Santander’s €10.3bn Profit Fuels Talk of Higher Deposit Rates in Portugal

Record profits from Banco Santander are once again making headlines, but behind the headline figure lie contrasting stories from Lisbon to São Paulo and a dividend promise that will interest thousands of Portuguese savers. The Spanish-based lender earned €10.337 B during the first nine months of the year, an 11 % jump that extends a streak of six straight record-breaking quarters. Yet while the group keeps smashing global highs, the Portuguese subsidiary has started to feel the pinch of lower European interest rates.

Why it matters on this side of the border

For households, the news has a double edge. On one hand, Santander’s strong capital position—its CET1 ratio now stands at 13.1 %—helps reassure mortgage holders that the bank remains rock-solid. On the other, soaring group profits coincide with a visible deceleration of net interest income in Portugal, the line that determines how much the bank pays for deposits versus what it earns from loans. Analysts at Caixa BI note that competition for savings accounts has intensified since the summer, which could eventually translate into slightly better deposit rates for clients here.

The engines behind the €10.3 B milestone

Executives credit four gears: expanding net-interest margin, record €10.011 B in fee income, tighter cost controls that drove the efficiency ratio to 41.3 %—its best reading in 15 years, and improved asset quality that shaved the cost of risk down to 1.13 %. Taken together, these factors pushed return on tangible equity to 16.1 %, already brushing the bank’s year-end goal of 16.5 %.

Portugal’s contribution: smaller slice, same strategic weight

Locally, Santander Totta booked €503.9 M in net profit over the first half, 8 % lower than a year earlier. The drop stems mainly from the European Central Bank’s rate-cut cycle, which squeezed the spread the bank earns on mortgages. Fee income, however, kept climbing, helped by brisk activity in cards and insurance cross-sales. Gross lending in Portugal reached €51.7 B, up 10 % year-on-year, signaling that corporate credit lines and consumer loans remain in demand despite cooling GDP growth.

Brazil steals the show—and then gives part of it back

Further afield, Santander Brasil generated R$4 B in quarterly profit, but a weaker real trimmed that contribution once converted into euros. Management described Brazil as both a growth engine and an FX headache; the unit’s 17.5 % ROAE is impressive, yet the currency slide carved nearly 6 % off the parent company’s underlying earnings.

Dividend boost and jumbo buy-back

Shareholders are set to pocket more cash. The board approved an interim €0.115 per-share dividend, 15 % higher than last year, to be wired on 3 November. In parallel, a €1.7 B share-repurchase programme is already underway, part of a wider pledge to return at least €10 B between 2025 and 2026. For the roughly 100 000 Portuguese investors who hold Santander stock directly or via funds, the richer payout could nudge portfolio yields higher, though tax on foreign dividends still applies.

Market reaction: a brief wobble, then relief

The earnings beat did not stop the share price from dipping 2 % in pre-market dealings as traders focused on a slightly softer-than-expected EPS of €0.2566. Still, most research desks kept their “buy” or “strong buy” calls, with a 12-month consensus target of €9.20. Barclays called the set of figures “generally good”, while Jefferies highlighted “solid progress across most metrics”.

Looking ahead

Chief Executive Héctor Grisi insists the bank will close the year with a RoTE near 16.5 % and says the cost-of-risk should remain around 1.1 %. For Portuguese customers, the key variable is how aggressively domestic lenders, Santander included, re-price deposits now that the ECB has pivoted. The group’s record haul gives it financial leeway, but competition—especially from online challengers—may dictate whether some of those billions filter back to savers in the form of higher interest on everyday accounts.