Rating action

Scope Ratings GmbH (Scope) has today affirmed the AA- issuer rating and AA- preferred senior unsecured debt rating of Banco Santander SA (Santander), both with Stable Outlooks.

The full list of rating actions and rated entities is provided at the end of this rating action release.

Key rating drivers

Business model assessment: Very resilient (Low). The issuer rating is anchored by the Very resilient (Low) business model assessment. Banco Santander benefits from a globally diversified retail and commercial banking franchise that generates around 50% of the group’s revenues, with leading market positions in Spain, UK, Mexico, Brazil, Chile and a strong presence in the US.

With total assets of around EUR 1.8trn and over 100m active customers across Europe, North and South America, the group is focused on organic growth, expanding the customer base in retail and commercial banking, by deploying its strong digital capabilities and operational know-how across its core markets.

The group also operates a leading consumer finance business in the EU, through its fully owned subsidiary Santander Consumer Finance and its Digital Consumer Bank which together represent 21% of the group’s revenues. It is also active in global Corporate and Investment Banking (14% of the group’s revenues), Wealth Management and Insurance, and holds a very strong position in payment services (including merchant acquiring and international trade solutions).

The recent acquisition of TSB UK from Banco de Sabadell and the sale of the Polish operation, Santander Bank Polska, evidence the group’s dynamic approach to capital allocation. In Scope’s view, the strength of the group’s franchise, with stable and relevant market shares across the different core markets, provides stability to the business model assessment.

Operating environment assessment: Supportive (Low). The assessment reflects Scope’s blended view of the different markets where Santander operates. The group’s main markets, Spain, the UK, as well as the US provide a relatively stable economic environment for banking activities, helping to offset the volatility primarily stemming from the group’s operations in Latin America. The stability and predictability of the institutional and regulatory frameworks in its main operating markets further support the development of the group’s strategic objectives and growth.

Spain (Supportive - low) represents 26% of the group’s loan book as of September 2025. Spain is the fourth largest economy in the EU and has been outpacing the GDP grow of most of its EU peers. It is a diversified, wealthy economy with GDP per capita of c. EUR 35,000 in 2024.

Following a decade-long process of private sector deleveraging and banking sector consolidation, the top four banks now account for around 80% of domestic assets as of YE 2024. The sector is characterised by strong cost efficiency, partly the result of the consolidation process, and low cost of risk since balance sheets have been cleaned up of legacy NPLs. Profitability metrics have further improved in tandem with the increase in market interest rates.

Santander’s adheres to a multiple point of entry resolution strategy with the primary operating group under the Spanish regulatory oversight. Spain is part of the European Banking Union, which has brought significant strengthening and harmonisation in bank regulation and supervision under the ECB’s Single Supervisory Mechanism, which we consider to be supportive of financial stability. The European Central Bank also shares with national central banks the role of lender of last resort, which limits the potential for illiquidity risks in the banking sector.

The UK (Supportive - high) accounts for 23% of the group’s loan book as of September 2025. The UK is a large, wealthy and well-diversified economy. The country benefits from strong institutions, including robust financial, economic and monetary governance frameworks and an independent monetary policy. The regulatory framework for banks is well established and largely aligned with Basel standards. The Bank of England is a highly experienced and effective regulator and a proven lender of last resort, contributing to financial stability. The generally sound operating performance of the UK banking sector continues to be supported by a relatively concentrated market and a high proportion of residential mortgage lending.

The United States (Supportive - high) accounts for 11% of the group’s loan book as of September 2025. The US is the largest economy in the world. The flexibility afforded by the dollar, being the world’s primary reserve currency, as well as the benefits of having the deepest capital market and an effective lender of last resort framework, supports further the operating environment. Our view also considers the comparatively strong performance track record of the banking sector, although the metrics could be flattered by the strength of the five largest banks in the system. The latter account for about 60% of the system’s assets as at end-2024, while the rest of the system remains highly fragmented.

The US banking sector also benefits from an effective, well-tested resolution framework for failing institutions. The quality of banking regulation and the strength of the prudential supervisory framework is comparable to other developed banking systems, therefore not affording any particular advantage. However, we will continue monitoring the impact on the strength of the regulatory framework of current proposals to change regulation for large banks, after the potential move to tighten regulatory requirements for mid-small banks has stalled.

Brazil (Moderately supportive - low) accounts for 9% of the group’s loan book as of September 2025 – but its contribution to group’s revenues increases to around 20%. Brazil is a developing country with an estimated GDP per capita of just USD 10,214 as of 2024, but it is the largest economy in Latin America and the 10th largest globally.

The banking sector has historically been highly profitable, and Scope believes this will continue, supported by the relatively high interest rates. However, high inflation and borrowing costs and declining economic growth could put pressure on the sector’s asset quality in the short and medium term.

While banking regulatory oversight is under the Banco Central do Brasil (BCB), the country has largely adopted Basel III standards since 2013, with some elements remaining pending or still in progress. The BCB also acts as a lender of last resort, providing short- and long-term liquidity facilities in local currency.

Scope’s initial mapping of ‘a’ for Santander is based on a combined assessment of the issuer’s operating environments and business model.

Long-term sustainability assessment (ESG factor): Positive (+1 notch). The assessment reflects Scope’s view that Santander is an early adopter of advanced industry standards and practices related to sustainability. This positions the group as best in class, reflecting its proactive approach to long-term sustainability, including target setting and commitment to delivery, which enhances its credit standing.

The group has developed strong capabilities in digital banking, environmental and sustainable finance. Its Digital Consumer Bank division, which focuses on auto loans, (including Openbank and Open Digital Services) has grown steadily and represents now more than 20% of the group’s revenues. The group has demonstrated agility in the development of products across jurisdictions, adapting execution to regional and country-specific circumstances, which have resulted in the simplification of client onboarding and the ability to impact efficiency, from levels closer to 45% in 2022 to 41% for 9M’255. The vision of a ‘digital bank with branches’ for its retail and commercial banking division allows the group to offer all products and services via digital through its own global platform, while maintaining a network of 8,000 branches.

Furthermore, the group‘s strategy to enhance financial inclusion and social responsibility has been deployed across geographies, with a positive impact that has translated into a franchise strength compared to peers. While the target for green finance loans and socially responsible investment in AuM still represent a limited portion of the portfolio, the fast growth observed in recent years and commitment to execution positions the group as a relevant player driving a differentiated value proposition.

The long-term sustainability assessment leads to an adjusted rating anchor of a+.

Earnings capacity and risk exposures assessment: Supportive (+1 notch). The assessment reflects Scope’s view that earnings capacity is stable through economic cycles providing a strong buffer against losses. Risks are well managed with losses highly unlikely to undermine the issuer’s viability.

The group’s ability to generate strong risk-adjusted earnings is supported by its well-executed business and geographic diversification. Scope expects operating performance to remain robust, driven by a more balanced performance between non-EU countries (UK, US and Latam) and EU (Spain, UK and Germany), as activity volumes pick up while asset quality remains stable.

Profitability metrics remain robust with an average return on RWAs of 2.0% for the past five years. While Santander has historically been more profitable than peers, the gap has recently closed and in some cases even reversed, mainly relative to traditional retail and commercial banks in Southern Europe. This is the result of a more favourable interest rate environment for banks operating in the EU, which has benefited Santander less than its EU peers. Scope’s assessment considers Santander’s ability to deliver high profitability through the cycle. The group’s focus on efficiency across geographies remains also a strength, translated into an outstanding cost containment culture, supporting further through the cycle earnings capacity generation.

Asset quality and risk exposures are adequately managed, reflecting the underlying economic performance of its diverse markets. The cost of risk at around 115bps - relatively high when compared to EU peers - reflects its greater focus on consumer lending, as well as the exposure to developing markets with an intrinsically higher risk-return profile.

Sector specific concentration is not material, due to the relatively lower component of corporate lending in its portfolio, with the largest exposure in manufacturing and retail trade SMEs. Sovereign exposure via the bond portfolio (EUR 152bn) represents 8% of total assets as of September 2025, with the largest being to the Spanish sovereign. In our view, this is not considered a material source of risk as the securities are primarily held for asset/liability management purposes and accounted for at cost (HTC portion representing 73% of the total). In line with Scope's Financial Institutions Rating Methodology, the issuer rating is not mechanically capped at the level of the sovereign.

Financial viability management assessment: Adequate. The assessment reflects Scope’s view that financial viability management provides some buffer and, under a base case scenario, should not imminently push any metric close to minimum requirements or jeopardise the issuer’s financial viability.

The group’s CET1 ratio stood at 13.1% as of September 2025, optimised to the management target of 13% and well ahead of the minimum requirement of 9.7%. While lower than most EU peers, capital management is in our view adequate considering the group’s proven track record of organic capital generation and resilience to stress, notwithstanding the relatively lower exposure to mature markets vs peers, as evidenced by supervisory stress tests results.

The EU resolution group has a TLAC position of 26.8%, with a buffer of 470bps above the requirement (including buffers) as of September 2025, which Scope considers supportive and mitigates in part the relatively lower CET1 ratio compared to peers.

Due to the retail nature of its business, the group’s funding structure is highly reliant on customer deposits which account for 70% of the group’s liabilities. The group is also very active in international debt markets, leveraging its multiple-point-of entry resolution strategy, which allows each subsidiary to manage capital autonomously. Liquidity across jurisdictions is also adequate, with a LCR at group level of 160% and NSFR at 126% as of September 2025. This underlines the strength of the group’s franchise, both in deposits and as a frequent debt issuer across several jurisdictions.

One or more key drivers of the credit rating action are considered an ESG factor.

Outlook and rating sensitivities

The Stable Outlook reflects Scope’s view that the risks to the current rating are balanced.

The upside scenario for the ratings and Outlooks is:

1. Strengthening of the capital base, exceeding management’s target and increasing buffers above current levels, which could result in an upgrade of the financial viability management assessment.

The downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Pressure on the group’s earnings capacity due to a larger than expected and prolonged increase in cost of risk, weakening the earnings capacity and risk exposures assessment.
    
2. Deterioration in the group’s financial viability management profile, with a persistent reduction in capital or tighter liquidity could lead to a downgrade of the financial viability management assessment.

Subsidiaries and affiliates: ratings and Outlooks

Santander Consumer Finance SA: A+/Stable.

The rating on Santander Consumer Finance S.A (SCF) is one notch below that of its parent, Banco Santander S.A. This is driven by Scope’s view that there is a high likelihood of support from the parent under a top-down approach.

Scope rates SCF using a top-down approach because SCF is considered an integral subsidiary of Santander group. The assessment reflects SCF’s status as a material subsidiary within the group’s resolution perimeter in EU, its full ownership by Banco Santander S.A, and its high level of strategic alignment with the parent. The rationale for the notch differential is driven by the full independency in funding managed by SCF, mostly due to the differences in maturity profiles of assets and business model.

Scope deems the parent's willingness to support SCF to be 'high'. The assessment incorporates SCF’s high operational integration, including IT and support areas, as well as the participation of the parent company’s representatives in SCF’s governance bodies. It also considers the fact that SCF operates under a similar brand and that it is unlikely that there will be significant regulatory restrictions preventing support from flowing, given that both SCF and its parent are domiciled in the EU. The comparatively low cost of support given SCF’s size has no impact on the assessment.

Scope would upgrade SCF’s issuer rating in case of an upgrade of the parent or from a strengthening of the level of integration with the parent. Conversely, the issuer rating could be downgraded if the parent is downgraded, or if Scope believes that the expectation of parent support would diminish.

Santander Consumer Bank AG: A+/Stable.

The rating on Santander Consumer Bank AG (SCB) is aligned to that of its parent, Santander Consumer Finance S.A. This is driven by Scope’s view that there is a high likelihood of support from the parent under a top-down approach.

Scope rates SCB using a top-down approach because SCB is considered an integral subsidiary of Santander Consumer Finance, as the arm for car financing in Germany. The assessment reflects SCB’s profit and loss sharing agreement under German law towards its parent SCF, the inclusion of SCB under the resolution perimeter of Santander group in EU, its full ownership by SCF, and its high level of strategic alignment with the parent.

Scope deems the parent's willingness to support SCB to be 'high'. The assessment incorporates SCB’s high operational integration, including IT and support areas, as well as the oversight of the parent on governance bodies. It also considers the fact that SCB operates under a similar brand and that it is unlikely that there will be significant regulatory restrictions preventing support from flowing, given that both SCB and its parent company are domiciled in the EU. The comparatively high cost of support given SCB’s size versus its parent has no impact on the assessment.

Scope would upgrade SCB’s issuer rating in case of an upgrade of the parent. Conversely, the issuer rating could be downgraded if the parent is downgraded, or if Scope believes that the expectation of parent support would diminish.

Debt ratings

Preferred senior unsecured debt: AA-/Stable. The rating is aligned with the issuer rating and applies to senior unsecured debt ranking above other classes of senior unsecured debt.

Non-preferred senior unsecured debt: A+/Stable. The rating is one notch lower than the issuer rating, reflecting statutory subordination.

Short-term debt: S-1+/Stable. The short-term credit rating is derived from the long-term issuer credit rating. The rating is consistent with Scope’s long-term/short-term rating correspondence table. The choice of the highest possible short-term rating (S-1+ given the AA- issuer rating) reflects the strength of the group’s liquidity profile and access to central bank funding.

Environmental, social and governance (ESG) factors

Please refer to the ‘long-term sustainability assessment’ under the ‘key rating drivers’ section above for the ESG analysis.

All rating actions and rated entities

Banco Santander SA

Issuer rating: AA-/Stable, affirmed

Preferred senior unsecured debt rating: AA-/Stable, affirmed

Non-preferred senior unsecured debt rating: A+/Stable, affirmed

Short-term debt rating: S-1+/Stable, affirmed

Santander Consumer Finance SA

Issuer rating: A+/Stable, affirmed

Preferred senior unsecured debt rating: A+/Stable, affirmed

Non-preferred senior unsecured debt rating: A/Stable, affirmed

Santander Consumer Bank AG

Issuer rating: A+/Stable, affirmed

Preferred senior unsecured debt rating: A+/Stable, affirmed

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
The methodology used for these Credit Ratings and/or Outlooks, (Financial Institutions Rating Methodology, 18 September 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation   YES
With access to internal documents                                 NO
With access to management                                          NO
The following substantially material sources of information were used to prepare the Credit Ratings: public domain, the Rated Entity and Scope Ratings’ internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Carola Saldias Castillo, Senior Director
Person responsible for approval of the Credit Ratings: Marco Troiano, Managing Director
Banco Santander SA issuer Credit Rating/Outlook was first released by Scope Ratings on 2 April 2014. The Credit Rating/Outlook was last updated on 13 December 2024.
Banco Santander SA short-term Credit Rating/Outlook was first released by Scope Ratings on 22 May 2014. The Credit Rating/Outlook was last updated on 13 December 2024.
Banco Santander SA preferred senior unsecured debt Credit Rating/Outlook was first released by Scope Ratings on 2 April 2014. The Credit Rating/Outlook was last updated on 13 December 2024.
Banco Santander SA non-preferred senior unsecured debt Credit Rating/Outlook was first released by Scope Ratings on 25 July 2017. The Credit Rating/Outlook was last updated on 13 December 2024.
Santander Consumer Finance SA issuer and the preferred senior unsecured debt Credit Ratings/Outlooks were first released by Scope Ratings on 12 December 2018. The Credit Ratings/Outlooks were last updated on 13 December 2024.
Santander Consumer Finance SA non-preferred senior unsecured debt Credit Rating/Outlook was first released by Scope Ratings on 21 January 2022. The Credit Rating/Outlook was last updated on 13 December 2024.
Santander Consumer Bank AG issuer and preferred senior unsecured debt Credit Ratings/Outlooks were first released by Scope Ratings on 13 December 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties. Scope Ratings also provides the Rated Entity with Credit Ratings by subscription on one or several of its assets.

Conditions of use / exclusion of liability
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