How Banco Santander, S.A. Makes Money

Santander Group generates revenue through five global business segments that collectively produced EUR 62.2 billion in underlying total income during FY2024. The Retail & Commercial Banking segment is the largest contributor, generating EUR 32.5 billion in revenue (52% of group total) with an efficiency ratio of 39.7% and return on tangible equity of 18.8%. This segment serves approximately 110 million retail customers across 10 core countries through a network of branches, digital channels, and relationship managers. Revenue derives from net interest income on mortgages, consumer loans, and SME lending, plus net fee income from payments, insurance distribution, and mutual fund sales. The segment's operating profit reached EUR 7.3 billion in 2024, a 29% increase year-over-year in constant euros. The Digital Consumer Bank (DCB) segment, which includes Santander Consumer Finance and Openbank, generated EUR 12.9 billion in revenue (20% of group total) with an efficiency ratio of 40.1%. This segment specializes in auto finance, point-of-sale lending, and digital banking, operating in 17 European countries and the Americas. The Consumer Finance business holds EUR 100+ billion in assets and provides vehicle financing, personal loans, and credit cards through partnerships with retailers and auto dealers. The segment's attributable profit was EUR 1.7 billion in 2024, though this declined 12% year-over-year due to lower electric vehicle leasing volumes in the US that reduced fiscal incentives. The Corporate & Investment Banking (CIB) segment generated EUR 8.3 billion in revenue (13% of group total) with an efficiency ratio of 45.6% and RoTE of 18.0%. CIB serves corporate and institutional clients through three business lines: Global Markets (fixed income, equities, derivatives), Global Banking (corporate finance, debt finance, structured finance), and Global Transaction Banking (trade finance, cash management, working capital solutions). The segment's attributable profit was EUR 2.7 billion in 2024, up 16% year-over-year, driven by strong Global Markets performance amid market volatility. The Wealth Management & Insurance segment generated EUR 3.7 billion in revenue (6% of group total) with an efficiency ratio of 35.9% and an exceptional RoTE of 78.7%. This segment manages EUR 498.3 billion in assets under management and administration, including EUR 88.8 billion in socially responsible investments. Revenue comes from fee-based asset management, private banking, and insurance premiums. The segment's attributable profit was EUR 1.6 billion in 2024, up 14% year-over-year. The Payments segment, comprising PagoNxt and Cards, generated EUR 5.5 billion in revenue (9% of group total). PagoNxt operates Getnet, a merchant acquiring platform processing EUR 108 billion in total payments volume in H1 2024, and a Global Payments Hub handling 405 million transactions. The Cards business issued and acquired credit and debit cards across all Santander markets. The segment's attributable profit was EUR 0.7 billion in 2024, up 18% year-over-year excluding write-downs. The group's revenue model is geographically diversified: Europe contributed 52% of underlying profit in H1 2024 (Spain 28%, UK 10%, Portugal 9%, Poland 6%, DCB Europe 7%), North America 22% (US 11%, Mexico 14%, Other North America -3%), and South America 28% (Brazil 19%, Chile 4%, Argentina 4%, Other 1%). Net interest income of EUR 46.7 billion represented 75% of total income in FY2024, earned through the spread between interest on loans and investments and interest paid on deposits and borrowings. Net fee income of EUR 13.0 billion contributed 21%, with gains on financial transactions and other operating income making up the remainder. The group's net interest margin is supported by a structural hedge and active liability management, with customer deposits of EUR 1.06 trillion funding 76% of net loans to customers. The loan-to-deposit ratio was 100% in 2024. Operating expenses totaled EUR 26.0 billion, yielding an efficiency ratio of 41.8% — a 2.3 percentage point improvement from 2023. The cost-to-income ratio target is below 42% for 2024-2025. The group's loan impairment charge was EUR 7.2 billion, or a cost of risk of 1.15%, within the 2024 target of approximately 1.2%. The bank's capital generation was strong: fully-loaded CET1 ratio of 12.8%, total capital ratio of 17.4%, and tangible net asset value per share of EUR 5.24. The shareholder remuneration policy distributes approximately 50% of attributable profit, split equally between cash dividends and share buybacks. In February 2025, the board announced its intention to distribute EUR 10 billion to shareholders through share buybacks over 2025-2026, including additional buybacks to distribute CET1 excess capital.

Banco Santander's growth strategy is built around four axes: expanding retail banking profitability in its nine core markets, scaling its digital and payments platforms, growing fee-based businesses that are less sensitive to interest rate cycles, and maintaining disciplined capital allocation that supports a double-digit return on tangible equity. In its largest markets, Santander is pursuing profitable growth rather than volume growth. In Spain, the strategy centres on cross-selling investment and insurance products to existing retail customers, reducing reliance on spread income by growing fee revenue from asset management and transactional banking. In Brazil, which generated the group's highest absolute profit contribution in FY2024, Santander is deepening digital customer engagement through its Superdigital platform and expanding its auto-financing business through Santander Financiamentos. In the United States, the group is focused on its Santander Consumer USA auto lending franchise and the selective build-out of its corporate and investment banking business for Latin American multinationals. On the digital side, Santander has invested heavily in Openbank, its fully digital bank operating across Spain, Germany, the Netherlands, Portugal, and the US, targeting price-sensitive customers who want competitive deposit rates without branch infrastructure. The group is also scaling PagoNxt, its payments technology subsidiary, which processes transactions across Latin America and Europe. The capital strategy is explicit: Santander targets a fully loaded CET1 ratio above 12%, returns surplus capital through a combination of cash dividends and share buybacks, and aims to grow tangible book value per share consistently through the cycle. The strategic risk is geographic complexity — operating across nine distinct regulatory regimes, currencies, and credit cycles means that group-level performance is always a weighted average of very different national environments, making it harder to sustain consistent earnings momentum than a single-market bank.