Banco Santander SA (SAN.US) has released its financial report for the fourth quarter and full year of fiscal 2025. The report reveals that, driven by an improved interest rate environment and a global business transformation, the bank's full-year net profit attributable to shareholders reached a record 14.101 billion euros, marking a 12% increase from the previous year; the bank's total annual revenue successfully held at a high of 62.39 billion euros, largely meeting the market's previously set guidance target of 62 billion euros. Concurrently with the earnings release, Banco Santander dropped two significant announcements: a plan to acquire US-based Webster Financial Corporation (WBS.US) for $12 billion, and board approval for a new 5 billion euro share buyback program.

Banco Santander SA's Q4 net profit surged by 15%, and its capital adequacy ratio climbed to a historic high of 13.5%. The bank is scheduled to hold an Investor Day on February 25th, where it will announce new financial targets. The bank continued its explosive growth trajectory into the fourth quarter, posting a quarterly net profit of 3.764 billion euros, a 15% year-on-year increase. This result not only set a new record for quarterly earnings but also significantly surpassed the average analyst forecast of 3.48 billion euros. This historic performance was primarily fueled by a notable increase in customer activity globally and strong support from net fee income. Although net interest income faced pressure in some markets, net fee income, on a constant currency basis, achieved a 9% counter-trend growth, effectively smoothing profit volatility. Regarding key financial metrics, the bank's Return on Tangible Equity (RoTE) rose to 16.3%, while earnings per share (EPS) soared 17% year-on-year to 0.91 euros. The sustained strong performance is largely attributable to the deepening of its "One Transformation" global operational strategy. By simplifying product models and enhancing digital penetration, Banco Santander successfully attracted approximately 8 million new customers in 2025, expanding its global customer base to 180 million. Furthermore, to reward investors, the board has approved a new 5 billion euro share buyback program and reaffirmed its commitment to a total shareholder distribution target of no less than 10 billion euros for the 2025-2026 period. In terms of asset quality and capital adequacy, Banco Santander delivered its most robust report in recent years. As of December 31, 2025, the group's non-performing loan (NPL) ratio improved further to 2.91% from 3.14% at the end of the previous year, with risk costs remaining stable and controlled at 1.15%. Particularly noteworthy, its Common Equity Tier 1 (CET1) capital ratio climbed to a historic high of 13.5%, significantly exceeding the regulatory requirement of 9.83% and also surpassing the bank's previously set target range of 12% to 13%. On Wednesday, Banco Santander stated its full-year target is to "achieve mid-single-digit revenue growth and reduce costs in constant euros." The bank also anticipates "profit improvement" and a CET1 ratio of at least 12.8%.

One of the Largest European Bank Deals in the US: Santander's $12 Billion Acquisition of Webster. Alongside the earnings disclosure, Banco Santander announced a highly strategic expansion plan, proposing to acquire US-based Webster Financial Corporation for approximately $12 billion. This move signals Banco Santander's accelerated reshaping of its North American footprint, aiming to push the Return on Tangible Equity (RoTE) of its US operations above 20% by 2028 by integrating Webster's commercial banking foundation with its own existing consumer finance strengths. According to the final agreement terms, Banco Santander will acquire Webster Financial Group for a total consideration of $75 per share (comprising 65% cash and 35% stock), with the transaction expected to complete legal closing procedures in the second half of 2026. This strategic merger will create a financial giant with total assets of $327 billion, positioning the new entity directly within the top ten US retail and commercial banking players, making it one of the most systemically important financial institutions in the country. Furthermore, this deal ranks among the largest ever transactions by a European bank in the United States, marking Banco Santander's move beyond its original foundation as one of the largest auto lenders in the US to aggressively expand its operations in the country. This is also part of Executive Chair Ana Botín's strategy to extend the bank's reach into growth markets while scaling back operations in some European countries. Botín stated at a press conference on Tuesday that without a presence in the US, there is "no hope of being a global bank." Commenting on this, Morgan Stanley analysts suggested the transaction would create a more balanced US business structure with lower funding costs. However, investor reaction might be lukewarm—they had previously hoped excess capital would be used to "fund additional cost-saving measures and reward shareholders." It is understood that, given Webster's business footprint in New York City, Massachusetts, and its headquarters state of Connecticut, Banco Santander will gain a significant market position in the US Northeast. According to the company's fourth-quarter business overview, it operates nearly 200 branches with assets exceeding $80 billion. Webster also operates a commercial banking business, covering lending, commercial real estate financing, capital markets, and treasury management. Its website indicates the company also provides healthcare financial services, such as operating health savings accounts. The Webster acquisition is the third deal led by Botín in less than a year, aimed at expanding the company's scale in the UK and the US. Last April, Banco Santander completed a key capital operation, selling a 49% stake in its Polish subsidiary to Austria's Erste Group Bank for 7 billion euros (approximately $8.3 billion), a transaction that freed up significant strategic capital for the group. Currently, Santander is progressing orderly with the acquisition of UK retail lender TSB, for which an exclusivity agreement was reached with Spain's Banco Sabadell last July, with funding partially sourced from the aforementioned stake sale proceeds. Although the proposed $800 million cost-saving plan—including $480 million in savings from consolidating headquarters and $280 million from technology—appears feasible, Jefferies analysts noted in a report that simultaneously integrating TSB and Webster "could be quite tricky."

Santander's Multi-Billion Dollar Acquisition Aims to Fulfill European Peers' Unrealized "American Dream". It is understood that Botín, who has held her current position for over 11 years, has consistently focused on strengthening Banco Santander's capital buffers while avoiding large-scale transactions. The bank's stock price more than doubled last year, creating favorable conditions for pursuing deals. She stated on the analyst call that the bank would actively avoid bolt-on M&A transactions over the next three years. In recent months, against the backdrop of a more relaxed regulatory environment under President Donald Trump's administration, a wave of merger activity has emerged among smaller US banks. Earlier this year, US Bancorp (USB.US), the largest US regional bank, reached an agreement to acquire brokerage firm BTIG for up to $1 billion. In 2024, Huntington Bancshares Incorporated (HBAN.US) agreed to acquire Cadence Bank for $7.4 billion. When regional bank deal activity picked up in 2021, Webster was also a buyer, agreeing to acquire Sterling Bancorp, valuing the target company at $5.14 billion. Some European banks have consistently struggled to gain a foothold in certain sectors of the US market. In 2020, Banco Bilbao Vizcaya Argentaria SA agreed to sell its US banking business; a year later, BNP Paribas SA reached a deal to divest its Bank of the West unit, thereby exiting the US retail market. Analysts at TD Cowen stated in a Tuesday report: "The combination of Santander's consumer finance business with Webster's commercial franchise and high-quality deposit base will significantly increase the bank's scale in the region."