating insurance into everyday banking interactions, generating a scalable capital-light fee income and increasing incremental fees by more than 20%. In Brazil, for example, we are leveraging our strength in SMEs and commercial by protecting their employees through group insurance policies while expanding into health solutions. Third, data and AI. By personalizing and simplifying offers, we expect to increase protected customers by over 20%, maximizing lifetime value. In Mexico, where scaling life savings with high affluent and private banking increasing AUMs by 35% versus 24%. Finally, we're expanding into new revenue streams, including global health and growth in the U.S. and the U.K. Together, this will generate more than EUR 2 billion in PAT and net fees by '28. Insurance is not an add-on. It's a core capital-light growth engine for wealth.

And now let's go to payments, which is about scaling transactions with operating leverage. Payment Solution is one of the highest growth, highest operating leverage businesses that we have. Today, EBITDA margins are around 35%. By '28, we moved towards 45% and as scale and platform convergence drives structural expansion. The strategy is straightforward: combined fee-based growth with platform scalability. We continue deploying our core global platforms across our footprint.This supports issuing A2A and cross-border payments under a unified architecture. We managed EUR 108 million cards across the group, processing 45 billion transactions per year, around EUR 3.8 billion per month. Customer activity, I could tell you, remains very strong with spending up 6% in the combination of our markets and balances are up 13%. We are migrating 8 to 8 and car processing to our global platforms, reducing duplication and the commissioning legacy systems country by country that lowers cost per transaction and improves speed to market.

Second, while strengthening differentiation in SMEs and global accounts. In Iberia and LATAM, Getnet is the leading acquirer embedding our solutions directly into SME's daily operations through integrated software vendors and payment facilitators. We're also enhancing FX and dynamic currency conversion, giving these capabilities to increase value-added services for merchants Payments is not just about processing transaction. It's about earning core flows, embedding ourselves in daily activity and scaling margins structurally. And when we look at the numbers, the scalability becomes very clear. By '28, revenue grows above 15% compound average growth. Total transactions doubled. Cost per transaction declines around 40% that combination drops EBITDA to margins towards 45%. GetNet targets margins above 50%, Getnet platforms above 30%, and [indiscernible] sustained margins above 30%, while growing very strongly.

Payments is a capital-light technology-driven business that supports higher and more sustainable returns, one of the strongest value creation engines for the group. Everything that you have seen today comes together here. We have built a unique model, combining global scale deep local knowledge, strong franchises and disciplined capital allocation. That model is already generating a stable, resilient returns. We are not changing directio. We are accelerating what already works. Now we move to the next phase, a phase defined by execution with precision, precision in capital allocation and profitability precision in cost discipline, precision in execution precision in becoming One Santander, and this is the outcome. As you have seen, we have delivered now selectively, not partially across the group businesses and markets. Santander is ready for the next phase of value creation. Thank you very much.

RS

Raul Sinha executive

Thank you, Hector. We have time for a short coffee break now. We are going to regather here in 20 minutes' time.

[Break]

JC

José Antonio García Cantera executive

Everyone, and thank you for joining us. Let me start with a quick recap of the numbers that Anna and Hector have already outlined. By 2028, we projected profit above EUR 20 billion and a return on tangible equity higher than 20%, while reinvesting at returns above 20%. And a 50% payout with a cash dividend rising to 35% from 2027, more than doubling cash dividend per share by the end of the plan. and a capital ratio around 13%. Taking them together, this supports high teens to per share plus dividend per share growth by 2028, and double-digit EPS annual growth over the planned period. Operationally, it comes down to the following levers. More customers over EUR 210 million by 2028, with active customers up to around EUR 125 million, better economics per active customer fees to around EUR 135 cost down to around EUR 220 in constant euros.

And overall, through on transformation, we expect mid-single-digit revenue growth and cost reduction every year on a constant euro and constant perimeter basis. The logic behind this is a simple equation, scale, customer focus and diversification, combined with customer growth, One Transformation on our network businesses will deliver operational leverage year after year. Within our capital hierarchy, we have also executed 3 decisive transactions. The sale of Poland and the acquisitions of TSB and Webster will reshape our portfolio and are fundamental to understanding our financial trajectory over the next 3 years. Together, this operational leverage and improved portfolio mix, lift return on tangible equity and strengthens value creation, supported by disciplined capital allocation. Today, I will focus on the specific levers that drive profitability and accelerate shareholder value creation. First, let me frame the macro assumptions embedded on our guidance -- in our guidance.

Our plan is built on a prudent, not optimistic set of assumptions. We assume moderate GDP growth across our core markets probably between 1% to 2% over the next 3 years with resilient labor markets. Inflation continues to normalize towards central bank targets supporting real income and enabling us to maintain our cost discipline. On rates, we assume different parts, easing in markets such as Brazil, while remaining broadly stable in mature economies. Overall, this is a balanced and conservative macro framework under which our targets are fully deliverable. Resilient growth, normalizing inflation, stable mature market rates and gradually seen in selected developing markets. Let me now turn to the key drivers of the plan, structured around 4 building blocks. First, our balance sheet second, profitability; third, capital discipline; and finally, the outcome accelerating shareholder value creation. Let me start with the balance sheet. With our recent bolt-on transactions, we have repositioned our balance sheet. We expect the loan book to reach around $1.2 trillion by 2028. But importantly, hard currency exposure increases from roughly 75% in 2025 to around 80%. This reduces volatility and improve the stability and predictability of returns through the cycle.

Across segments, we continue to prioritize our core franchises. Mortgages remain stable anchor. SMEs and corporates continue to show strong momentum and CIB delivers attractive risk-adjusted growth while remaining at 20% of total allocated capital where we have clear competitive advantages, we expect to grow above the market. Latin America should continue to grow at higher rates as banking penetration is still relatively low. As shown on the right, growth is selective and differentiated across markets. fully consistent with our disciplined approach. Importantly, we can deliver this growth with a structurally lower risk profile. Looking at 2026 to 2028. Group cost of risk is expected to remain stable at portfolio level. At the same time, the mix post M&A reduces cost of risk from around 15% during the last strategic cycle to around 1% to 1.1% over the next 3 years. The key driver is the composition of growth. The majority of incremental lending will come from lower risk portfolios. Around 80% of the loan book is concentrated in low-risk segments, all operating with a cost of risk below the group average.

Higher risk exposure remains limited and tightly managed. Medium to high-risk portfolios represent less than 10% of the loan book. In these portfolios, we take risks selectively with a strict pricing discipline and higher returns. Turning to deposits. We are strengthening our franchise to build a more resilient and lower risk funding structure. With TSB and Webster, we add scale and structurally reduce the commercial gap, improving the balance sheet profile. As a result, the loan-to-deposit portfolio or ratio is expected to move down from 98% in 2025 to around 95% by 2028. We are also enhancing the quality of the deposit base by deepening primary relationships and increasing the share of demand deposits. With a higher contribution from retail and commercial and Open Bank, the deposit base becomes more granular and diversified and the relative weight of CIB is reduced. As the mix improves and pricing discipline remains strong, we expect the average cost of deposits to trend down compared with the 2022 to 2025 average. For 2026 to 2028, we expect the average cost of deposits to be below 1% in Europe, below 2% in the U.K. and around 2% in the U.S. This reinforces funding resilience and support margin stability through the cycle.

Building on the strength of our deposit franchise, let me briefly address liquidity and funding resilience. Liquidity remains very strong across the group. We hold a solid liquidity buffer of around EUR 340 billion of high-quality liquid assets, 96% of which qualify as eligible well diversified by currency. All metrics remain at comfortable levels, well above regulatory requirements, and we expect them to remain strong throughout the plan. Our insurance plan remains prudent and front-loaded. For Banco Santander SA in 2026, we expect to issue EUR 15 billion to EUR 20 billion, of which close to 50% has already been executed. 2027 will require a similar -- slightly higher amount before declining to between EUR 12 billion to EUR 17 billion in 2028. I Issuances will primarily consist of senior preferred and senior nonpreferred instruments. -- replacing securities that are losing regulatory eligibility while remaining current TLAC and MREL buffers. In addition, we expect to issue up to 2.5 billion new hybrids in the first year at around EUR 3 billion in 2017, EUR 28 million, in line with projected risk-weighted asset growth.

Turning to another key level of the balance sheet. We will continue to actively manage interest rate sensitivity across the group, particularly in a lower rate environment. In 2025, the ALCO portfolio, excluding Poland, stood at EUR 147 billion. 75% is dedicated to managing interest rate risk, while the remaining quarter supports liquidity. The portfolio is diversified across our main countries. But let me focus on 2 markets in particular. In Spain, the ALCO portfolio is around EUR 50 billion with an average yield of 3.3% and a duration of 6.4 years. In the U.K., we project margins -- we protect margins through the structural hedge. The average balance in 2025 was around GBP 105 billion with a yield close to 3% and a duration that is slightly above 2 years. There is obviously a clear opportunity to extend it over time. This active balance sheet management provides meaningful protection and support low single-digit NII growth in 2026 in both countries. We take a conservative and disciplined approach to FX risk management across the group. For capital, our policy is to hedge the capital ratio, the CET1 ratio by hedging the excess capital held in our subsidiaries.

In 2025, our capital FX exposure was around EUR 18 billion, with a hedging cost of approximately EUR 700 million. For 2026, both the FX exposure and the cost of hedging are expected to remain broadly in line with 2025. In terms of earnings, our P&L hedging is calibrated to our forward-looking view or reviewed regularly. For 2026, we have fully hedged the expected results from Brazil and Mexico, and partially hedged the U.K. and the U.S. For 2027, Mexico is currently hedged at around 50%. In short, the balance sheet is now positioned to deliver growth with a structurally lower volatility supported by a stronger credit mix post M&A, a resilient funding and liquidity profile and active interest rate and FX risk management, which protect capital and earnings through the cycle.

Let me turn now to our growth profile. As you've seen, we have strengthened our NII resilience by reducing the balance sheet rate sensitivity through disciplined ALCO actions and active hedge management. As a result, the group is now much closer to rate neutrality. Importantly, our objective is not to eliminate interest rate sensitivity entirely but to manage it actively and protect margins through the cycle. For a minus 100% parallel shift, NII sensitivity in euros has improved from around minus EUR 1 billion in December 2023 to roughly a negative $530 million in December 2025, and we expect it to reduce it further to around EUR 500 million by the end of this year. Similar interest sensitivity improvements are visible across sterling and U.S. dollar while the Brazilian real remains positive and supportive.

And just as importantly, relatively small changes in assumptions such as deposit betas not translate into a much more limited impact on group NII than in the past. As we just saw on the previous slide, our active balance sheet management has allowed us to navigate very different rate cycles while protecting margins. From 2022 to 2024, developed markets went through a cycle of share rate hikes, which was supportive for NII. That benefit was partially offset by Brazil where we have negative sensitivity to higher rates. Since 2024, the environment has become more challenging. Developed markets have faced rate cuts, while Brazil has remained at elevated levels. Even in that context, we have been able to defend our NII. This resilience reflects structural discipline, active pricing on both assets and liabilities, strict ALCO management, hedging and the natural geographic diversification of the group. Looking ahead for 2026 to 2028, the rate environment becomes more balanced.

Overall, our rate profile is now more neutral and less dependent on any single cycle, supporting a constructive outlook for low to middle to mid-single-digit NII growth over the period. Let me walk you through how we expect to expand NII over the plan. We started from a position in 2025 of EUR 42 billion, excluding Poland, or EUR 3 billion higher on a pro forma basis, including TSB and Webster. We expect NII to grow at low to mid-single digits over the next 3 years on a compound basis, supported by volumes, lower rate sensitivity improved funding and our active ALCO management. By business, retail will deliver low to mid-single-digit growth, while Openbank rose at a low single-digit rate. By country, growth is also well diversified. Brazil, the U.S. and Chile benefit from a more supportive rate environment and solid volumes, with Brazil expected to deliver mid- to high single-digit growth the U.S. mid-single digits and Chile low to mid-single digits.

In Mexico, strong customer activity and disciplined deposit pricing will support mid to high single-digit NII growth. As we discussed before, the U.K. and Spain, we expect low single-digit growth in 2026, and the U.K. should accelerate to low to mid-single digit through the plan. Overall, this combination of lower structural sensitivity volumes and active balance sheet management will support sustainable NII expansion through the cycle. Turning to fees. We expect high single-digit growth over the next 3 years, supporting structural operational leverage. Around 30% of the increase comes from high-quality capital-light activities. Our network businesses, wealth payments and CIB, which are a key engine of fee growth, leveraging our global footprint, collaboration and scale. Fees play a central role in the plan. They reduce the sensitivity to the rate cycle and enhance the quality and diversification of earnings. By 2028, fees and net interest income -- revenues are expected to represent around 30% of total revenue, up from 26% in 2028 and to contribute more than 40% of total revenue growth over the next 3 years.

At the same time, the recurrency ratio fees to cost is expected to improve to around 65% by 2028, reinforcing the structural nature of our operational leverage. The result of this is a revenue that will rebalance in a more diversified and capital light way by 2028. We expect to deliver a compounded mid-single-digit annual growth rate over the 2025 to 2028, in constant euros and constant perimeter. Across our global businesses, growth is broad based over the plan. Retail is expected to increase mid-single digit, CIB up between 5% to 10%, Openbank low single digits, wealth at double digits and payments above 15%, all expressed as compounded annual growth rates. Overall, fees are growing faster than NII, as I just mentioned, enhancing revenue stability and predictability through the cycle while supporting a stronger operational leverage and sustainable returns. Costs at the other major lever on delivering profitable growth, and our target is clear. Tight discipline and structural productivity gains.

We are taking actions to control the cost base structurally and expand operational leverage in an environment where we could see some easing of inflationary pressures. Before moving forward, let me briefly clarify the different cost bases. As we announced recently, we have changed the way we report costs. We have reallocated certain charges previously reported in other results mainly to the total cost line. This improves reporting enhances cost control and transparency and at the same time, does not affect the group's profit or public targets announcements during the fiscal year 2025 presentation. As a result, 2025 total costs, including TSB and Webster are around EUR 28.5 billion. We are setting a target of reducing them to below EUR 27 billion in 2028, with an efficiency ratio near 36% and we expect to deliver around EUR 4 billion to EUR 5 billion in efficiencies and that together with bolt-on synergies more than offset approximately EUR 3.5 billion to EUR 4.5 billion in inflation and investments. This is structural.

For example, personnel costs, which represented around 63% of total expenses in 2025 are expected to decline to 50% by 2028, reflecting the scale of our transformation. These efficiencies, together with bolt-on synergies, underpin higher operational leverage and support our profitability targets while we continue investing for growth. Moving to asset quality and cost of risk. As I mentioned earlier, we expect cost of risk to remain broadly stable across most of our portfolios, while the post-M&A country mix supports a lower group cost of risk. We have exited Poland, which had a cost of risk of around 70 basis points and acquired TSB and Webster with cost of risk of approximately 10 and 40 basis points, respectively. This structurally enhances the group mix and improves our normalized cost of risk. By the way, Poland's cost of risk that I just gave, the 70 basis points includes loan loss provisions related to Swiss franc mortgages. But the cost of operating in Poland, including Swiss franc provisions recorded below the loan loss provision line was around 130 basis points in 2025. Therefore, the overall impact of having exited Poland and having both TSB and Webster is even higher than that implied by the cost of risk.

Over the next 3 years of the plan, we assume a reduction in cost of risk at the group level to between 1% to 1.1%. Let me now briefly address the Corporate Center. Over the past few years, we have taken consistent actions to reduce its size and complexity. As a result, its weight as a percentage of group underlying profit has declined from around 13% in 2022 to approximately 8% in 2025. Looking ahead, we expect the corporate centers wait to fall even further to around just 5% by 2028, driven mainly by cost actions. The result is a leaner corporate center and again, lower overall earnings volatility for the group. All these operational targets converge on our path to higher profitability. This is the road map from 16.3% return on tangible equity in 2025 or 15.2% on an underlying basis to above 20% by 2028.

First, higher revenue contributes from 3 to 4 percentage points of return on tangible equity. As we discussed earlier, we will grow NII through volumes and algo management while accelerating fees and other revenue lines, improving the revenue mix. Second, lower costs are expected to add from 1 to 2 percentage points of royalty. One transformation will keep driving structural efficiency gains through simplification, automation and scale. The integration of bolt-on acquisitions will generate material cost savings. We expect to reach the full run rate of synergies from Webster by 2028 with 2029 being the first fully synergized year. Creating additional upside beyond the current plan. Finally, a lower cost of risk will add up to 1 percentage point to ROTE. Over the last 3 years, 4 businesses have generated returns below the average of the group, the U.K., the U.S., Brazil and Openbank Europe. Between 2026 to 2028, we expect to increase the profitability of these businesses closer to or even higher than the average of the group, which will obviously push that average to higher levels. The improvement of the returns in these 4 units helps explain the overall improvement in group's return on tangible equity.

Spain, Portugal, Chile and Mexico are already operating at or above 20% return on tangible equity and are expected to remain at those levels. In the U.K., the acquisition of TSB accelerates profitability improvement increasing return on tangible equity to approximately 16% by 2028. Similarly, in the U.S., One Transformation together with the acquisition of Webster will drive a similar step up with ROTE rising to approximately 18%. In Brazil, we expect lower rates to support both NII and asset quality driving an increase in RoTE from around 15% in 2025 to 20% in 2028. And in Openbank Europe, a business that benefits from lower rates, return on tangible equity is expected to improve to around 14% in 2028. Therefore, the path to above 20% RoTE for the group is broad-based and supported across our core markets. With this profitability profile in place, the next question is how we deploy the capital to maximize value creation. We will continue to adhere to our rigorous capital hierarchy, which ensures we maximize shareholder value.

First, organic growth. We prioritize capital allocation to accelerate our strategy and strengthen market leadership but only where returns are attractive and value accretive. Second, ordinary distributions. We maintain a 50% ordinary payout target, but from 2027, we will increase the cash dividend component to around 35% of underlying profits complemented by approximately 15% through share buybacks, subject to corporate and regulatory approvals. Third, bolt-on acquisitions. We will only consider small bolt-ons where there is a clear strategic and financial rationale with minimal capital investment. We require returns on investment capital above 15%, exceeding our cost of equity and the current return from share buybacks. Finally, as Ana said, we will return to shareholders any excess capital above 13% at the end of the plan. This capital discipline is supported by a virtuous capital cycle that enhances profitability and maximizes shareholder value creation. We ended 2025 with a return on tangible equity at 16.3%. From that starting point, capital is first allocated to our 50% ordinary profit, ordinary payout, FX hedging and supervisory requirements. The remaining capital is then available for disciplined redeployment feeding a virtuous circle.

Every year, roughly 1/3 of the balance sheet matures as assets roll off. We reinvest that capital at higher returns, targeting RoTEs above 20%. In parallel, we rotate out of assets at a cost well below the cost of capital and reinvest into more profitable businesses. Risk-weighted assets stood at around EUR 630 billion in 2025 are expected to grow a low single-digit rate through 2028 below loan growth. This disciplined asset rotation and reimbursement cycle supports the ROTE step up to above 20% by 2028. Asset mobilization is key to maximize capital productivity. In 2025, we relieved approximately EUR 6 billion of capital through active portfolio management. Around EUR 3 billion came from asset sales, guarantees, credit protection and other measures. Only EUR 2 billion came from synthetic securitizations and a bit more than EUR 1 billion from cash securitizations. The average cost of capital of these transactions was around 6% to 8%, generating a profitability uplift of more than 10 percentage points with no net capital consumption.

We are disciplined in how we grow risk-weighted assets, focusing on capital-efficient revenue. We have tightened pricing discipline, improved portfolio mix and prioritize higher quality returns, increasing capital productivity. As a result, Return on risk-weighted assets has improved from around 1.8% in 2022 to 2.4% in 2025, and we expect it to reach approximately 2.7 by 2028. In parallel, as I just mentioned, we continue to optimize our balance sheet through asset mobilization. In 2025, we mobilized around EUR 45 billion in risk-weighted assets, as [indiscernible] just mentioned, from 2026 to 2028, we expect to mobilize between EUR 30 billion to EUR 35 billion per year, with roughly 1/3 through SRTs. The combination of improved returns and active asset rotation results in revenue growing faster than risk-weighted assets, meaning a higher income generation per unit of capital. Here, we can see how our capital discipline works, and it links directly back to the capital hierarchy I have just laid out. We use our capital optionality for 2 clearly value-accretive bolt-on acquisitions, strengthening our U.K. franchise through TSB and accelerating our transformation in the U.S. through Webster.

Both transactions meet our strict criteria of capital allocation. They have a clear strategic and financial rationale and each delivers a return on investment capital above 15% and above our cost of equity and the return we can currently generate through share buybacks. Importantly, these acquisitions enhance our capital generation capacity while preserving balance sheet strength. CET1 ratio remains within our 12% to 13% operating range in 2026, ending the year close to the upper end and moving to above 13% in 2027. The key takeaway is that we are moving into a new capital cycle between 2022 and 2025, we'll rebuild capital with a clear focus on profitability. Starting from around 12% in 2022, profit generation more than offset distributions, organic risk-weighted asset growth and regulatory effects, taking us to 13.5% in 2025, around 100 basis points above the midpoint of our operating range. We now begin the 2026 to 2028 strategic cycle from a stronger position. Organic capital generation strengthens as profits increase on our path to above 20% RoTE in 2028. Risk-weighted assets are expected to grow at low single digits, as I just mentioned.

Announced M&A transactions represent around 150 basis points of capital consumption. And we expect a further 60 to 90 basis points from hedges, models and other effects. Even after these impacts, the capital ratio is expected to remain above 13% after 2026, and creating a new layer of capital optionality as we move towards our circa 13% target in 2028. In other words, we can fund growth, execute our capital priorities, and still maintain a stable and resilient capital position. A stronger balance sheet, higher profitability and disciplined capital allocation set the stage. Let me now turn back to our 2026 to 2028 commitments. Looking back at our last strategic cycle, we delivered on our commitments, achieving double-digit value creation over the period. During the last 3 years, we generated an average [ pre-1 ] return on tangible equity of around 16%. Despite headwinds from FX and other factors, we delivered average value creation of approximately 14% and between 2022 and 2025, demonstrating our ability to execute consistently and create value through different market environments.

Our ambition today is to accelerate it further over the next 3 years. We project TNAV plus dividend per share to accelerate to high teens over the plan, up from double-digit growth on average in the previous cycle. Over the plan, we will increase return on tangible equity to between 17% to 20% on average. At the same time, we expect lower FX headwinds as we continue hedging excess capital in subsidiaries, maintaining disciplined dividend upstreaming and increasing the proportion of TNAV denominated in hard currencies to around 60%, up from 55% in 2025. In short, the plan is to compound tangible book value per share growth while continuing to return capital and accelerating shareholder value creation through 2026 to 2028. As we made public during our 2025 results presentation, 2026 will be a transitional year for the group. In 2026, we completed the sale of Poland in the first quarter, and we will also complete the acquisition of TSB in the second quarter and Webster in the second half of the year.

At the same time, we will continue running in parallel, our legacy systems and new platforms for a few months as we migrate our businesses to the global platforms. Excluding these corporate transactions for 2026, we already expect an acceleration in operating leverage. We expect revenue to increase mid-single digit in constant euros, with fees growing more than lower cost in constant euros, leading to operating jaws more or less double of what we reported in 2025. All in all, underlying profit above EUR 14.1 billion with a capital ratio close to the upper range of our -- the upper end of our operating range. Looking ahead into 2027, we expect revenue to grow double digits, deliver positive operational leverage profit increase in the mid-teens and capital above 13%. And in 2028, delivering on our 2020 ambition, more than EUR 20 billion in profit with a return on tangible equity above 20%.

Let me close reiterating our financial objectives for the next 3 years. In addition to the profitability increase that I have just mentioned above 20% and the profit exceeding EUR 20 billion by 2028, based on our disciplined approach to capital allocation, we will maintain a 50% ordinary payout but will increase the cash dividend to 35% from 2027, more than doubling cash dividend per share by 2028 and from 2025 levels. At the same time, we will end the period with a capital ratio of around 13% at the top end of operating range. All of this will help us to accelerate value creation through the plan reaching high teens TNAV plus dividend per share growth by 2028 and double-digit annual EPS growth. This is a plan designed to consistently compound value driven by a stronger balance sheet, disciplined growth, structural efficiency and rigorous capital allocation. Thank you very much for your attention. I will now hand it back to our Executive Chair for her closing remarks after which the Chair, the CEO and myself will be very happy to take your questions. Thank you very much.

RS

Raul Sinha executive

Thank you, Jose. Actually, we're going to go to Q&A first. And then we'll do closing remarks at the end to remind everybody. Can I please ask you to raise your hands. We've already got a few hands the mics in the room. I think some people have an early flight to catch. So can we start here with Nacio Ulargui and then Alvaro Sarama.

IU

Ignacio Ulargui analyst

I have just 2 questions. One a bit more strategic. I mean, just looking to Santander growth potential. Just wanted to get your thoughts on the trade-off between distributions and growth. You have a very clear organic or capital here. You have some with us what makes you to be more keen on growing the balance set? And the second one, more on the cost-to-income interaction with the EUR 27 million constant euros target of cost in '28. The 36% cost-to-income would probably get you to a much higher than EUR 20 billion net profit. So I just wanted to get a bit of your sense what could be changing that picture in the end?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes, we said less than '27. Yes, I would let to that maybe -- so in terms of how we think about distributions and growth, the capital priority is very clear. We expect to land in 2 at 13%, Circus or 13%. We do expect to be above 13% actually other things equal at the end of '27 already. So we believe that we are in a situation today where we can maximize growth in distributions over time and deliver higher returns on higher amounts of TNAV. This is really important.

So I would say that, again, our goal is to maximize growth in distributions over time on higher returns on higher amounts of TNAV. There's not many companies in the world that can give you that. So going back to a hierarchy, again, organic growth above 20%, distributions minimum of 50% payout. Bolt-ons, we will not do any bolt-ons in the next couple of years. We're very busy. So again, if and when bolt-ons return, it will always be consistent with what I said and what we believe is that they have to be substantially above share buybacks. And then there would be extraordinary distributions.

So at the moment, Hector has lots of opportunities to invest above 20%. And so I think he deserves that he gets that if again, we can deliver the goods, which he has over time, as Jose has explained. So that's how we see it. If we do not find those opportunities and believe me, we're very disciplined, we'll give it back. We've said at the end of the period, it could be before. Again, it will depend on distributions. If you ask our colleagues in Spain, mortgages, we're losing market share in mortgages. It's a public number. Why? Because we will not allocate beyond the franchise, and of course, we support our customers, but we can allocate capital globally. This is a huge flexibility that not many companies have. So is that a good answer?

Okay. On the cost income, I don't really understand the question. You're saying that less than EUR 27 billion and the 36% don't? Well, there's -- we said over EUR 20 billion. So you do your numbers and you can say 20.01% or 20.1%, it's going to be over EUR 20 billion. And I can tell you that over the last 11 years, I showed you that graph really important one on predictability, 99 until this year. Quarterly earnings per share volatility of Santander was the lowest among those banks, and these are the top banks that you all know. Multiply profits by 8%. Every year, when we start 12 months and we're getting better and better over 3 years, there's a 5% difference in euros between what we say we're going to do with our plan and what happens at the end, in revenues and in net profit. I hope that gives you enough...

JC

José Antonio García Cantera executive

If I may add. -- we gave ranges for NII for revenue, we get a cost figure, but we gave ranges for cost of risk. So obviously, if you use the most optimistic scenario, you get to over EUR 20 billion. but we gave ranges with the purpose of being conservative.

AT

Alvaro de Tejada analyst

Alvaro Serrano from Morgan Stanley. Thanks for the increment of detail in the slides. Two questions from me, please. On the cost efficiency, which is clearly better than most of us expected, you called out EUR 4 billion to EUR 5 billion efficiencies. Could you maybe break that down where they're coming from? Obviously, you've called out the implementation of gravity many times before, and that's part of the plan, I'm sure, but I'm thinking more headcount wise, how much it's coming down? Is it switching off mainframes? Just a bit of color on that to assess how much revenue disruption, if any, presumably not much there could be.

And kind of related to that is the second question on -- in particular, on the high single-digit fee growth. I mean, what part of that, again, can you help us understand what part of that do you feel is entirely in your hands? And what kind of market environment you're expecting, obviously, in CIB that's important and it's difficult from our side maybe putting a high single-digit CAGR as a base case. So maybe help us through the assumptions and how you're seeing that.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Okay. Yes. In terms of cost and revenue, as we think about cost, first, we really believe in today's world, being a cost leader is incredibly important, right? And we want to be a cost leader, but also the best in UX. The only way to do that is investing in platforms, everything we have explained, aligning the business model and then the platforms. You haven't only begun to see the effects of that, okay? And I gave you an example of payment help.

So again, gravity is a first step. Brazil is not even on gravity yet. But there's a gravity 2.0, which will bring additional benefits. And some of that, you're going to see in this plan, and some of it will go beyond that. So again, it's a very structural change. I think Hector explained it really well. It's a change in the way we run the company. It's a change in the business model. This is not about cutting cost and affecting revenues. We're cutting costs and growing revenues. What we've said is every single year in the next 3 years, we're going to grow revenues and reduce cost. This is what we're saying with a stable cost of risk across portfolios, but structurally 1 to 10, given the change in the mix. So again, going to cost of revenue.

This is about a structural change in the business model. It's about reducing costs and growing revenues as a consequence because we are simplifying we're aligning. It's not something you do in 1 year, and it's really hard. And I can say it's maybe not a lot of fun. And actually, this is one of my colleagues calls boring banking, right? [indiscernible] is how do you run a bank in a better way, aligning not just CIB, which I'm sure you can all visualize, but individuals and now there will be personalization, as Hector said. And we will run the banks by geographies in terms of the balance sheet and many of those things.

So we're not going to go all the way and say the global business run everything. It's a 50-50 JV the local countries will have it. But this is, again, the change in the model and the One Transformation. Then you have the way we think about corporate investment banking, wealth management and payments is in a bit of a different way. It's more -- it is about One Transformation, but the model is easier to implement. It takes less time. And there, it's about network effects, it's about leveraging and working across the countries.

CC

Carlos Cobo Catena analyst

Do you want me? Yes. Let me give you a little bit of hard data, Alvaro, because I know you always like it, okay? So first of all, it's important that [indiscernible] is the concept of exactly how we're doing things, and I explained it through the presentation. It's important to acknowledge that we will achieve this by whereas, first of all, accelerating on transformation, as Ana told you. It's important to take into account EUR 1 billion in cost reduction from TSB and Webster, okay? That's a very important number.

IT and operations OpEx will drive around 25% of the total cost reduction, right? It's reflecting the platform consolidation that we're doing, the commissioning of systems and all the automation and simplification that we're doing, okay? It's very important to say that we are not cutting a strategic investment. We will continue investing around EUR 2 billion in technology by [indiscernible] transformation is simplifying the group, but we're tracking synergies at the same time and longer in the cost base, all right? Over the last 2 years, One Transformation has already improved efficiency by more of 4 percentage points. And we have delivered tangible structural results. Headcount, if you see, it's down 3% in '24 and 4% on '25. We have also reduced the number of branches by around 8% annually since '22. IT OpEx has come down around EUR 542 million between '25 and '22. And as Ana, I mean, correctly mentioned that we're reducing our efficiency ratio of 45% to 36% by '28.

But yes, if you say a little bit, I mean, on the next few years, from One Transformation, 3 percentage points. AI initiatives is going to be 1 percentage point, EUR 700 million and EUR 200 million in revenue and cost efficiencies. The global technology platform is around 2% network businesses around 1% and the bolt-on acquisitions that I just told you is around 2%, okay. That's where the numbers come from.

AT

Alvaro de Tejada analyst

The AI is 700 costs, [ $300 ] mil revenues, just to clarify?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. So on the fees, I mean, assumptions, obviously, there's the macro assumptions that Jose explained. But at the end, fees grow when customers grow, and we are aiming for a EUR 30 million increase in total but EUR 20 million, EUR 19 million increase in active customers. You've seen over the last few years, there is a correlation between growth in customers and growth in revenues and, of course, fees. So that is one part of it for retail and consumer. So as activity grows, fees should grow other things equal.

There is a couple of very significant opportunities. One is insurance. You're going to see part of that in Wealth Management and Insurance. You're going to see part of that as distribution fees. We are aiming for 70% increase in gross written premiums, right? Javier? Hector? There is a huge opportunity that we have not really focused on. A lot of this, again, is what we call borrowing banking. It's actually getting incentives aligned, it's getting the product to be better. It's not rocket science. So there's a lot of basic things that we can do and we will do to increase insurance premiums. Again, that's a big part in the fees. And then you have the what we call network businesses, which are growing we're being quite conservative. In CIB, they say 5% to 10% growth in fees. And hopefully, that's going to be more [indiscernible] let's see.

In payments, over 15% increase in fees and Wealth Management, I think it's like double digit in general in that area. So that's where the fees increase come from, more or less. Again, a lot of it's going to be based on growing customers and the big leap in active customers. That's not an easy thing. It's not so much the macro. So you have to go to the base, right?

HC

Hector Blas Grisi Checa executive

I mean just to complement fairly quickly what Anna said. It's important to see. Look at what we have been able to do in CIB, for example. CIB has had a tremendous growth in fees and as I was saying, we're changing the business completely before basically it was a corporate bank. Now it's a true investment bank, all right, in which we are really taking care of restricting value out of the money that we lend to customers. The fee growth was 9%, okay, in '25. So that basically tells you a little bit of what we've been doing in Wealth as Ana was telling you, 9% again in '25.

In payments, the capture -- we're capturing scales and increased by 9% also the volumes. So -- and also the point that Ana said about how many -- the important growth that we have had in active customers that basically has created that we have grown fees much more than NII, and it's going to continue that way because it's exactly what the change of the model is about. By becoming the #1 bank to our customers we're making sure that we penetrate the client base, not just with mono products. It's basically giving them a lot of different services. Insurance is probably the biggest delta that we have, as Ana pointed out. But nonetheless, there's many different kind of products that we can do with that and not just with individual customers.

The commercial side is very important as well. Because we do -- we try to do, and that's our bread and bottling in that business because we actually do everything for them. We're the largest, for example, in trade finance where we operate and probably world where trade finance, ECA financing. So a lot of things and services that we do. Remember that we have the network businesses that are the ones that serve retail and Openbank. And the network businesses service a lot, and that's where the value added come from. It's working together in order to reach over to that.

RS

Raul Sinha executive

I think we got Paco who's got the mic already, and then we can come to this side.

FR

Francisco Riquel analyst

Francisco Riquel from Alantra. I have 2 questions, one on capital and the second on capital allocation. On capital, you have followed an asset-light strategy. Today, it's 70 basis points organic generation in '25. That's also the guidance for '26. It seems to me that capital generation in '27, '28 will be much smaller. So you are shifting to a more capital-intensive business model. So if you plan to accelerate the loan growth in the next couple of years, where and what businesses, countries? So any excess capital generation indication that you can give from the business model in coming years?

My second question is you have deployed M&A selectively to strengthen your position in the U.K. and the U.S. once these deals are integrated, I wonder if you would also consider M&A opportunities to improve your position in other markets like Brazil or Mexico?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Maybe Jose, you can take the loan growth and -- and I will take the M&A. I mean, actually, let me go on the M&A first. For the next few years, we're not going to do any bolt-ons. I mean that is something that we have said. I have said several times. Then you go back to the capital hierarchy. Again, we do have markets where, as we have explained, if organic growth is not there above 20%, we have paid the 50% that we have in terms of payout. If there's any opportunities for bolt-on in core markets from '28 onwards that meet our requirements, which is to be significantly above buybacks that enhance our strategic position, improving funding, giving us greater scale and deliver for shareholders, that is something that we're not going to take off the table. But you can relax for a couple of years.

Now, no, I was going to say because then you're going to come back and say, so a few days ago, we did a small insurance deal in Chile, 1.5 basis points. Don't come and tell me then, oh, you said this, 1.5, 2 basis points in specific areas, small things, that doesn't count, right? As long as the returns are 50% or something crazy like we're doing in Chile. But this is minor, and it's not like we're going to do a lot, but...

UE

Unknown Executive

I have given you all the details of the capital plan. And there are differences between '26 -- '25, '26 and '27, '28, significant differences. I give you a number of a substantial lower asset rotation in the plan than in previous years. We want to be conservative. We need the market to be there. We don't know if the market is going to be there next year or not. And we want to make sure that what is in the plan, we are going to be executing for sure. I have given you an estimate for regulatory headwinds, which is probably also conservative. It might not be there, but we don't know. So the capital plan is consistent. We are going to be generating, as I said, more capital organically, but we are in the plan assuming that some of the components of the capital plan are substantially, let's say, less positive than what we saw in 2025 and we expect in 2026.

Even with that, we will generate capital as an asset. Already in 2027, we expect the capital to be above 13% and above 13% in 2028. As I said as well, there is not an infinite amount of capital that we can invest at 20% organically, but we have very good opportunities to grow organically. And as long as we can grow organically above 20%, we should because that's what this is about. This is compounding growth and value creation going forward. But obviously, there are not infinite amount of opportunities. So that's it, I think.

UE

Unknown Executive

We've got Jacques-Henri Gaulard, who's already got the mic.

JG

Jacques-Henri Gaulard analyst

Well, it was hard work. That's visible. Two questions for me. One on borrowing banking again. The insurance development makes a lot of sense. Are you happy about the product engine you have on insurance that you have the whole bank that you're okay. You mentioned a deal in Chile, 1.5 basis points. Would you do some other things like that? Again, not a lot, but to develop that product, which is not necessarily natural with you? And the second question, because we discussed it here at the intermission, is the U.S. development, I mean, we're all putting the great synergies that you've had, but the reality is the integration of U.S. assets from European Bank has been a graveyard over the last 25 years. Why is it going to make it really different and make the paper being realized in effect?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Okay. So insurance, are we going to do lots of 1.5 basis points? I don't know, but we might do a few, but that's not going to take away from the numbers we gave you and even doing better than the numbers we gave you. Okay. But the borrowing banking, that's Manuel's description. There's a lot of borrowing banking improvements in insurance that we are going to be doing and the product itself. And actually, Javier [indiscernible] is here, what are the 2 things you're going to improve in insurance to deliver those 70% increase in premiums, Javier?

RS

Raul Sinha executive

Can we please get the mic in front to Javier? Do we have another mic here?

UE

Unknown Executive

Yes. Well, on insurance, we have 2 different businesses. One is on life-saving insurance, which is around be able to sell to our clients and if a client needs long-term liabilities and deploy those liabilities into long-term duration assets. We originate very small amount of premium of the life-saving insurance every year. So the penetration among our client base is super low compared to our peers. So we want to go from [ 6 billion ] of premiums every year to [ 20 billion ]. So there is very significant upside on life-saving insurance. And then we have another business, which is protection. Just to give you a sense of the upside on protection, out of the 180 million clients that we have, only 22% of those clients buy insurance products from Santander. So aligning incentive digital platform distribution, improving at the end of the day, the franchise is going to have also significant upside and growth in the premiums and the fees.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So thank you. On the U.S., so this time it's different, yes. And we are going to deliver the goods. The first thing I would say is that Webster is a great bank. I'm not sure what other colleagues did, but this is a fantastic bank, well-managed bank, best-in-class profitability. And by the way, they have managed integrations very successfully with the current team. And I think we have John connected maybe he -- but I want to go first to Christiana, who's here on the front row and who thank you for making it in spite of the storms. I don't know how you made it, but that shows you that. Yes. So we have an organic plan that takes us, and that's why I said and I reiterate we're going to get to 15% -- 15%, 16% organically. So I'd like Christiana, the 3 things you're going to do. And then maybe John Siula, who I think is connected can also give us a bit of color on his track record and why he believes that this is something that will deliver the 18% in 3 years. So Christiana?

UE

Unknown Executive

Thank you. Thank you. We appreciate the question. We appreciate and recognize where the skepticism may come from. As Ana says, we are building on significant momentum in the U.S. business already. So if I take you back to 2023, on a fully loaded IFRS basis, we have to acknowledge our business as was shown in the slides, it was earning less than 6%. In 2025, we had significant momentum had moved that already above 10%. If you translate that from IFRS into U.S. GAAP, that's actually already a comparable return of 11.5% that is well within the midrange of the regional banking peer group against whom we compete in the U.S. market. So we've had momentum building already into 2025.

And our organic plans from here actually represent more than half of the return on tangible equity improvement from 10% to 18% over the coming 3 years. That's coming from 2 very important levers. The first has been emphasized strongly in the presentation is around the continued momentum that we have in our fee-based businesses in the U.S. We've seen fee-based growth in our CIB business in excess of 30% each year in the last 2 years, and we are continuing to build on that pace and momentum over the coming period. And then secondly, which is probably a bit more buried in the story is around the full integration of our auto lending capabilities into our deposit-taking institution in the U.S. So folks will know that our corporate structure in the U.S. has previously had the auto lending business separate from the deposit-taking institution at Santander Consumer. We are on the path to be bringing all of those assets into our deposit-taking institution, benefiting not only from the funding advantages that we achieved through that, but also the elimination of redundant systems and costs. So if you walk that bridge from 10% to 18%, you've got 3 percentage points coming from that integration of the consumer business into the bank, another 2 percentage points coming from the momentum out of CIB and the remainder comes from the successful execution of the integration of Webster.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Maybe just 2 comments on the -- because I'm sure someone is going to ask on the $800 million synergies of the combined institution. And maybe you and John, can you hear us? John, you have a big audience here.

UE

Unknown Executive

Yes. I'm sorry, I can't be there in person. I appreciate the opportunity to say hi to everybody.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. So you heard Christiana mention our path organically. Maybe you want to comment briefly, both of you actually on the $800 million synergies and also, John, on your and your team track record and integrations and why you believe this is something that we will deliver.

UE

Unknown Executive

Sure. I'll let Christiana -- go ahead, Christiana.

UE

Unknown Executive

I'll kick it off on the $800 million. I think it's important everyone to hear from John on the execution track record that the Webster team bring. So we laid out, again, in the presentation, clearly the material 3 buckets that build that $800 million. It's a significant chunk, equally roughly about 1/3, 1/3, 1/3 of our technology and operations strategy, integration. The deduplication of head office functions as well as the scaling and deduplication of retail and commercial overhead. Clearly, it's an ambitious number if you place it only on top of Webster's existing cost base. We know that it's close to 60% of their stand-alone cost base, 19% of the combined.

I think a couple of reasons why you should be confident that we can achieve that. Clearly, it reflects and embeds cost takeout on both sides of the organization and some KPIs that may be helpful in thinking about that, particularly in the retail business. Our goal is, frankly, to get Santander to be as efficient as the Webster platform is. They operate with 1.1 FTE overhead per branch. We're at 1.5. So we're going to move in clearly in the direction of Webster. Likewise, if we think about the amount of overhead per business volume, so if you take the KPI of $1 billion of business volume, how much overhead FTE do you have? Webster operates at about half of the overhead that Santander operate at. So our work is cut out for us. The KPIs are clear. We know what we need to do.

I think 2 other aspects that underpin the credibility before we get to what's really important and the execution effectiveness of the team that will be doing this. Remember that when you think about in-market benchmarks in the U.S., this is actually quite a different scenario, right? This is a G-SIB acquiring a regional bank and a lot of the cost infrastructure around regulatory compliance is frankly already there, and we're able to bank on that. And I think folks have also focused a little bit on the guidance that we've given around a sub-40% cost-income ratio in the U.S. as being out of line with the regional peer banking average. I would encourage you to remember there our business mix that we are indeed a consumer finance player for a significant portion of our business in the U.S., which already operates at about a 25% cost-income ratio. So you marry that with what Webster already achieves today with about 45% cost-income ratio. We just got to get the Santander commercial platform to that level, and we're absolutely confident of being able to do that.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

John, do you want to take from there?

UE

Unknown Executive

Yes, I'm happy to. And I think Christiana hit most of the details, but I just want to let this group know how excited we are for this transaction, and we are confident in our ability to deliver the promise financial metrics of the combined company. Why are we confident? Because Webster has a strong track record of delivering high returns, ROATCs in the high teens through an efficient operating model that focuses on clients, customers and local communities. We're really excited about the scale and the technology that Santander brings to the combined entity. We think there are really opportunities to do things not only more efficiently, but more effectively to deliver products and services to our clients.

We have recently, in the last 3 years, been through a significant integration with an MoA with Sterling Bank a few years ago. And so our team is primed and has a lot of ability and proven track record in terms of successful integrations Ana is nice enough to have me here, but we also have our current President, will be COO of Luis [indiscernible], who led the integration through the last merger and will be a principal in the integration here. And he did a terrific job 3 years ago and has his sights on strong execution here now. So I believe with our model, Ana, and the combined power of what Santander brings with respect to technology, scale and products that we've got a clear path to be able to deliver the types of returns that we promised the market here. And quite frankly, I can't wait to get started.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Okay. So let's get moving guys and get the approval soon, okay? And that's an upside for everybody because that's not...

RS

Raul Sinha executive

The mic, but can we move back on this side to Antonio...

BT

Benjamin Toms analyst

Ben Toms from RBC. One of the bits about Santander, which isn't bore in banking, I guess, is the CIB. Generally speaking, what are the growth ambitions of that business? Are there any products that you don't currently offer that you're looking to offer? If I think about CIB RWAs as a proportion of the group, are you looking to grow that over the 3-year plan? Or is this really about doing more with what you've got in the CIB?

And then secondly, in the U.K., I'm just interested in relation to the structural hedge. What proportion of the NII growth that you're expecting to deliver in the U.K. is coming from that structural hedge? I'm trying to work out how much of the growth is just mechanical rollover of the swaps. And whether there's anything specific about your structural hedge versus peers, which means that it won't be the same kind of tailwind that we're seeing at other banks like Lloyds and NatWest.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. On CIB, we're not thinking about launching any new products. We have what we need we have, correct? We have been very clear that we'll keep CIB capital at 20% of the total, just below that. So we're not going to increase the capital to the business. We want to grow it in a capital-light manner, and that's less and less balance sheet relative to the income. There is a lot of opportunities on the commercial side. For example, talking about the United States. We know very well that Webster has commercial customers that don't have today the products that we already have. That's not in the numbers, by the way. There is 0 revenues, correct? 0 revenues in what we have shown you on Webster, 0. Now you might say usually you lose revenues. Maybe we don't think so because we have a very tiny commercial bank. So yes, the goal is to do more with what we have, do more network collaboration. We've invested in the teams. It's now about profitability and scaling up and network effects. I have said it correctly. Thank you. Right, Hector? You agree on that, right?

HC

Hector Blas Grisi Checa executive

Yes, no, completely. And look, I mean, let me give you because the proof, as the Chair would say, the proof is in the pudding, okay? 3 years ago, RWAs from CIB were EUR 126 billion. We closed '25 with EUR 106 billion. And actually, we're decreasing the number of RWAs that Jose is consuming because what we've been able to do is basically to really do great in rotating the balance sheet and managing the business in that way, okay? Also, what you'll see is we're doing a lot better in other income, and that's because there's a lot of client flow that is coming in exactly what Ana was talking about of the cross fertilization we have with the commercial and the other businesses that we have in the group in terms of FX, trade financing, terms of credit, a lot of what the factory because you got to understand that CIB is not just an independent part of the company. CIB is an integral part of the business in which -- and it's a global factory. And as they have their own customers, but most importantly, they're a global factory for Borja here that he manages commercial.

So Borja depends a lot on the product that Jose is giving him all the time, and we manage that because that's very important. The amount that I was playing to you the example in the U.S., the moment that John's customers basically will have the capabilities to do something that we don't have today. So that's exactly what is giving us -- and that's why we call them network businesses because it's a part of the network that -- yes, they do -- they have their business within themselves, but as well, they service other areas of the banks, okay?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Thank you. So on the structural hedge, maybe Jose, do you want to take that?

UE

Unknown Executive

As I said, we have EUR 105 billion at the end of '25. The main difference with our competitors is that this is very short term. It's slightly over 2 years. So there is a great opportunity to lengthen the maturity of the structural hedge. Right now, the yield is below 3%, and we think we can take it to over 3%, 3.3%, more or less in 2 to 3 years. And if we add TSB, TSB -- with TSB, the structural hedge will increase to around EUR 125 billion. But again, the opportunity comes from lengthening the structure of the hedge. More or less half of the growth of NII. As I mentioned, NII in the U.K. will start growing low single digits, accelerating to mid-single digits. Half of that is the consequence of lengthening the maturity of the structural hedge going forward.

RS

Raul Sinha executive

Okay. I think Antonio has got the mic.

AR

Antonio Reale analyst

Antonio from Bank of America. Two questions from me, please. One is a follow-up on the discussion we've had on allocation of capital. I mean if I look at what you've delivered and where we've come from, obviously, you've shown a significant amount of discipline. You bought back shares when you were trading at a steep discount. You've had high return on investments on that. You've sold Poland, you've added to your developed market exposure with Webster and TSB. So my question is really, how should we think about sort of buyback at Santander? From here, you've committed to do more of that. But I wonder to what extent does it make sense for you to deploy this capital to buy back, for example, minorities in Santander Brazil, for example. So how does that compare as a use of capital to buying back your own shares? And would that be at the right time given what you've done in the DMEM mix and what you talked about in terms of Brazil returns and where we are in the interest rate cycle. So that would be my first question.

My second question is on the business unit and specifically on the product. I mean it's quite clear from what you said, the direction of travel of the various business units and the strategy that you've outlined today is quite clear. Maybe help us clear the one hurdle that I have, which is what do you see as the future for the auto lending business? This still accounts for about 18% of your group numbers. So I think it would be interesting to hear your thoughts as to what you think is the end game there.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. In terms of capital allocation to share buybacks, I still believe at this price, Santander is a very undervalued company. If you think about everything you just heard, I'm not going to go through the business model, the plans we have, the scalability. And we're going to get the company to 20% -- over 20% buying at what, 9% spot, but what is it -- whatever it is for it is still cheap, right? And so we always look at that on a constant basis, again, going back to the capital hierarchy, and we analyze minorities and we analyze the group. But the hierarchy is what drives our decision-making. Again, organic, buybacks, bolt-ons, I would put minorities within that, and we always compare that vis-a-vis our share buybacks.

In terms of auto, auto is a business that does better with lower rates. A lot of the volumes in auto have been put on the books at rates in '22, '23. By the way, when interest rates were negative or 0, this was the star in the group, and we value diversification and through the cycle delivery. As you saw, part of these businesses and people think about geographies. The types of businesses have very different correlations with the cycle. Again, lower rates are good for consumer. So you should see a big improvement. Part of it is ourselves improving the business model. Part of it is the lower rates, right? That's why, again, there will be very little upside in net interest income in euros, but there will be upside in consumer. So that's how I would describe it. And again, we have taken a very important step consolidating Openbank with consumer that gives you a huge opportunity to offer additional products to our customers we didn't have before. It was much harder. Today, you have a single bank in euros that is going to have customers, what we call now mobility, but it will have the opportunity in Germany, in Holland, where we have Openbank up and running to offer other products, current accounts, the whole digital bank. Again, a lot of opportunities to make single product customers do what we do in retail, offer insurance, offer other accounts. And that is the strategy, by the way, also in the United States. So you'll have auto and the digital bank, national across the United States, the same as across Europe.

RS

Raul Sinha executive

Sofie?

SP

Sofie Caroline Peterzens analyst

So Sofie from Goldman Sachs. So my first question would be on the number of customers. Back in the 2022 plan, you guided for 200 million customers in 2025, but you actually only got 280 million customers. Now you target 210 million customers in 2028. What gives you the confidence that you can grow the customer base this time around, especially considering a lot of banks have excess capital, they are very happy to kind of deploy that? Everyone wants to grow and competition, you could argue on many fronts is increasing.

Then my second question would be on Mexico. On one of the slides, you say that you are kind of -- or Mexico's profitability is in line with the above 20% return on tangible equity target. However, you continue to kind of lose a little bit of market share in Mexico. How do you think about the organic growth opportunities in Mexico? And what can you do to improve that franchise further? And how should we think about the EUR 2 billion improvement in net income that comes from the soft currencies? Is it fair to assume half of that comes from Mexico?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. On the number of customer growth, we feel confident because we are setting a target, which is very much aligned with the growth we've seen in the last 3 years. So again, the growth we are aiming for of [ 30 million ] is more or less the same as the [ 20 million ] -- sorry, the [ 30 million ], the [ 20 million ] in the previous years. Where it's coming from, [ 20 million ] of that growth is coming from retail and commercial and [ 10 million ] is coming from Openbank, of which [ 7 million ], [ 8 million ] is in Europe based on what I just described, where we are going to -- now with a single euro bank, we're going to be able to offer the digital bank to our mobility customers. And again, these are customers that come in the door with a loan, and we're already testing that, would they like us to offer other products. In Germany, the answer is overwhelmingly yes, okay? We also originate customers in Openbank through alliances with Amazon and others. We are going to try and offer other products. We are working on that.

On the [ 20 million ] growth in retail commercial, about half of that is coming from Brazil and Mexico. I think actually more than half, [ 15 million ] is coming from Brazil and Mexico and [ 5 million ] from everywhere else. So these are numbers that I think we feel very comfortable we can get to. But last but not least, and this is maybe where we got it wrong before, is that for a structural change -- and by the way, the big number is not total customers. The big number is 19 million active customers, 19 million active customers. That's a big jump. Why do we feel comfortable? Because one transformation is helping us. We're going to have a single app across all our countries by the end of this year, which is exponentially better or should be than what we've had before. And again, customers will come because of the better UX. And at the end, that's something which we believe there's other levers to grow customers. As I said, insurance is not just a product you can offer to existing customers. It's also a way to acquire customers. On Mexico, maybe, Hector, do you want to address Mexico?

HC

Hector Blas Grisi Checa executive

Yes. Sure, Sofie. Okay. First of all, I mean, you got it right. I mean...

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. Sorry, I forgot one very important thing. We did a lot of cleanup in our customers. That's one of the reasons we didn't get to that. So we had a lot of inactive customers, and we are very rigorous. We audit customers. So we did a big cleanup. Millions of customers disappeared. I mean, we decided they were not customers or we -- they didn't meet our bar, and these are millions of the last couple of years. That's one of the reasons that we didn't get to the target. We feel very comfortable that a lot of this cleanup across the group has been done. Yes.

HC

Hector Blas Grisi Checa executive

That's [indiscernible]. Okay. So Mexico, first of all, the business basically is returning in pesos much more than 20%. And what we've been doing is getting closer to the best-in-class every single year. If you look at the 3 years, we've been closing the gap to the leaders in Mexico, okay? And that has been part of the reason that we've been so strict and this goes basically to capital allocation. The reason that we've been losing a little bit of market share in Mexico, first of all, we changed the mix a little bit, right, because we wanted to be cautious in the way we were seeing the Mexican economy. So -- and we changed the mix a little bit of that, but also because due to capital allocation, we basically concentrated on profitability. And that's why the reason that Mexico has been growing on the RoTE. But on the other side, -- we basically have been allocating capital in a much, I would say, a strict way than some of our competitors. And this basically goes to being cautious in that way.

Secondly, about, I mean, what we've seen in terms of organic opportunities in Mexico, Look, what we have the #3 bank in Mexico. We have almost 15% market share in that market. That basically gives us the scale and allow us to compete to launch products to do whatever we require in order to compete head-to-head in the market against the 2 big guys. On the other side, what is important is that we continue to enhance the deposit base that we have, and we have been able to do so. So if you take a look and compare what we've been doing in terms of decreasing the cost of funds in Mexico, which is a big difference that we have to both leaders in the market is exactly that. So much more transactional deposits, concentrate on that and closing the commercial gap that we had years ago. So it's basically being and having a much better franchise that we used to have. And at the end, this is what we have. We believe that if Mexico basically doesn't have a good year, we have a very good strong balance sheet in order to sustain that, very good liquidity, very good structure. And we want to maintain that. We don't want to go overboard and grow like crazy in credit cards or something like that. We already had a problem in credit cards in Mexico, if you remember back in 2012. We don't want to go back to that again. So we want to do it in the right way. Cost of risk, as you've seen, has decreased significantly over the past few years. So we maintain a lot of discipline in the way we manage the franchise. And that's what we've been doing it, and we plan to continue that way. We don't believe we need to acquire anything to be competitive in the market.

RS

Raul Sinha executive

The EUR 2 billion soft currencies, how much comes from?

HC

Hector Blas Grisi Checa executive

No, I think it's -- we have given you the details of Brazil. So it's less than half of that is Mexico.

RS

Raul Sinha executive

Next question from Andrea.

AF

Andrea Filtri analyst

One on M&A and one on Brazil. On the slides, you put a 15% return on invested capital as the hurdle for M&A. But you have regions with very different cost of equity. Why not just stick to what Ana said, i.e., returns well above share buyback and above local cost of equity instead as the hurdle for eventual future bolt-on acquisitions?

The second is on Brazil. With rates declining from 15% to 10%, can you explain how is Brazilian cost of risk meant to be stable at portfolio level? And at a 20% RoTE, Brazil would still be a drag to the group given the higher cost of equity versus the group. What do you need to take Brazil to 25%?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So -- but you answered your question on yes, I would go -- again, always back to -- I don't know, we didn't say 15% ROIC. I mean that was -- it has to be substantially above share buybacks. And again, when we did TSB, it was roughly 6 points, 5, 6 points. When we did Webster, it was the same 5, 6 points. If you take the cost of equity at [ 9 ] or [ 10 ], [ 15 ], it was 14%, 15% when we did TSB. So that would be, again, capital hierarchy, we're going to be super disciplined. That is going to be -- that's a firm commitment of this team and the Board that that's going to be something we're going to stick to, okay? So you can relax on that. The 15% -- who's put 15% -- did you put 15%...

HC

Hector Blas Grisi Checa executive

This is because this is hard currency. Obviously, 15% in reais is not 15% for -- it's obvious.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

It should not have -- I mean there was Okay. Is it clear what it is? Okay. Yes. Thank you. On Brazil, so I'll let Hector maybe cover that. In terms of the cost of risk stable in Brazil with rates coming down, I must say something is that when rates come down, it doesn't mean that customers who have not suffered are not going to continue suffering. So I think this is what we see happening in many cases. So Brazil's stable cost of risk, I think, is what we really think is going to happen. But Hector, you can cover that maybe in a bit more detail.

And as we take Brazil from [ 20 ] to -- Hector was just telling me before, Itaú is at [ 22 ], I believe. But yes, we should aim for higher than 20% down the road. Absolutely, yes. The issue in Brazil is that it's really important that we are able to compete in individuals. We are very good at CIB and affluent. There's space to grow. We are going to grow in commercial. We're going to reallocate capital to the better risk return segments. But there is an issue in terms of the cost base with competitors that are very competitive. Sorry for the repetition. So I do think that's something we have further upside than the 20% for sure. But for now, that's a number we feel comfortable with. If I ask Hector more, he's going to say, that's not possible. So to go above 20% sooner.

HC

Hector Blas Grisi Checa executive

Sooner, but yes. I mean the idea is basically to go beyond 20%. I don't know if in 2 years, I'm going to be able to make it to be sure. But look, I mean, the first part was very good in your question. Let me tell you why. First of all, cost of risk has been stable in Brazil below 5%, okay? And we intend to do so and to maintain it. Why if rates are coming from 15% to 10%, the cost of risk doesn't get any better. And let me tell you why, and it's very important. It's because the moment that we see that the credit cycle becomes much better, I tend to go back into credit cards and personal loans in the upper market, which I'm not doing today. So I know perfectly well that credit cards cannot go beyond 11% to 12% cost of risk. If I go beyond there, it's because I'm giving them too much. But if my cost of risk in credit cards go below 10%, then I'm leaving money on the table. And that's exactly the right combination that I need to get in order to deliver the 20% or above 20% growth. And that's exactly how precise it needs to be.

So what we're playing with here is basically the change of the model, what Ana is telling you about basically changing the mix a little bit. When we see the market getting better, I'm going to get back into that market and cost of risk is not going to get better because of that. If I deliver better cost of risk in Brazil, it means I'm leaving money on the table. It's the same as in Mexico. So I understand very well the dynamics on the market, and we are playing it that way. It's very important to understand that we went a little -- I mean, we went a little bit -- remember, rates in Brazil went from 2% to 15% in less than 24 months. So some of the things and some of the markets that you were playing in personal loans, and you lost a little bit of money there. So we are basically recovering ourselves, covering that. And then as soon as the market gets better, we're going to get back into the game.

As Ana said, you cannot be a complete bank in Brazil if you don't play in the mass markets. And this is a huge opportunity. You're talking about a humongous market, 240 million customers -- sorry, 240 million Brazilians at average age of 32 years old, okay? That's much better than Europe. So it's a huge opportunity. And at the end, the market has become very competitive. So that's exactly what we're trying to do. So it's a change in the model, but we're also -- we need to change the cost to serve on how we manage mass markets, and that's exactly what we're doing. So that combination is the one that is going to take us. If we do things right, I really do believe we can go beyond the 20%. We need to. Actually, if you know her, she's going to push me towards that. But in the meantime, I mean changing the model, doing the things I need to do in order to be able to get better. '26 is still going to be tough, okay? But I believe that '27, '28 will get a lot better.

IO

Ignacio Cerezo Olmos analyst

Ignacio from UBS. A couple of questions. First one on AI around the strategy, basically, if you can give us a bit of color in terms of internalization versus outsourcing third-party vendors strategy over time? And the second one on AI is, I mean, you seem to be incorporating some revenue enhancement coming from AI. So what makes you confident actually there's not going to be any margin compression coming through? And if so, what kind of vulnerability or what are the products or the segments where you see more vulnerability in terms of margins coming from AI? And one follow-up in terms of detail. Sorry if I missed it, actually, I don't think I've seen the currency expectations you have. So if you can share basically what kind of FX assumptions we're taking in the main countries. That one, forward rates.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Is that forward rates, is that enough of an answer? You're being very like [indiscernible] and [indiscernible]. Yes. Is that enough? Or do you want him to say more? Yes, the forwards. Whatever the forward curve is as of what they, at least tell him when.

IO

Ignacio Cerezo Olmos analyst

So forward rates as of a couple of weeks ago?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Okay. On AI. So we have not begun to invest in AI yesterday or the day before. So this is really important. But let me just go back to why we think that Santander can be a winner in AI. I know there's a lot of talk about that. So first of all, we have everything that is needed to succeed in AI in the sense that it's all about data, and we have quality data for decades. I mean, huge amounts of quality data, which obviously is important. The top talent today, that's what they want. They want lots of data to work with. We have that. We have -- as of today, I would say, an organization that is able to embed AI in a lot of productivity and improvements. So we are putting Ricardo here. He's the Head of AI. He reports directly to me. He heads up data and AI. But it's actually in the businesses under Hector. So there's a data AI person in every single global business and countries coordinated by the global businesses.

The most difficult thing for us is the culture. That is the hardest thing for us to get right because at the end of the day, if we -- and when I say we, I mean me, Hector and Ana and Jose, if we build our own agents, which we are doing, by the way, this is what every single person in the organization needs to do, right? That's a starting point. That is not easy for people to understand and to spend time on. And that's one of the things we're trying to change. So there is a big cultural mind shift -- mindset, sorry, shift across the company. I think that is the biggest hurdle once we get over that, and that's why I think today or this year, we should be able to see, and that's why we gave some numbers. And we just had a Board yesterday and the Board members are asking for the same. How do I measure progress in AI? I'm saying we're going to do that as of this year, we're going to start measuring progress. To measure progress, you need to know where you're going. And to be honest, this -- what's going on in AI is changing every month, every 2 months. So again, we're going to start being much more specific on both what we call defensive and offensive. Of course, we're going to work with partners, but we're not going to give partners all the IP of Santander. That is not going to happen, right? So we've been very thoughtful about how we build alliances with strategic partners from the very big names to the not such big names to the start-ups. Through our fintech fund, we're making small investments in start-ups where we are working with them and helping them scale. And if these start-ups do well, we'll also be able to benefit from that upside. We've been doing that for 15 years. So there's a lot of things going on. And I would say that in the next 12 months, we should see big progress.

Again, data is crucial, right? And this is something which we have loads of. And as I said in my presentation, with AI, you can actually access that data without having to do anything very expensive or voting the ocean as you had to do before. There was a news yesterday where Anthropic plot is going to -- I hope you saw that one. Yes, they're going to translate COBOL and that had streamlined. Well, I call it translate, COBOL into something more user-friendly, I guess. And of course, every single bank in the world, including us, still has COBOL, right? So again, these kind of things should help us get better faster. I think AI is a huge opportunity for companies that are at scale like us that understand this. We've been working on technology for 11 years. I've been making this speech for 11 years. Nobody listened until 2 years ago, right? Why? Because a lot of the things you have to change are really boring. They're not going to give you a headline, you're not going to do M&A, but it works, right? It's aligning the culture. It's putting in place a global business. And I think today, we're ready to really take Santander to the next level and be a big winner in the AI world. When we say defensive and offensive, we're also going to do offense. Why not? We're very big in many markets, but we have 2 brands. So there's many things we can think of. And again, Openbank and Ebury, when I was saying -- I'm not saying LEGO-like, Raul, I'm the lawyers. But think about a LEGO, okay? I'm not -- think about a LEGO. I think that's...

RS

Raul Sinha executive

Building blocks.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes, that's very boring. Building blocks. So we have Ebury, we have open bank. We have places where we can actually test these things without getting in the way of delivering all these boring banking and huge numbers that we need to do. So all you guys get all the capital generation. So I'm very optimistic that there's a huge opportunity for us in AI. Again, both defense and offense.

RS

Raul Sinha executive

Mike's got a question here. Mike, please?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Sorry, we have Ricardo, if there's more questions on AI. Do you want to say something, Ricardo?

UE

Unknown Executive

No.

RS

Raul Sinha executive

He's got an AI question.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Another AI. I'm so happy in fashion finally.

UA

Unknown Analyst

Yes, I'm Mike [indiscernible] Newton. I do have a question on AI. And most people talk about it as being a massive game changer, whether for companies or industries. If I look at your efficiency ratio walk slide, it shows, I think, 100 basis points of the 900 from AI, which is good, but that doesn't scream game changer that screens kind of just another tool. So would investors be better thinking about AI at Santander and the banking industry in general as being just another helpful tool versus something that changes everything?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So I think we should not get ahead of ourselves. As I said, the biggest -- so my vision for Santander, not today, but in 2, 3 years is that we have lots of AI start-ups within the bank. Remember, we are highly regulated, and we're always going to have to have a person at least for now, controlling whatever happens and whatever goes to customers. And so this is really important. So we need to make sure that before we can say it's a game -- I think it is going to be a game changer, by the way. And for a very simple reason because you're going to end up each one of us, including our mothers and grandparents, if you're young enough and so on, they're going to have AI in here, right? And this is not going to take 10 years. It's going to take 4, 5 years. So maybe less. So we have to be ready for that, and we will be ready.

So to answer your question, yes, I do think it's going to be a game changer. It's going to happen tomorrow. I think it's going to take a bit longer because of, a, it takes a lot of work to change culture, organization, leadership mindset. But at some point, those that are not ready, we're not going to be -- not going to be good. So that's why we want to play defense and offense. And when I say offense, going back to the building blocks, I would not say let go again. Companies like Ebury, which is a fintech that does cross-border payments, one of the more -- or Openbank where we can play with another brand, not play but not put at risk the Santander franchise in any way, it gives us huge optionality, and that's what you want.

RS

Raul Sinha executive

We've got a question from Britta there and then another question here in front, please.

BS

Britta Schmidt analyst

I've got 2 or 3 questions, depending on which way you look at it. The first one is on the cost targets. Can you maybe talk a little bit about the trajectory of the cost reductions that you're seeing? You got to a decrease every year, but are there any bumps along the road? And then maybe also comment a little bit on what your plans are for the U.S. in terms of corporate structure and what the time line is to potentially merging the entities, be it Miami, SCUSA and then eventually also Webster. And then the other one is on Openbank. I personally was surprised to see the target of a 16% return from 10%, which is a very meaningful improvement. The back end of the slides points to the European business seeing the improvement mainly being revenue driven, if I see that correctly. And given that the fee growth is low single digit, I would presume that's going to be NII driven. So maybe you can talk a little bit about the interplay of volumes in this business versus also potential margin pressure from digital challenges versus the opportunity of funding cost upsides from expanding the deposit base? And maybe tell us what your deposit growth ambition in this business is.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

In terms of the cost reduction trajectory, I guess, -- no bumps. No bumps. So it should be quite linear, right? Cost down every year in constant...

HC

Hector Blas Grisi Checa executive

And this is ex M&A. M&A -- M&A will obviously create volatility. But ex M&A, it should be pretty...

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

The BAU reduction is -- this is something we have worked really hard. And believe me, it's not easy, but because people always give you great projections 3 years down the road, but everything goes up before and then it comes down. There is no hockey stick here, no. And M&A, well, I think -- do we have anything more on M&A? No. U.S.A., the idea is that it'd be a single bank, right? So we'll integrate Dallas, as Christiana was saying. So Dallas will be integrated. We have already filed all the approvals. We should get that in the next couple of months. That should happen this year. They will be collapsed, right? That will be funding benefits. That would be a significant part of the road to 18%, 3 basis -- 3, 4 -- 3 out of the total 3 percentage points will be with the integration of Dallas.

Webster, we both have to have shareholder meetings for that. That should be in the next months, but we don't have -- we're still in the process of approval. So I'd say by the end of this year. So we're estimating the closing of Webster sometime in Q3. That's what we're saying. So again, both of those should happen this year, correct? Okay. On Openbank. So yes, Europe is a big delta for Openbank and it's volumes and margins. It's both. So of the improvement in Openbank, about 50% of the total is Europe and 45% is -- 40%, 45% is U.S. and 10%, 15% is Lat Am. So the big delta is in Europe. Europe had a lot of one-offs this year. So when you see those low numbers, that includes nonrecurring items. Maybe somebody can remind me what they are, but there was a couple of things here in the U.K., there was Swiss francs or something in Poland.

HC

Hector Blas Grisi Checa executive

Some fee regulation in Germany.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Germany -- and Germany. So that should not happen again, right? We don't expect that to happen. And that is -- so the underlying performance is much better than the -- what you're seeing as a headline. And again, a big delta will be in Europe. and will be both volumes and margins aside from the one-offs, not happening again. And then there's also one transformation going on, by the way, same as in retail. So consumer is part of the same program with common platforms across consumer and Openbank.

RS

Raul Sinha executive

Question here. Sorry, Borja, I'll call you next.

CP

Carlos Peixoto analyst

Carlos Peixoto from CaixaBank. Two quick questions from my side, I guess. The first one would be on the cost to income. I know you already broke down more or less the EUR 4 billion to EUR 5 billion expected cost reduction. But I was wondering, given the changes in the disclosure that took place with this new reporting, whether there are any effects from lower legal charges that are now included in the cost line within those EUR 4 billion to EUR 5 billion of cost reduction.

The second question would be on the capital -- the excess capital distribution part. So many of your competitors have opted to distribute excess capital when it's built up at the end of each year or around that. So what drove the decision to allow for capital to accumulate up until 2028 and only distribute excess capital by then?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So on the excess capital, we have a lot of organic growth above 20%. That's going to be the priority. And depending on what opportunities there are, again, after the BAU distributions, we would return any excess over 13% in principle. We do not want to say that, that's going to happen across the plan, but it might happen. So we are absolutely open to that if there is excess capital, if mortgages continue to be below treasuries and we don't grow, we will have more excess capital. But as we've said, I believe that both Mexico -- we have a lot of organic growth, which is very different from our peers. And we are in markets that have growth, we can deliver.

And as I said before, our goal is to maximize growth in distributions over time. higher returns on a higher TNAV, very simple, higher amounts of TNAV, higher returns, growing distributions over time. That is the business model of Santander. That's why you should own Santander if you like that kind of a model. If you want to get everything back today, that's not Santander, right? But again, if we can offer you returns above 20%, as we're saying, in euros, right? Well, actually in euros, high teens, right? But close to 20%, we think that is a good value proposition at these levels. On the cost income and EUR 4 billion and EUR 5 billion in legal?

HC

Hector Blas Grisi Checa executive

Yes. Well, I mean, once you move the cost to the cost line, it's all the same. There is -- in the plan, there is not a disproportionate cutting from the piece that has been moved from other results to cost. So for instance, Travaistas in Brazil. That's the cost of operating in Brazil is really personnel cost because it has to go through a judicial process is accounted for below the line, but it's part of personnel cost, and it needs to be managed as such. So the key point of moving those costs to the cost line is that now they are included in the cost to income. So now we are going to have management focus on the cutting of those costs. But in the plan, there is not a disproportionate saving coming from those costs.

RS

Raul Sinha executive

Borja has got the next question here.

BS

Borja Ramirez Segura analyst

Borja Ramirez from Citi. I have 2 questions, please. Firstly, a follow-up on the AI. In my view, Santander could be -- seems to be better positioned not only because of the scale, but also because its globality. You are present across many markets and you could maybe learn what is happening in more advanced digital regions like U.S. or U.K. and apply it to other regions. So kind of to the signal of applying a building block or a LEGO from one region to another. That would be one question.

And then my second question would be more of a high level. So it's quite evident the revenue diversification and lower earnings volatility of Banco Santander and that could become more relevant in the current geopolitical environment. Yet if I -- this is my estimate, if I take the EPS 2028 post AT1 based on the plan and I calculate the implied price earnings, it seems to be slightly below the sector average. So I would like to ask -- I mean, this is a good opportunity, but I would like to ask what could the market be missing at this point?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So in terms of the AI, yes, there's a number of other advantages. For sure, learning from one market to the other is one. But I also think the trust and the brand in the age of machines having like branches and people talking to people, I think that will have huge value, and that's something we believe in, and we can make happen in a profitable way because of the network effect and because we don't just have individuals. So maybe you don't need as many branches, but our Work Cafe model is working incredibly well. There's going to be a lot of the creator economy that we can service. We have all these entrepreneurs. And so we think there's a lot of advantages to our scale, but also to our physical presence and our belief in people, talking to people and the brand.

In terms of EPS, '28 below the sector, to be honest, when we benchmark against our peers in '28, in terms of value creation, we're going to be near the top. So that is what we look at. We believe that we're going to be one of the most profitable banks among the top banks in the world. You can see that in our RoTE. Other banks are at our level. The question is, is it sustainable? And is it growing? And that is, I think, the question you need to ask yourself, is our profitability going to stop at 20%? We've said we think we can do better than that. Second, we have growth. So it's not just about profitability, it's about growth. And that's how you compound returns because you make more money, more distributions and a higher TNAV. And that's the difference, I think, with many of our peers, including U.S. banks that not all of them have the growth we have, right? We believe the U.S. is a great market, but obviously, Brazil, Mexico grow faster. So we will be towards the top of the profitability and EPS growth.

RS

Raul Sinha executive

Last question there, maybe 2.

FD

Fernando Gil de Santivañes d´Ornellas analyst

My name is Fernando Gil de Santivañes from Intesa Sanpaolo. A couple of questions, please. First one, regarding the assumptions on costs, other than the U.K. and the U.S. restructuring, are there any one-off restructuring included in the plan and where to what units?

Second one is on taxes assumption. I know it's minimal for you, but the banking tax in Spain in 2028, is it included in the EUR 20 billion forecast? And what is in the other provisions line litigation and other stuff, what should we be thinking about in terms of litigation costs and going on?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So yes, in the BAU, every year, we include restructuring costs, pretty big numbers. We just think that's BAU, and that's going to continue. So when we give you the numbers, we're including BAU restructuring in different countries. I mean, numbers close to EUR 1 billion a year roughly across the company. So again, in the BAU, what we don't include in the BAU is the M&A restructuring, okay? So M&A is out. That's why all the guidance we're giving you, all the guidance, except when we say including M&A, and that includes restructuring. Yes, in every single market. So you're not going to get it below the line on the BAU. Is that clear? No. Yes, there is...

HC

Hector Blas Grisi Checa executive

He asked about [indiscernible] besides the 2...

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

No, I said on the BAU, there is a restructuring allowance every year, about EUR 1 billion in the BAU numbers that we're giving. The one thing that's not there is the M&A. The M&A is separate, right? And we will try -- that's an accounting issue. When you do the restructurings, that's when they go in, right? So we're going to try and do some this year already, but that's as far as we can go. But that's in the numbers that we gave you on the ROIC. On taxes and other provisions.

HC

Hector Blas Grisi Checa executive

So no, there's -- we believe -- well, we -- the plan is to -- that the Spanish banking tax will stay. It's a very small amount. So -- and it goes in the tax line. So it's very, very small. But there's nothing extraordinary in the expected tax rate for the next 3 years, nothing extraordinary. And in the other results line, in the next 3 years, the average of the 3 years is below EUR 1.5 billion per year. So EUR 1 billion to EUR 1.5 billion to below EUR 1.5 billion per year.

RS

Raul Sinha executive

Last question.

UA

Unknown Analyst

[indiscernible] from KBW. So I just wanted to ask a little bit more detail, if you can, about the split of the fee growth by country, if possible, and the cost savings by country, if possible, most analysts still model by country. And then a more high-level question around -- I think you mentioned that the tech transformation probably would continue post 2028. I know that it's an ongoing process, tech transformation, but when talking about moving everything to global platforms, how much do you think will be done by '27, '28 in terms of percentage of your -- like the work -- the bulk of the work you're doing?

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

So we run the company by global business. I hope that you can model by global business, but we're very happy to try and help you if you need some help on that. Raul, please. So again, the key thing here is the network businesses are the ones that are going to grow more in fees, and that is really important. We did that -- we said that already 3 years ago, 50% of the increase in fees over the plan should come from the network businesses. And I think that number is roughly the same. So again, CIB, wealth management and payments are the big uplift in fees. There is an increase in retail, commercial and consumer also, but those -- that is not going up as much.

If you look about if you want to break down by country, if you -- in Retail Commercial Banking, Spain, the U.K., Mexico and Brazil represent 72%. So 4 countries within Retail Commercial Banking represent 72% in Openbank, as I said before, 50% is Europe and 40% is the U.S. roughly, if you go to CIB, actually, Europe, which is Spain, Spain hub, Brazil and the U.S. is 72%. So it's not hard to model by global business. That's how we run the company. That's how we model the numbers. That's how we do the plans. And of course, within each global business, as I said, 3 or 4 countries are 70%, 80% of the total. So when people say we're such a diverse and everything, once you take Poland out, there's -- you need to understand 4, 5 countries and understand what it means between retail commercial, consumer and CIB, and that's it, simple. Again, I'm really keen that you tell me directly, write to me an e-mail, tell me what you need to model by global business. What are we missing? What information you need so you can do that? Because again, I think that tells a much better -- reflects much better what Santander is and the potential we have. Sorry to say that, but now if -- on fees, yes, maybe Raul can call you and give you some detail on that.

On tech and the deployment of the platforms, a huge country for us, which is Brazil, is still not on gravity. We will focus over the next 3 years on the countries that are not in the process of M&A. So even though, yes, in the U.S., and I think John and Christiana mentioned that, some of our platforms like payments, like the front end of Openbank will be ours from the start. We will wait on the others because we have to prioritize integration, and we have to prioritize customers being serviced in the right way. So we cannot do too many things at the same time. So that's the case for the U.S. It's also partly for the U.K. That doesn't mean that they will not be convergent to the platforms, but that means that you will have further upside beyond '28, especially in those countries where we're going to focus on the integrations. So Brazil, Mexico, Spain, Chile will be much more of a focus on the deployment this year and again, with a big focus on Brazil. Spain is very advanced already, I have to say. So Spain is very advanced on gravity and payments. So yes, there will be further upside from '29 as we deploy further platforms.

HC

Hector Blas Grisi Checa executive

Yes. And as I said, '29 is going to be the first fully synergized in the U.S. So by the fourth quarter, we will have executed 100% of the synergies. But obviously, the first fully synergized year will be 2029.

AO

Ana Botín-Sanz De Sautuola y O'Shea executive

Yes. So finally, I'm going to get to do the closing that as I said before, I think I've done a bit already, but I'm very disciplined, and I do what my Head of IR says. So I want to show you first -- great job, Raul. Not really. You've done a fantastic job. I'm not kidding. So this is a sum up, so you have it fresh in your minds. So we do have a unique business model. It combines unmatched global and in-market scale in retail consumer, customer focus and diversification across Europe and Americas. When combined with our 3 core pillars, we are convinced this will deliver consistently for our shareholders. We aim to be the #1 bank by number of customers in our footprint, going to above 210 million. We are changing the model in a structural way and going to global platforms. We have done a lot of the groundwork, as we have explained today on the business and operating model alignments, which is, again, what we call the boring banking, but incredibly important part of being able to deploy this common tech.

We will continue to leverage our network businesses, CIB, Wealth Management and payments. Together with a continuing focus and discipline in capital allocation, continued investments in data and AI, the integration of the bolt-on acquisitions will drive mid-single-digit growth in revenue, double digit, including M&A with lower cost. Jose has explained in more detail '26, '27, '28. '26 will be a transition year. What's important is we are setting a new standard for profitable growth and value creation. Just going over the targets again, we completed the sale of Poland in Q1. We'll complete TSB in the second quarter and Webster in the second half of the year, hopefully in Q3.

We expect revenue to increase mid-single digit in constant euros, lower cost in constant euros, underlying profit above the EUR 14.1 billion and CET1 ratio close to the upper end of our operating range. For '27, we expect revenue growing double digit, positive operational leverage and profit increase in the mid-teens and CET1 being above 13%. And for '28, more than EUR 20 billion in profit with a return on tangible equity above 20%. I will not go over again the operational targets, but these are being cascaded down to all the countries, countries and global businesses. And this is something which will be our operational North Star with, of course, very important deployment of Gravity in Brazil and Gravity 2.0, including our ON app to serve over 80% of retail and consumer by the end of '26. This means we aim to increase revenue mid-single digits and lower cost in absolute terms every year in constant euros and excluding the impact of M&A. I said already, including M&A, double-digit revenue and profit.

This takes us to the financial North Star, which you have seen a few times already, EPS growth set to grow well into the double digits from '26 to '28, maintaining the payout target of 50% with cash dividend payout increasing to 35% from '27 onwards. This means that cash dividend per share will more than double by '28 from '25 levels. Excess capital above 13% CET1 at the end of '28 will be distributed to shareholders. And again, our value creation will accelerate to the high teens. Importantly, our commitment is to continue to be a compounder, again, growing profits, growing distributions on a higher TNAV and doing this during time and continuing to improve profitability, as we have said before.

Our investment base is solid. In the following 3 years, we'll have more than 50 -- over EUR 50 billion in capital to fund both profitable growth and shareholder distributions. So again, these are the numbers that we have reviewed today. So thank you very much. I want to end by saying something which is really, really important. I mean, here you have in the front row, not all, but our key management team. We have an amazing group of people. They work really hard. Believe me, today is the interesting and fun day. There's been a huge amount of work, and I want to congratulate Hector, especially because he is the leader in a lot of what has been happening in the planning. These are very ambitious numbers. They're not going to be easy, but we are very confident that with the team we have today, we will continue to deliver. So thank you very much.

Jun '26		+/- %
Umsatz	68.944 68.944	5 % 5 % 100 %
- Zinsertrag	43.848 43.848	6 % 6 % 64 %
- Zinsunabhängige Erträge	25.096 25.096	4 % 4 % 36 %
Zinsaufwand	58.860 58.860	5 % 5 % 85 %
Nichtzinsaufwand	-36.493 -36.493	1 % 1 % -53 %
Risikovorsorge für Kredite	12.913 12.913	7 % 7 % 19 %
Nettogewinn	16.241 16.241	22 % 22 % 24 %

Hauptsitz	Spanien
CEO	Mr. Checa
Mitarbeiter	186.370
Gegründet	1857
Webseite	www.santander.com

Banco Santander Aktie

Banco Santander Aktienkurs

Vergleich mit Peer Group

Insights zu Banco Santander Insights

Ist Banco Santander eine Topscorer-Aktie nach der Dividenden-, High-Growth-Investing- oder Levermann-Strategie?

Kennzahlen

Banco Santander Aktie Analyse

Dividenden

??

High-Growth-Investing

HGI

??

Levermann

???

Analystenmeinungen

Analystenmeinungen

Finde heraus, in welchem Banco Santander enthalten ist

In diesem ist Banco Santander

Banco Santander Events

🇩🇪 Neu: Alle Transkripte jetzt auch auf Deutsch verfügbar!

Nächstes Event

Vergangene Events

Finanzdaten von Banco Santander

Nichts mehr verpassen! Wir senden Dir alle News zur Banco Santander-Aktie direkt und kostenlos in Deine Mailbox.

Banco Santander Aktie News

Firmenprofil

Kostenlos registrieren