Banco Santander, S.A.

Auditor’s report, Annual accounts and director’s report for the year

ended 31 December 2025

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial

reporting framework applicable to Banco Santander in Spain (see notes 1 to 50). In the event of a discrepancy, the Spanish-

language version prevails.

Banco Santander, S.A.

Financial statements for the year ended 31 December 2025

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial

reporting framework applicable to Banco Santander in Spain (see notes 1 to 50). In the event of a discrepancy, the

Spanish-language version prevails.

1

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

Banco Santander, S.A.

BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR Million

ASSETS	Note	2025	2024 A
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEPOSITS ON DEMAND	6	74,786	97,457
FINANCIAL ASSETS HELD FOR TRADING		181,944	160,425
Derivatives	9 & 11	46,583	52,462
Equity instruments	8	21,196	16,225
Debt securities	7	55,736	43,315
Loans and advances		58,429	48,423
Central banks	6	657	1,239
Credit institutions	6	26,349	23,428
Customers	10	31,423	23,756
Memorandum items: Lent or delivered as guarantees with disposal or pledge rights	31	55,600	27,581
NON-TRADING FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS		1,923	2,127
Equity instruments	8	958	991
Debt securities	7	42	204
Loans and advances		923	932
Central banks	6	—	—
Credit institutions	6	—	—
Customers	10	923	932
Memorandum items: Lent or delivered as guarantees with disposal or pledge rights	31	—	30
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		4,898	4,826
Debt securities	7	—	—
Loans and advances		4,898	4,826
Central banks	6	—	—
Credit institutions	6	557	580
Customers	10	4,341	4,246
Memorandum items: Lent or delivered as guarantees with disposal or pledge rights	31	—	—
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME		15,720	15,312
Equity instruments	8 & 25	1,283	1,245
Debt securities	7 & 25	5,349	8,873
Loans and advances		9,088	5,194
Central banks	6	—	—
Credit institutions	6	839	32
Customers	10	8,249	5,162
Memorandum items: Lent or delivered as guarantees with disposal or pledge rights	31	2,154	2,148

2

ASSETS	Note	2025	2024 A
FINANCIAL ASSETS AT AMORTIZED COST		434,429	392,443
Debt securities	7	83,585	65,917
Loans and advances		350,844	326,526
Central banks	6	223	218
Credit institutions	6	40,882	34,711
Customers	10	309,739	291,597
Memorandum items: Lent or delivered as guarantees with disposal or pledge rights	31	30,025	15,277
HEDGING DERIVATIVES	32	1,359	1,917
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK		3	(17)
INVESTMENTS	13	98,316	100,045
Group entities		96,067	97,674
Joint venture entities		283	322
Associated entities		1,966	2,049
TANGIBLE ASSETS	15	5,825	6,219
Property, plant and equipment		5,430	6,046
For own-use		4,537	5,144
Leased out under an operating lease		893	902
Investment property		395	173
Of which: Leased out under an operating lease		395	173
Memorandum items: Acquired in financial leasing		559	2,371
INTANGIBLE ASSETS	16	749	830
Goodwill		147	209
Other intangible assets		602	621
TAX ASSETS	24	10,148	10,353
Current tax assets		4,392	4,332
Deferred tax assets		5,756	6,021
OTHER ASSETS		2,188	2,637
Insurance contracts linked to pensions	14, 17 & 23	240	267
Inventories	17	—	—
Other	17	1,948	2,370
NON-CURRENT ASSETS HELD FOR SALE	12	4,495	266
TOTAL ASSETS		836,783	794,840

A. Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50  and appendices are an integral part of the balance sheet as of 31 December 2025.

3

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR Million

LIABILITIES	Note	2025	2024 A
FINANCIAL LIABILITIES HELD FOR TRADING		136,884	119,149
Derivatives	9 & 11	41,524	46,121
Short positions	9	30,694	25,518
Deposits		64,666	47,510
Central banks	18	5,465	9,123
Credit institutions	18	30,602	24,884
Customers	19	28,599	13,503
Marketable debt securities	20	—	—
Other financial liabilities	22	—	—
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS		38,710	33,257
Deposits		37,123	32,188
Central banks	18	3,086	1,774
Credit institutions	18	1,521	2,107
Customers	19	32,516	28,307
Marketable debt securities	20	1,587	1,069
Other financial liabilities	22	—	—
Memorandum items: Subordinated liabilities		—	—
FINANCIAL LIABILITIES AT AMORTIZED COST		566,794	552,080
Deposits		418,742	392,720
Central banks	18	7,522	5,117
Credit institutions	18	34,678	38,691
Customers	19	376,542	348,912
Marketable debt securities	20	137,997	146,113
Other financial liabilities	22	10,055	13,247
Memorandum items: Subordinated liabilities	20 & 21	21,774	28,142
HEDGING DERIVATIVES	32	2,284	2,516
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK		(20)	(19)
PROVISIONS	23	2,980	3,190
Pensions and other post-retirement obligations		578	647
Other long term employee benefits		744	699
Taxes and other legal contingencies		815	762
Contingent liabilities and commitments		179	175
Other provisions		664	907
TAX LIABILITIES	24	2,672	2,168
Current tax liabilities		633	190
Deferred tax liabilities		2,039	1,978
OTHER LIABILITIES	17	4,137	4,167
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE	12	—	—
TOTAL LIABILITIES		754,441	716,508

A.  Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the balance sheet as of 31 December 2025.

4

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR Million

EQUITY	Note	2025	2024 A
SHAREHOLDERS’ EQUITY	26	83,653	79,887
CAPITAL	27	7,345	7,576
Called up paid capital		7,345	7,576
Unpaid capital which has been called up		—	—
Memorandum items: Uncalled up capital		—	—
SHARE PREMIUM	28	36,792	40,079
EQUITY INSTRUMENTS ISSUED OTHER THAN CAPITAL	30	—	—
Equity component of compound financial instruments		—	—
Other equity instruments issued		—	—
OTHER EQUITY INSTRUMENTS	30	417	217
ACCUMULATED RETAINED EARNINGS	29	31,272	24,345
REVALUATION RESERVES		—	—
OTHER RESERVES	29	(1,587)	(899)
(-) OWN SHARES	30	—	—
RESULTS FOR THE PERIOD	4	11,113	10,101
(-) INTERIM DIVIDENDS	4	(1,699)	(1,532)
OTHER COMPREHENSIVE INCOME OR LOSS		(1,311)	(1,555)
ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS	25	(1,325)	(1,669)
Actuarial gains or - losses in defined benefit pension plans		(484)	(827)
Non-current assets and disposal groups that have been classified as held for sale		—	—
Changes in the fair value of equity instruments measured at fair value with changes in other comprehensive income		(822)	(919)
Ineffectiveness of fair value hedges of equity instruments measured at fair value with changes in other comprehensive income		—	—
Changes in the fair value of equity instruments measured at fair value with changes in other comprehensive income [hedged item]		203	279
Changes in the fair value of equity instruments measured at fair value with changes in other comprehensive income [hedging instrument]		(203)	(279)
Changes in the fair value of financial liabilities at fair value through profit or loss attributable to changes in credit risk		(19)	77
ITEMS THAT MAY BE RECLASSIFIED TO PROFIT OR LOSS	25	14	114
Hedge of net investments in foreign operations [effective part]		283	—
Currency conversion		(299)	—
Hedging derivatives. Cash flow hedge reserve [effective part]		35	104
Changes in the fair value of debt instruments measured at fair value with changes in other comprehensive income		(5)	10
Hedging instruments [non-designated items]		—	—
Non-current assets and disposal groups that have been classified as held for sale		—	—
TOTAL EQUITY		82,342	78,332
TOTAL LIABILITIES AND EQUITY		836,783	794,840
MEMORANDUM ITEMS: OFF BALANCE SHEET AMOUNTS	31
Loan commitments granted		149,881	141,976
Financial guarantees granted		22,138	18,888
Other commitments granted		121,415	108,829

A.  Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the balance sheet as of 31 December 2025.

5

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

EUR Million

	(Debit) Credit
	Note	2025	2024 A
Interest income	34	24,672	27,027
Financial assets at fair value through other comprehensive income		626	619
Financial assets at amortized cost		16,193	18,180
Other interest income		7,853	8,228
Interest expense	35	(18,170)	(20,112)
Expenses for capital stock repayable on demand		—	—
Interest income/(changes)		6,502	6,915
Dividend income	36	6,691	7,725
Commission income	37	4,148	3,791
Commission expense	38	(1,008)	(866)
Gains or losses on financial assets and liabilities not measured at fair value through profit or loss, net	39	100	(97)
Financial assets at amortized cost		(34)	(47)
Other financial assets and liabilities		134	(50)
Gains or losses on financial assets and liabilities held for trading, net	39	494	704
Reclassification of financial assets at fair value through other comprehensive income		—	—
Reclassification of financial assets at amortized cost		—	—
Other gains (losses)		494	704
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value through profit or loss, net	39	80	73
Reclassification of financial assets at fair value through other comprehensive income		—	—
Reclassification of financial assets at amortized cost		—	—
Other gains (losses)		80	73
Gains or losses on financial assets and liabilities measured at fair value through profit or loss, net	39	(2)	350
Gains or losses from hedge accounting, net	39	(16)	(6)
Exchange differences, net	40	217	(106)
Other operating income	41	434	575
Other operating expenses	41	(234)	(625)
Total income		17,406	18,433
Administrative expenses		(5,419)	(5,293)
Staff costs	42	(3,324)	(3,210)
Other general administrative expenses	43	(2,095)	(2,083)
Depreciation and amortisation cost	15 & 16	(535)	(598)
Provisions or reversal of provisions, net	23	(587)	(659)
Impairment or reversal of impairment at financial assets not measured at fair value through profit or loss and net gains or losses from changes	7 &10	(1,162)	(1,334)
Financial assets at fair value through other comprehensive income		(25)	(1)
Financial assets at amortized cost		(1,137)	(1,333)
Impairment or reversal of impairment of investments in subsidiaries, joint ventures and associates, net	44	1,498	(241)
Impairment or reversal on non-financial assets, net		(13)	(3)
Tangible assets	15 & 44	3	(3)
Intangible assets	16 & 44	(16)	—
Others		—	—
Gain or losses on non-financial assets, net	45	11	10

6

	(Debit) Credit
	Note	2025	2024 A
Negative goodwill recognised in results		—	—
Gains or losses on non-current assets held for sale not classified as discontinued operations	12 & 46	(34)	(58)
Operating profit/(loss) before tax		11,165	10,257
Tax expense or income from continuing operations	24	(1,073)	(1,091)
Profit/(loss) from continuing operations		10,092	9,166
Profit/(loss) after tax from discontinued operations		1,021	935
Profit/(loss) for the year		11,113	10,101

A. Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the income statement for the year ended 31 December 2025.

7

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

STATEMENTS OF RECOGNISED INCOME AND EXPENSE  FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

EUR Million

	Note	2025	2024 A
PROFIT (LOSS) FOR THE YEAR		11,113	10,101
OTHER RECOGNISED INCOME AND EXPENSES	25	(80)	731
Items that will not be reclassified to profit or loss		20	425
Actuarial gains and losses on defined benefit pension plans		30	(16)
Other recognised income and expense of investments in subsidiaries, joint venture and associates		—	—
Changes in the fair value of equity instruments measured at fair value through other comprehensive income, net		100	262
Gains or losses resulting from the accounting for hedges of equity instruments measured at fair value through other comprehensive income, net		—	—
Changes in the fair value of equity instruments measured at fair value through other comprehensive income  (hedged item)		(76)	20
Changes in the fair value of equity instruments measured at fair value through other comprehensive income  (hedging instrument)		76	(20)
Changes in the fair value of financial liabilities at fair value through profit or loss attributable to changes in credit risk		(137)	247
Income tax relating to items that will not be reclassified	24	27	(68)
Items that may be reclassified to profit or loss		(100)	306
Hedges of net investments in foreign operations (effective portion)		283	—
Revaluation gains (losses)		283	—
Amounts transferred to income statement		—	—
Other reclassifications		—	—
Exchanges differences		(299)	—
Revaluation gains (losses)		(299)	—
Amounts transferred to income statement		—	—
Other reclassifications		—	—
Cash flow hedges (effective portion)		(100)	409
Revaluation gains or (losses)		(79)	140
Amounts transferred to income statement		(21)	269
Transferred to initial carrying amount of hedged items		—	—
Other reclassifications		—	—
Hedging instruments (items not designated)		—	—
Revaluation gains (losses)		—	—
Amounts transferred to income statement		—	—
Other reclassifications		—	—
Debt instruments at fair value with changes in other comprehensive income		(26)	29
Revaluation gains (losses)		37	(54)
Amounts transferred to income statement		(63)	83
Other reclassifications		—	—
Non-current assets held for sale		—	—
Revaluation gains (losses)		—	—
Amounts transferred to income statement		—	—
Other reclassifications		—	—
Income tax related to items that may be reclassified to profit or loss	24	42	(132)
Total recognised income and expenses for the year		11,033	10,832

A. Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the statement of recognized income and expenses for the year ended 31

December 2025.

8

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain (see notes 1 to 50). In the event of a discrepancy, the Spanish-language version prevails.

STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024
EUR Million
	Capital	Share premium	Equity instruments issued (not capital)	Other equity instruments	Accumulated retained earnings	Revaluation reserves	Other reserves	(-) Own Equity shares	Result for the period	(-) Interim dividends	Other comprehensive income	Total
Balance at 31 December 2024A	7,576	40,079	—	217	24,345	—	(899)	—	10,101	(1,532)	(1,555)	78,332
Adjustments due to errors	—	—	—	—	—	—	—	—	—	—	—	—
Adjustments due to changes in accounting policies	—	—	—	—	—	—	—	—	—	—	—	—
Opening balance at 1 January 2025 A	7,576	40,079	—	217	24,345	—	(899)	—	10,101	(1,532)	(1,555)	78,332
Total recognised income and expense	—	—	—	—	—	—	—	—	11,113	—	(80)	11,033
Other changes in equity	(231)	(3,287)	—	200	6,927	—	(688)	—	(10,101)	(167)	324	(7,023)
Issuance of ordinary shares	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of preferred shares	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—
Maturity of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—
Conversion of financial liabilities into equity	—	—	—	—	—	—	—	—	—	—	—	—
Capital reduction	(231)	(3,287)	—	—	—	—	231	3,287	—	—	—	—
Dividends	—	—	—	—	(1,642)	—	—	—	—	(1,699)	—	(3,341)
Purchase of equity instruments	—	—	—	—	—	—	—	(3,865)	—	—	—	(3,865)
Disposal of equity instruments	—	—	—	—	—	—	—	578	—	—	—	578
Transfer from equity to liabilities	—	—	—	—	—	—	—	—	—	—	—	—
Transfer from liabilities to equity	—	—	—	—	—	—	—	—	—	—	—	—
Transfers between equity items	—	—	—	—	8,569	—	(324)	—	(10,101)	1,532	324	—
Increases (decreases) due to business combinations	—	—	—	—	—	—	—	—	—	—	—	—
Share-based payment	—	—	—	(67)	—	—	—	—	—	—	—	(67)
Others increases or (-) decreases of the equity	—	—	—	267	—	—	(595)	—	—	—	—	(328)
Balance at 31 December 2025	7,345	36,792	—	417	31,272	—	(1,587)	—	11,113	(1,699)	(1,311)	82,342

A.  Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the statement of changes in total equity for the year ended 31 December 2025.

9

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain (see notes 1 and 50). In the event of a discrepancy, the Spanish-language version prevails.

STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024
EUR Million
	Capital	Share premium	Equity instruments issued (not capital)	Other equity instruments	Accumulated retained earnings	Revaluation reserves	Other reserves	(-) Own Equity shares	Result for the period	(-) Interim dividends	Other comprehensive income	Total
Balance at 31 December 2023A	8,092	44,373	720	195	17,889	—	(706)	(1,039)	9,239	(1,298)	(2,591)	74,874
Adjustments due to errors	—	—	—	—	—	—	—	—	—	—	—	—
Adjustments due to changes in accounting policies	—	—	—	—	—	—	—	—	—	—	—	—
Opening balance at 1 January 2024 A	8,092	44,373	720	195	17,889	—	(706)	(1,039)	9,239	(1,298)	(2,591)	74,874
Total recognised income and expense	—	—	—	—	—	—	—	—	10,101	—	731	10,832
Other changes in equity	(516)	(4,294)	(720)	22	6,456	—	(193)	1,039	(9,239)	(234)	305	(7,374)
Issuance of ordinary shares	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of preferred shares	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—
Maturity of other financial instruments	—	—	(751)	—	—	—	—	—	—	—	—	(751)
Conversion of financial liabilities into equity	—	—	—	—	—	—	—	—	—	—	—	—
Capital reduction	(516)	(4,294)	—	—	—	—	516	4,294	—	—	—	—
Dividends	—	—	—	—	(1,485)	—	—	—	—	(1,532)	—	(3,017)
Purchase of equity instruments	—	—	—	—	—	—	—	(3,740)	—	—	—	(3,740)
Disposal of equity instruments	—	—	—	—	—	—	—	485	—	—	—	485
Transfer from equity to liabilities	—	—	—	—	—	—	—	—	—	—	—	—
Transfer from liabilities to equity	—	—	—	—	—	—	—	—	—	—	—	—
Transfers between equity items	—	—	—	—	7,941	—	(305)	—	(9,239)	1,298	305	—
Increases (decreases) due to business combinations	—	—	—	—	—	—	—	—	—	—	—	—
Share-based payment	—	—	—	(62)	—	—	—	—	—	—	—	(62)
Other increases or (-) decreases of the equity	—	—	31	84	—	—	(404)	—	—	—	—	(289)
Balance at 31 December 2024A	7,576	40,079	—	217	24,345	—	(899)	—	10,101	(1,532)	(1,555)	78,332

A. Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the statements of changes in total equity for the year ended 31 December 2025.

10

Translation of annual accounts originally issued in Spanish and prepared in accordance with the regulatory financial reporting framework applicable to Banco Santander in Spain

(see notes 1 and 50). In the event of a discrepancy, the Spanish-language version prevails.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

EUR Million

	Note	2025	2024 A
A. CASH FLOWS FROM OPERATING ACTIVITIES		(10,324)	(31,135)
Profit or loss for the year	4	11,113	10,101
Adjustments made to obtain the cash flows from operating activities		(1,119)	(4,439)
Depreciation and amortization cost	15 & 16	535	598
Other adjustments		(1,654)	(5,037)
Net increase/(decrease) in operating assets		60,570	63,685
Financial assets held-for-trading		21,520	46,227
Non-trading financial assets mandatorily at fair value through profit or loss		(205)	(177)
Financial assets designated at fair value through profit or loss		72	(980)
Financial assets at fair value through other comprehensive income		300	5,309
Financial assets at amortized cost		43,432	14,701
Other operating assets		(4,549)	(1,395)
Net increase/(decrease) in operating liabilities		41,114	27,479
Financial liabilities held-for-trading		17,736	23,097
Financial liabilities designated at fair value through profit or loss		5,318	(3,921)
Financial liabilities at amortized cost		21,100	11,839
Other operating liabilities		(3,040)	(3,536)
Income tax recovered/(paid)		(862)	(591)
B. CASH FLOWS FROM INVESTING ACTIVITIES		4,979	6,629
Payments		4,231	2,915
Tangible assets	15	447	438
Intangible assets	16	196	221
Investments	13	3,588	2,256
Subsidiaries and other business units		—	—
Non-current assets held for sale and associated liabilities		—	—
Other payments related to investing activities		—	—
Proceeds		9,210	9,544
Tangible assets	15	205	164
Intangible assets	16	—	—
Investments	13 & 36	8,788	9,226
Subsidiaries and other business units		—	—
Non-current assets held for sale and associated liabilities		217	154
Other proceeds related to investing activities		—	—
C. CASH FLOW FROM FINANCING ACTIVITIES		(13,227)	(5,313)
Payments		15,657	11,423
Dividends	4	3,341	3,017
Subordinated liabilities	21	8,310	3,615
Redemption of own equity instruments		—	751
Acquisition of own equity instruments		3,865	3,740
Other payments related to financing activities		141	300
Proceeds		2,430	6,110
Subordinated liabilities	21	1,852	5,625
Issuance of own equity instruments		—	—
Disposal of own equity instruments		578	485
Other proceeds related to financing activities		—	—
D. EFFECT OF FOREIGN EXCHANGE RATE CHANGES		(4,099)	2,256

11

	Note	2025	2024 A
E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS		(22,671)	(27,563)
F. CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR		97,457	125,020
G. CASH AND CASH EQUIVALENTS AT END OF THE YEAR		74,786	97,457
MEMORANDUM ITEMS
COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR
Cash		1,278	1,318
Cash equivalents at central banks		72,163	94,613
Other financial assets		1,345	1,526
TOTAL OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR		74,786	97,457

A. Presented for comparison purposes only (note 1.d).

The accompanying notes 1 to 50 and appendices are an integral part of the statement of cash flows for the year ended 31 December 2025.

12

Translation of annual accounts originally issued in

Spanish and prepared in accordance with the regulatory

financial reporting framework applicable to Banco

Santander in Spain (see notes 1 to 50). In case of

discrepancy, the Spanish version prevails.

Banco

Santander,

S.A.

Notes to the financial statements (annual accounts) for

the year ended 31 December 2025

1. Introduction, basis of

presentation of the financial

statements (annual accounts)

and other information

a) Introduction

Banco Santander, S.A. ('the Bank' or 'Banco Santander'),

is a private-law entity subject to the rules and

regulations applicable to banks operating in Spain,

where it was constituted and currently maintains its

legal domicile, which is paseo de Pereda, numbers 9 to

12, 39004, Santander, Spain.

The principal headquarters of Banco Santander are

located in Ciudad Grupo Santander, Avenida Cantabria s/

n, 28660, Boadilla del Monte, Madrid, Spain.

The corporate purpose of Banco Santander, S.A. mainly

entails carrying out all kinds of activities, operations and

services inherent to the banking business in general and

permitted by current legislation, and the acquisition,

holding, enjoyment and disposal of all kinds of

securities.

In addition to the operations carried on directly by it,

Banco Santander is the head of a group of subsidiaries

that engage in various business activities and which

compose, together with it, Grupo Santander ('Grupo

Santander' or 'the Group'). Therefore, Banco Santander is

obliged to prepare, in addition to its own separate

financial statements, the Group's consolidated financial

statements, which also include the interests in joint

ventures and investments in associates.

Banco Santander financial statements for 2024 were

approved by the shareholders at the group´s annual

general meeting on 4 April 2025. The Group's 2025

consolidated financial statements, the financial

statements of Banco Santander and of substantially all

the Group companies have not been approved yet by

their shareholders at the respective annual general

meetings. However, Banco Santander board of directors

considers that the aforementioned financial statements

will be approved without any significant changes.

Appendix VII includes the list of agents that assist Banco

Santander on the performance of its business activities in

Spain.

b) Basis of presentation of the financial statements

(annual accounts)

Banco Santander financial statements for the year

ended 2025 have been authorised by the Bank’s

directors (at the Board of Directors meeting on 24

February, 2026 ) in accordance with Bank of Spain

Circular 4/2017 and subsequent amendments, and

Spanish corporate and commercial law applicable to the

Bank, using the accounting policies and measurement

criteria applied by the Bank as set forth in note 2,

accordingly, they present fairly the Bank’s equity and

financial position at 31 December 2025 and 2024,

results of its operations, recognized revenue and

expense, changes in total equity and cash flows

pertaining 2025 and 2024. These annual accounts have

been prepared on the basis of the accounting records

held by Banco Santander.

The notes to the financial statements contain additional

information to that presented in the balance sheet,

income statement, statement of recognised income and

expense, statement of changes in total equity and

statement of cash flows. The notes provide, in a clear,

relevant, reliable and comparable manner, narrative

descriptions and breakdowns of these statements.

The figures of the annual accounts are presented in

millions of euros unless another alternative monetary

unit is indicated, rounded to the nearest million unit.

Adoption of new standards and related

interpretations

The following is a summary of the main Bank of Spain

Circulars issued that became applicable to Banco 

Santander in financial year 2025:

On 29 December, Circular 1/2025, dated 19 December,

issued by the Bank of Spain, was published. This Circular

amends Circular 4/2017, of 27 November, addressed to

credit institutions, on public and confidential financial

reporting rules and financial statement templates, and

Circular 1/2013, of 24 May, concerning the information

provided through the Central Credit Register.

13

This Circular amends Circular 4/2017, of 27 November,

in order to maintain appropriate alignment with the

International Financial Reporting Standards as adopted

by the European Union (EU IFRSs), in accordance with the

provisions of the Spanish Commercial Code, thereby

avoiding the application of divergent accounting criteria

between the separate and consolidated financial

statements, with a phased entry into force starting in

2026.

Furthermore, the Circular revises the requirements

relating to credit risk coverage for country risk,

introduces minor clarifications and technical corrections,

and updates the confidential financial statement

templates in order to adapt them to the supervisory and

information needs of the Bank of Spain.

No significant effects on the Bank’s annual financial

statements have arisen from the application of this

Circular, as its adoptions will become effective from 1

January 2026.

c)  Use of accounting estimates

The results and the determination of  equity are sensitive

to the accounting policies, measurement bases and

estimates used by Banco Santander in preparing the

financial statements.

The main accounting policies and measurement bases

are set forth in note 2.

In the financial statements estimates were occasionally

made by the senior management of Banco Santander in

order to quantify certain of the assets, liabilities, income,

expenses and obligations reported herein. These

estimates, which were made on the basis of the best

information available, relate basically to the following:

• The impairment losses on certain assets: it applies to

financial assets at fair value through other

comprehensive income, financial assets at amortised

cost, non-current assets held for sale, investments,

tangible assets and intangible assets ( see notes 6, 7,  

10, 12, 13, 15, 16 and 50).

• The assumptions used in the actuarial calculation of

the post-employment benefit liabilities and

commitments and other obligations (see note 23).

• The useful life of the tangible and intangible assets

(see notes 15 and 16).

• Assessment of the impairment of investments in

group, joint venture and associated entities (see note

13).

• The measurement of the impairment in goodwill

(see note 16).

• The calculation of provisions and the consideration of

contingent liabilities (see note 23).

• The fair value of certain unquoted assets and

liabilities (see notes 6, 7, 8, 9, 10, 11, 18, 19 and 20).

• The recoverability of deferred tax assets (see note

24).

• The fair value of the identifiable assets acquired and

the liabilities assumed in business combinations

(see note 3).

To update the previous estimates, the Bank's

management has taken into account the current

macroeconomic scenario, characterized by persistent

geopolitical tensions and changing financial conditions,

as well as the evolution of monetary and fiscal policies in

major economies. The analysis also considers

developments in interest rates, credit spreads, and

currency movements, along with labor market trends in

the geographies where the Bank operates.

The Bank´s management has evaluated in particular the

uncertainties caused by the current environment in

relation to credit risk, maintaining active oversight of

clients in geographies and sectors more exposed to

international trade tensions, global geopolitical

uncertainty and the impact of public debt containment

policies or fiscal stimulus measures, liquidity and market

risks, taking into account the best available information,

to estimate the impact on the credit portfolio's

impairment provision, and in the debt instruments'

interest rates and valuation, developing in the notes the

main estimates made during the period ended December

31, 2025 (see notes 10, 13, 48 and 50).

Although these estimates have been made on the basis

of the best information available at the end of the year

2025, and considering information updated at the date

of preparation of these annual accounts, it is possible

that events that may take place in the future may make

it necessary to modify them (upwards or downwards) in

the coming years, which would be done, if appropriate,

in a prospective manner, recognising the effects of the

change in estimate in the corresponding income

statement.

d) Comparative information

The information contained in the 2025 annual accounts

for the 2024 financial year is presented, solely and

exclusively, for comparison with the information relating

to 2025.

The information in the income statement from 2024 

has been restated, as a result of the agreement for the

sale of Santander Bank Polska S.A. by the Bank, as

required by IFRS 5(see notes 3 and 12, as well as the rest

of the notes of the profit and loss account).

14

e) Capital management

i. Regulatory and economic capital

Credit institutions must comply with a set of minimum

capital and liquidity requirements. These minimum

requirements are regulated by the European Capital

Requirements Regulation (CRR), which is directly

applicable within the Spanish legal framework, and by

the Capital Requirements Directive (CRD).

On 19 June 2024, the final texts of the update to the

banking package were published in the Official Journal

of the European Union: Regulation (EU) 2024/1623

(hereinafter, CRR 3), which amends the CRR with regard

to requirements for credit risk, credit valuation

adjustment risk, operational risk, market risk and the

floor on risk-weighted assets (known as the output

floor), as well as Directive (EU) 2024/1619 (hereinafter,

CRD VI), which amends the CRD as regards supervisory

powers, sanctions, third-country branches, and

environmental, social and governance risks.

The update to the banking package aims, on the one

hand, to implement the final Basel III reforms and, on

the other, to strengthen the harmonisation of banking

supervision within the European Union (EU).

CRR 3, applicable since 1 January 2025, introduce

greater risk sensitivity into standardised approaches,

reduce the variability of risk-weighted assets among

banks using internal models to calculate capital

requirements, and enhance comparability across banks.

Under CRD VI, the ambition to achieve more robust

supervision and to safeguard financial stability is

reflected in a set of rules affecting fit-and-proper

requirements, an extended scope resulting from the

revision of certain definitions, and new provisions

regarding the establishment of third-country branches in

the EU, with the aim of achieving greater regulatory

harmonisation and improved supervision of this type of

entity.

Although most CRR 3 provisions apply since 1 January

2025, for certain provisions the regulator has

established a gradual implementation (phase-in) period

until 2030 in order to give the industry sufficient time to

build up the capital required to meet the requirements

on a fully loaded basis.

Regarding Market Risk, the European Commission and

the European Parliament have approved an additional

12-month delay to the entry into force of the new

market risk capital framework, or FRTB, until 1 January

2027. Beyond this date, the CRR 3 does not allow for any

further delay, as postponements are limited to two

years. This delay also covers other provisions, such as

the separation between the trading book and the

banking book, the internal risk transfer regime, etc.

The CRR 3/CRD VI package contains 140 mandates for

the EBA to develop Level 2 or Level 3 legislation

(regulatory technical standards, implementing technical

standards and guidelines—RTS, ITS and GL, for their

acronyms) and to issue opinions and reports to further

specify certain aspects of the regulation. In this context,

the EBA published its roadmap (EBA Roadmap) at the

end of 2023, structuring the implementation of the

banking package around four sequential phases, under

which the authority will address the various mandates in

an orderly manner based on their latest legal application

dates (up to four years after the entry into force of CRR 3

and CRD VI). In addition, at the end of 2024, the EBA

published its 2025 work programme, setting out the

guidelines for addressing these mandates during the

year. This has resulted in the publication of various

consultations throughout the year on RTS, ITS and

Guidelines, such as, for example:

– Regulatory Technical Standards (RTS) on off-

balance-sheet exposures and unconditionally

cancellable commitments

– Regulatory Technical Standards (RTS) on

material changes to IRB models and model

extensions

– Revision of the Guidelines on the revised

definition of default

– Regulatory Technical Standards (RTS) and

Implementing Technical Standards (ITS) on

operational risk

In its 2025 Work Programme, the EBA undertook, among

other initiatives, the revision of the SREP Guidelines, the

consultation for which was published on 24 October,

with the aim of updating them based on three pillars:

legislative changes (CRR 3 and CRD VI, IRRBB/CSRBB,

DORA, etc.), lessons learned, and structural changes

intended to improve the usability of the Guidelines. The

consultation period was set to run until early February

2026, and following the conclusion of the consultation

process, the Guidelines are expected to enter into force

on 1 January 2027.

On 28 July 2025, the ECB published a revised version of

its Guide to Internal Models, with the objective of

reflecting the regulatory changes introduced by CRR 3 in

relation to internal models for credit, counterparty credit

and market risk; clarifying supervisory expectations for

internal models that make use of machine learning; and

enhancing transparency and supervisory harmonisation.

This revision builds on the experience accumulated by

the ECB since the first publication of the Guide in 2019.

15

On 25 July 2025, the ECB also published the final Guide

on Options and Discretions, following a consultation

process launched in November 2024. The Guide

introduces clarifications and adjustments to the

treatment of market risk and operational risk, as well as

to the conditions under which minority interests may be

included in group capital, among other aspects.

Regarding resolution regulation, institutions are required

to maintain an adequate funding structure to ensure

that, in the event of financial distress, they hold

sufficient liabilities to absorb losses and either restore

viability or be resolved while safeguarding depositor

protection and financial stability. To this end, global

systemically important institutions are subject to

minimum loss-absorbing capacity requirements, namely

Total Loss-Absorbing Capacity (TLAC) and the Minimum

Requirement for own funds and Eligible Liabilities

(MREL), as regulated under CRR 3 and the Bank Recovery

and Resolution Directive (BRRD).

On 25 October 2022, a regulation on the prudential

treatment of global systemically important institutions

was published, amending both the CRR and the BRRD

with respect to the prudential treatment of G-SIBs with a

multiple point of entry (MPE) resolution strategy, as well

as the methods for the indirect subscription of eligible

instruments (daisy chains) for the purpose of meeting

MREL requirements. This regulation, known as the

Resolution 'Quick Fix', pursues two main objectives:

• The inclusion in the BRRD and CRR 3 of references to

third-country subsidiaries allowing for adjustments to

the deduction for holdings of TLAC instruments issued

by such subsidiaries, based on excess TLAC/MREL at

subsidiary level, as well as adjustments in cases where

the aggregate own funds and eligible liabilities

requirements of a G-SIB under an MPE strategy exceed

the theoretical requirements of the same group under

a single point of entry (SPE) strategy. This adjustment

is therefore based on a comparison between the two

possible resolution strategies.

• The introduction of a deduction regime for holdings of

MREL instruments through entities within the same

resolution group other than the resolution entity. The

Regulation establishes a deduction at the level of the

intermediate entity within the daisy chain that

repurchases the instruments. As a result, the

intermediate entity is required to issue an equivalent

amount, thereby transferring internal MREL needs to

the resolution entity, which will cover them with

external MREL.

In this context, in 2025 the EBA published the Final

Report on the draft Implementing Technical Standards

(ITS) on resolution planning, aimed at further

harmonising reporting requirements.

Regarding Deposit Guarantee Schemes (DGS), these are

regulated under the Deposit Guarantee Schemes

Directive (DGSD), which has not undergone substantial

amendments since its publication in 2014. The Directive

aims to harmonise DGS across Member States to ensure

stability and consistency across countries. It establishes

an appropriate framework to improve depositor access

to DGS through a clear scope of coverage, short

repayment periods, enhanced information, and robust

funding requirements. The Directive has been

transposed into Spanish law through Royal Decree

2606/1996, as amended by Royal Decree 1041/2021.

To ensure the protection of depositors, DGS collect

financial resources through contributions from their

members, which must be paid at least annually. These

annual contributions are determined based on the

number of covered deposits and the risk profile of the

institutions affiliated with the DGS. The methodology for

calculating contributions is set out in the EBA Guidelines

(EBA/GL/2023/02).

In June 2025, the Council and the European Parliament

reached a political agreement, which still needs to be

finalized at a technical level as a prerequisite for its final

formal approval.

Within the sustainability field from a prudential

perspective, the implementation of the CRR 3/CRD VI

package has progressed, introducing specific

requirements to integrate environmental, social and

governance (ESG) risks into the prudential framework.

With the aim of assessing whether a specific prudential

treatment is warranted, the CRR establishes three

mandates: to assess the availability of ESG risk data; to

evaluate the effective risk profile of exposures affected

by environmental or social factors; and to analyse the

potential effects on financial stability of differentiated

prudential treatment, with a view to possible legislative

proposals by 31 December 2026.

In addition, the CRR 3/CRD VI package introduces

disclosure requirements on ESG risks, reporting of ESG

risk exposures to competent authorities, and an

obligation for institutions to develop specific plans for

managing financial risks arising from ESG factors,

including those related to transition trends.

16

In this context, the EBA published in January 2025 the

Guidelines on the Management of ESG Risks, fulfilling

the CRD VI mandate to structurally integrate ESG risks

into the European prudential framework. These

Guidelines set out minimum standards and reference

methodologies for the identification, measurement,

management and monitoring of ESG risks, as well as

their proper integration into internal governance

processes, risk appetite frameworks and strategic

planning. The Guidelines also specify minimum

requirements for the development of transition plans,

which must include metrics, quantifiable targets and

time-bound milestones aligned with institutions’

sustainability strategies and prudential requirements.

Their application will be mandatory from 11 January

2026, consolidating a prudential framework that

strengthens the systematic consideration of ESG risks in

supervisory and risk management processes.

At the international level, the Basel Committee on

Banking Supervision (BCBS) has continued to advance

work on ESG-related standards. In June 2025, the

Committee published a voluntary framework for the

disclosure of climate-related financial risks, aimed at

guiding internationally active banks in the provision of

qualitative and quantitative information on their

exposures to physical and transition risks. The

framework acknowledges the still nascent state of

climate data availability, consistency and quality, and

therefore adopts a flexible approach that allows for the

use of different metrics and methodologies. While its

adoption will depend on jurisdictional decisions, the

Committee considers this framework an important step

towards enhancing transparency and international

comparability of climate risk disclosures and intends to

monitor its implementation with a view to potential

future revisions.

In the digital field, due to the increase in international

crypto assets activities, the EU is moving forward with

the integration of Basel standards on crypto-assets

through the mandate set out in CRR 3, which will enable

the establishment of a harmonised prudential treatment

once the legislative process is completed. In fulfilment

of the CRR 3 mandate, the EBA has finalised and

published the draft Regulatory Technical Standards (RTS)

applicable to the calculation of own funds requirements

for crypto-asset exposures.

At 31 December 2025 the Bank met the minimum capital

requirements established by current legislation (see

note 50.d). Additionally, it should be noted that the

Group has filed an appeal with the Court of Justice of the

European Union (CJEU) requesting the annulment of a

decision by the European Central Bank (ECB) related to

the treatment of deferred tax assets generated at Banco

Santander Brasil, which, if resolved favourably, would

have a positive impact of approximately 20 basis points

on the Group's CET1, using the amounts at the end of the

year.

f) Environmental impact

In view of the business activities carried on by the Group

entities, and therefore the Bank, do not have any

environmental liability, expenses, assets, provisions or

contingencies that might be material with respect to its

financial position or results (see note 50.a).

g) Customer Care Service Annual Report

As required by the Article 17 of Ministry of Economy

Order ECO/734/2004, of 11 March, on the services and

departments of Customer Service and the Customer

Ombudsmen of Financial Institutions, the annual report

will be submitted by the Head of the department to the

board meeting held on March 2026 is summarised in the

directors' report.

h) Deposit Guarantee Fund, National Resolution

Fund and Single Resolution Fund

i. Deposit Guarantee Fund

Banco Santander participates in the Deposit Guarantee

Fund (DGF). The annual contribution to be made by the

entities to this fund, established by Royal Decree - Law

16/2011 of October 14, by which the DGF is created in

accordance with the wording given by the Tenth Final

Disposition of Law 11/2015 of June 18 on Recovery and

Resolution of credit institutions and investment services

companies (in force since June 20, 2015), is determined

by the Management Committee of the DGF and is

established based on the guaranteed deposits of each

entity and their risk profile. The annual contribution to be

made by the entities to this fund is determined by the

Management Committee of the FGD, and consists of the

contribution based on the guaranteed deposits of each

entity corrected for their risk profile, which includes the

phase of the economic cycle and the impact of pro-

cyclical contributions, according to section 3 of article 6

of the Royal Decree-Law 16/2011.

The purpose of the FGD is to guarantee deposits, both

monetary and in securities, in credit institutions up to the

limit set forth in the mentioned Royal Decree-Law. The

expense incurred by the contributions accrued to this

organism in the year 2025 has amounted to EUR 14

million (EUR 16 million in the year 2024), after the

required amount by the current legislation has been

reached, which are recorded under ‘Other operating

expenses’ in the profit and loss account attached (see

note 41).

17

ii. National Resolution Fund

Law 11/2015 regulates the creation of the National

Resolution Fund, whose financial resources should

reach, by 31 December 2024, at least 1% of the amount

of secured deposits, through contributions from credit

institutions and investment firms established in Spain.

The details of the calculation of contributions to this

Fund is regulated by Commission Delegated Regulation

(EU) 2015/63 of 21 October 2014 and is calculated by

the Orderly Banking Resolution Fund, on the basis of the

information provided by each entity.

iii. Single Resolution Fund

On January 1, 2016, the Single Resolution Fund (SRF),

which was implemented by Regulation (EU) No.

806/2014 of the European Parliament and of the

Council, became operational. The rules governing the

banking union provide that banks will pay contributions

to the SRF over eight years.

The Single Resolution Board (SRB) is responsible for

calculating the contributions to be made by credit

institutions and investment firms to the SRF. These

contributions are based, as of fiscal year 2016, on: (a) a

flat-rate contribution (or base annual contribution), pro

rata with respect to the total liabilities, excluding own

funds, guaranteed deposits of all institutions authorized

in the territory of the participating member states; and

(b) a risk-adjusted contribution, which will be based on

the criteria set out in Article 103(7) of Directive 2014/59/

EU, taking into account the principle of proportionality,

without creating distortions between structures of the

banking sector of the member states. The amount of this

contribution will accrue from the 2016 financial year, on

an annual basis.

During 2025 it was confirmed that no call for

contributions to the SRF would be issued for this year, so

there has been no expenditure incurred in 2025 for

contributions made to the National Resolution Fund and

the Single Resolution Fund (as was also the case in

2024).

Likewise, in 2023 Banco Santander acquired an

Irrevocable Payment Commitment (IPC) in favor of the

Single Resolution Fund for EUR 120 million. This

commitment is guaranteed by constituting a cash

deposit of the same amount, delivered as a guarantee

that was recorded in the Balance Sheet Assets for which,

in accordance with the standard, no provision has been

recorded.

i) Merger by absorption

On 24 June 2025, the boards of directors of Banco

Santander, S.A. (as the absorbing company) and of URO

Property Holdings, S.A., Blecno Investments, S.L.U.,

Emisora Santander España, S.A.U. and Elevate Tech

Platforms, S.L.U. (as the absorbed companies) drew up

and executed the common draft terms of merger by

absorption.

On 12 September 2025, the Extraordinary General

Meeting of Shareholders of URO Property Holdings, S.A.

approved the merger on the terms and conditions set out

in the draft merger. Pursuant to the provisions of Articles

53.1, 54 and 55 of Royal Decree-Law 5/2023 of 28 June,

transposing European Union Directives on structural

modifications of commercial companies (“RDLME”),

approval of this merger by the general meetings (or,

where applicable, by the sole partner or sole

shareholder) of the remaining absorbed companies was

not required, as they were wholly owned by Banco

Santander, S.A. Likewise, approval by the shareholders’

meeting of Banco Santander, S.A. was not required, as it

was not requested by shareholders representing at least

1% of the share capital, in accordance with Article 55.1

of the RDLME. Consequently, the board of directors of

Banco Santander, S.A., at its meeting of 24 June 2025,

approved the common draft terms of merger, as well as

the merger contemplated therein.

Once the requisite authorisations had been obtained, on

28 January 2026 the corresponding merger deed was

executed and, upon its registration with the Commercial

Registers of Madrid and Cantabria, URO Property

Holdings, S.A., Blecno Investments, S.L.U., Emisora

Santander España, S.A.U. and Elevate Tech Platforms,

S.L.U. were dissolved and wound up without liquidation,

and the entirety of their respective assets and liabilities

was transferred en bloc, by universal succession, to

Banco Santander, S.A., which acquired them by universal

succession and without interruption. It should be noted

that, for accounting purposes, the merger was

recognised by Banco Santander, S.A. in the 2025

financial year.

As the absorbed companies were wholly owned by

Banco Santander, S.A., directly or, in the case of URO

Property Holdings, S.A., with an ownership interest of

more than 90%, in accordance with Articles 53 and 54 of

the RDLME, the Bank did not increase its share capital.

Upon the merger becoming effective on 28 January

2026, all the shares and equity interests of the absorbed

companies were fully redeemed, extinguished and

cancelled.

The merger balance sheets were deemed to be those

included in the annual accounts for the financial year

ended 31 December 2024, drawn up by the

management bodies of each of the companies

participating in the merger. The merger balance sheets

of Banco Santander, S.A., URO Property Holdings, S.A.,

Blecno Investments, S.L.U. and Emisora Santander

España, S.A.U. were duly verified by their respective

auditors.

In accordance with the applicable accounting

regulations, for accounting purposes 1 January 2025 was

set as the date from which the operations of the

absorbed companies were deemed to have been carried

out by Banco Santander, S.A.

18

Furthermore, the transaction constitutes a merger as

regulated in Article 76.1(c) of Law 27/2014 of 27

November on Corporate Income Tax (“LIS”). In

accordance with Article 89.1 of the LIS, the merger was

subject to the tax regime set out in Chapter VII of Title VII

and in the Second Additional Provision of the LIS, as well

as in Articles 19.2.1 and 45, paragraph I.B.10, of the

Consolidated Text of the Law on Transfer Tax and Stamp

Duty, approved by Royal Legislative Decree 1/1993 of 24

September. The information required under Article 86.1

of the aforementioned Law in relation to the merger is

included in these annual accounts (Annex VI).

Set out below are the balance sheets of the absorbed

companies as at 31 December 2024:

URO PROPERTY HOLDINGS, S.A. - (Thousand euros)

ASSETS	2024	EQUITY AND LIABILITIES	2024
NON-CURRENT ASSETS	1,402,337	EQUITY	108,063
Investment property	1,340,383	OWN FUNDS	108,063
Long-term financial investments	29,623	Share capital	8,998
Deferred tax assets	32,331	Share premium	417,179
		Reserves	269,608
		Treasury shares	(14)
		Profit/(loss) from prior years	(525,965)
		Other contributions from shareholders	5,900
		Profit/(loss) for the year	(67,643)
		NON-CURRENT LIABILITIES	1,482,856
		Long-term borrowings	13,391
		Long-term borrowings from group companies and associates	1,416,644
		Long-term accruals and deferred income	52,821
CURRENT ASSETS	323,790	CURRENT LIABILITIES	135,208
Trade and other receivables	1,009	Short-term provisions	107,721
Short-term financial investments	190,398	Short-term borrowings	7
Short-term investments in group companies and associates	148	Short-term borrowings from group companies and associates	15,463
Cash and cash equivalents	132,235	Trade and other payables	1,622
		Short-term accruals and deferred income	10,395
TOTAL ASSETS	1,726,127	TOTAL EQUITY AND LIABILITIES	1,726,127

BLECNO INVESTMENT, S.L.U. - (Thousand euros)

ASSETS	2024	EQUITY AND LIABILITIES	2024
NON-CURRENT ASSETS	225,515	EQUITY	172,932
Investment property	223,639	OWN FUNDS	172,932
Long-term financial investments	1,876	Share capital	22,243
		Share premium	149,405
		Reserves	4,449
		Profit/(loss) for the year	(3,165)
		NON-CURRENT LIABILITIES	2,178
		Long-term borrowings	2,178
CURRENT ASSETS	7,153	CURRENT LIABILITIES	57,558
Trade and other receivables	42	Short-term borrowings from group companies and associates	36,882
Cash and cash equivalents	7,111	Trade and other payables	995
		Short-term accruals and deferred income	19,681
TOTAL ASSETS	232,668	TOTAL EQUITY AND LIABILITIES	232,668

EMISORA SANTANDER ESPAÑA, S.A.U. - (Thousand

euros)

ASSETS	2024	EQUITY AND LIABILITIES	2024
NON-CURRENT ASSETS	10	EQUITY	1,639
Deferred tax assets	10	OWN FUNDS	1,639
		Share capital	1,653
		Reserves	284
		Profit/(loss) from prior years	(319)
		Profit/(loss) for the year	21
CURRENT ASSETS	1,656	CURRENT LIABILITIES	27
Short-term investments in group companies and associates	10	Trade and other payables	27
Cash and cash equivalents	1,646
TOTAL ASSETS	1,666	TOTAL EQUITY AND LIABILITIES	1,666

19

ELEVATE TECH PLATFORMS, S.L.U.-(Thousand euros)

ASSETS	2024	EQUITY AND LIABILITIES	2024
NON-CURRENT ASSETS	994	EQUITY	1,024
Long-term investments in group companies and associates	991	OWN FUNDS	1,024
Deferred tax assets	3	Share capital	3
		Profit/(loss) from prior years	(3,155)
		Other contributions from shareholders	2,350
		Profit/(loss) for the year	1,826
CURRENT ASSETS	30	CURRENT LIABILITIES	—
Short-term investments in group companies and associates	2
Cash and cash equivalents	28
TOTAL ASSETS	1,024	TOTAL EQUITY AND LIABILITIES	1,024

In accordance with the provisions of the applicable

regulations, as a result of the accounting record of the

aforementioned merger by absorption transaction

carried out by the Bank in the financial year 2024, an

increase in the Bank's voluntary reserves in that year

amounted to 166 million euros was evident due to the

decline in the participation of the companies acquired

(see note 29).

j) Events after the reporting period

On 9 January 2026, after obtaining the necessary

regulatory approvals and fulfilling the conditions for

closing, the Group completed the sale of 49% of the

share capital of Santander Bank Polska S.A. and 50% of

the share capital of Santander Towarzystwo Funduszy

Inwestycyjnych S.A. (TFI, the asset management

business in Poland) to Erste Group Bank AG for a total

cash amount of approximately EUR 7,000 million.

Santander holds the 9.7% of Santander Polska's share

capital.

The transaction resulted in the loss of effective control

over the entity, and therefore, effective as of 9 January

2026, Santander Bank Polska S.A. has been reclassified

to the portfolio of equity instruments measured at fair

value through other comprehensive income as from that

date.

Additionally, on 3 February 2026, Banco Santander, S.A.

('Santander') announced that it had reached an

agreement to acquire Webster Financial Corporation

('Webster'), the parent company of Webster Bank, N.A.,

for approximately USD 12,200 million (around EUR

10,300 million). Webster shareholders will receive USD

48.75 in cash and 2.0548 Santander shares for each

Webster share, resulting in a total consideration of USD

75 per Webster share. Completion of the transaction is

expected to take place in the second half of 2026 subject

to the customary conditions for this type of operations,

including obtaining the relevant regulatory approvals

and the approvals of both Webster's and Santander's

shareholders.

2. Accounting policies

The following accounting principles, policies and

measurement criteria have been applied in the

preparation of the financial statements:

a) Foreign currency transactions

Banco Santander’s functional and presentation currency

is the euro.   Therefore, all balances and transactions

denominated in currencies other than the euro are

deemed to be denominated in foreign currency.

The balances in the financial statements whose

functional currency is not the euro are translated to

euros as follows:

• Assets and liabilities, at the closing rates.

• Income and expenses, at the average exchange rates

for the year.

• Equity items, at the historical exchange rates.

In general, balances denominated in foreign currencies,

including those branches in countries outside the

Monetary Union, have been converted to euros using the

official average exchange rates of the Spanish spot

currency market (through the US dollar's quotation on

local markets, for non-monetary currencies listed on the

Spanish market) at the end of each fiscal year.

20

The exchange differences arising on the translation of

foreign currency balances to the functional currency are

generally recognised at their net amount under

'Exchange differences, net' in the income statement,

except for exchange differences arising on financial

instruments at fair value through profit or loss, which

are recognised in the income statement without

distinguishing them from other changes in fair value,

and for exchange differences arising on non-monetary

items measured at fair value through equity, which are

recognised under 'Other comprehensive income–Items

that may be reclassified to profit or loss–Exchange

differences' except for exchange differences on equity

instruments, where the option to irrevocably elect to be

measured at fair value through changes in accumulated

other comprehensive income, which are recognised in

accumulated 'Other Comprehensive Income - Items not

to be reclassified to profit or loss - Changes in fair value

of equity instruments measured at fair value' through

other comprehensive income (see note 25).

b) Investments in subsidiaries, joint ventures and

associates

Group entities are those over which the Bank has the

capacity to exercise control; capacity which is generally

but not exclusively manifested by the direct or indirect

ownership of at least 50% of the voting rights of the

investees or, even if this percentage is lower or zero, if,

as in the case of agreements with their shareholders, the

Bank is granted such control.

Control is understood to be the power to direct the

financial and operating policies, by law, by statute or by

agreement, of an entity in order to obtain benefits from

its activities.

Joint ventures are deemed to be entities that are not

subsidiaries but which are jointly controlled by two or

more unrelated entities. This is evidenced by contractual

arrangements whereby two or more parties have

interests in entities so that decisions about the relevant

activities require the unanimous consent of all the

parties sharing control.

Associates are entities over which Banco Santander is in

a position to exercise significant influence, but not

control or joint control. It is presumed that Banco

Santander exercises significant influence if it holds 20%

or more of the voting power of the investee.

The shareholdings in group, multi-group and associated

entities, are presented on the balance sheet at their net

acquisition cost of any impairments that, where relevant,

those shares may have suffered.

Where there is evidence of impairment of these shares,

the amount of such deterioration is equivalent to the

difference between their recoverable amount and their

book value. Impairment losses are recorded under the

heading ‘Impairment or reversal of impairment of

investments in subsidiaries, joint ventures and

associates’ in the profit and loss account.

Appendices I and II contain significant information on

these companies. In addition, note 13 provides

information on the most significant acquisitions and

disposals in 2025 and 2024.

c) Classification of financial instruments

A financial instrument is any contract that gives rise to a

financial asset of one entity and a financial liability or an

equity instrument of another entity.

The following transactions are not treated for accounting

purposes as financial instruments:

• Investments in subsidiaries, associates and joint

venture when accounted for using the equity method

in accordance with IAS 28 (see note 13).

• Rights and obligations under employee benefit plans

recognized in accordance with IAS 19 (see note 23).

• Contracts and obligations relating to employee

remuneration based on own equity instruments

accounted for in accordance with IFRS 2   (see

note 30).

i. Classification of financial assets for measurement

purposes

Financial assets are classified into the various categories

used for management and measurement purposes,

unless they have to be presented as 'Non-current assets

held for sale' or they relate to 'Cash, cash balances at

central banks and other deposits on demand', 'Changes

in the fair value of hedged items in portfolio hedges of

interest rate risk (asset side)', 'Hedging derivatives and

Investments', which are reported separately.

Classification of financial instruments: the classification

criteria for financial assets depends on the business

model for their management and the characteristics of

their contractual flows.

Banco Santander´s business models refer to the way in

which it manages its financial assets to generate cash

flows. In defining these models , the Bank takes into

account the following factors:

• How key entity staff are assessed and reported on

the performance of the business model and the

financial assets held in the business model.

• The risks that affect the performance of the business

model (and the financial assets held in the business

model) and, specifically, the way in which these risks

are managed.

• The way in which business managers are

remunerated.

• The frequency, the calendar and volume of sales in

previous years, as well as expectations of future

sales and the reasons of the sales.

21

The analysis of the characteristics of the contractual cash

flows of financial assets requires an assessment of the

congruence of these flows with a basic loan agreement.

Banco Santander determines if the contractual cash

flows of its financial assets that are only principal and

interest payments on the outstanding principal amount

at the beginning of the transaction. This analysis takes

into consideration four factors (performance, contractual

clauses, contractually linked products and currencies).

Furthermore, among the most significant judgements

used by  Banco Santander in carrying out this analysis,

the following ones are included:

• The return on the financial asset, in particular in

cases of periodic interest rate adjustments where the

term of the reference rate does not coincide with the

frequency of the adjustment. In these cases, an

assessment is made to determine whether or not the

contractual cash flows differ significantly from the

flows without this change in the time value of

money, establishing a tolerance level of 5%.

• When contractual clauses that may modify the cash

flows of the financial asset exist, the structure of the

cash flows before and after the activation of such

clauses is analysed, regardless of the probability of

occurrence of the contingent event. The evaluation of

contractual flows of financial assets with

characteristics associated with ESG (Environmental,

Social and Governance) is included in this analysis.

• Financial assets whose cash flows have different

priority for payment due to a contractual link to

underlying assets (e.g. securitization instruments or

similar structures) require a look-through analysis by

the Bank so as to review that both the financial asset

and the underlying assets are only principal and

interest payments and that the exposure to credit

risk of analyzed segment does not exceed the

average exposure of the underlying assets of the

instrument.

Depending on these factors, the financial assets classify

for measurement as: (i) at amortised cost, (ii) at fair

value with changes in other comprehensive income or

(iii) at fair value with changes through profit and loss.

Bank of Spain Circular 4/2017 also establishes an option

to irrevocably designate an instrument at fair value with

changes in profit or loss, when doing so eliminates or

significantly reduces a measurement or recognition

inconsistency (sometimes referred to as 'accounting

asymmetry') that would otherwise arise from measuring

assets or liabilities or recognising gains and losses on

different bases.

Banco Santander uses the following criteria for the

classification of the financial debt instruments:

• Amortised cost: financial instruments managed

under a business model whose objective is to hold

the financial assets to collect contractual principal

and interest flows. This category includes

instruments for which there are no frequent or

significant unjustified sales and fair value is not a key

element in the management of these assets and

contractual conditions they give rise to cash flows on

specific dates, which are only payments of principal

and interest on the outstanding principal amount. In

this sense, justified sales are considered to be those

related to an (i) increase in the credit risk of the

asset, (ii) unanticipated funding needs (stress case

scenarios) and (iii) those close to maturity .

Additionally, the characteristics of its contractual

flows represent substantially a 'basic financing

agreement'.

• Fair value with changes in other comprehensive

income: financial instruments held in a business

model whose objective is to collect principal and

interest cash flows and the sale of these assets,

where fair value is a relevant factor in their

management. Additionally, the contractual cash flow

characteristics substantially represent a 'basic

financing agreement'.

• Fair value with changes in profit or loss: financial

instruments included in a business model different

from the above, where fair value is a key element in

the management of these assets, and the contractual

flows of the financial instruments do not

substantially represent a 'basic financing

agreement'. In this section it can be enclosed the

portfolios classified under 'Financial assets held for

trading', 'Non-trading financial assets mandatorily at

fair value through profit or loss' and 'Financial assets

at fair value through profit or loss'. In this regard,

most of the financial assets presented in the

category of 'Financial assets designated at value

reasonable with change in results' are instruments

financial services that, not being part of the portfolio

of negotiation, are contracted jointly with other

financial instruments that are recorded in the

category of 'held for trading', and that by both are

recorded at fair value with changes in results, so your

record in any other category would produce

accounting asymmetries.

Equity instruments will be classified at fair value under

Bank of Spain Circular 4/2017 with changes in profit or

loss, unless the Bank, decides, for non-trading assets, to

classify them at fair value with changes in other

comprehensive income (irrevocably) at initial

recognition.

22

ii. Classification of financial assets for presentation

purposes

Financial assets are classified by nature into the

following items in the balance sheet:

• Cash, cash balances at Central Banks and other

deposits on demand: cash balances and balances

receivable on demand relating to deposits with

central banks and other credit institutions.

• Loans and advances: includes the debit balances of

all credit and loans granted by the Bank, other than

those represented by securities or securitized, as

well as the finance lease receivables and other debit

balances of a financial nature in favour of the Bank,

such as cheques drawn on credit institutions,

balances receivable from clearing houses and

settlement agencies for transactions on the stock

exchange and organised markets, bonds given in

cash, capital calls, fees and commissions receivable

for financial guarantees and debit balances arising

from transactions not originating in banking

transactions and services, such as the collection of

rentals and similar items. They are classified, on the

basis of the institutional sector to which the debtor

belongs, into:

– Central banks: credit of any nature, including

deposits and money market transactions

received from the Bank of Spain or other central

banks.

– Credit institutions: credit of any nature, including

deposits and money market transactions, in the

name of credit institutions.

– Customers: includes the remaining credit,

including money market transactions through

central counterparties.

• Debt securities: bonds and other securities that

represent a debt for their issuer, that that accrue

interest or equivalent returns implemented in

securities or in book entries.

• Equity instruments: financial instruments issued by

other entities, such as shares, which have the nature

of equity instruments for the issuer, other than

investments in subsidiaries, joint ventures or

associates. Investment fund units are included in this

item.

• Derivatives: includes the fair value in favour of the

Bank of derivatives which do not form part of hedge

accounting, including embedded derivatives

separated from hybrid financial instruments.

• Repurchase agreements and reverse repurchase

agreements: Purchases of financial instruments

under a non-optional resale (repurchase) agreement

at a fixed price (repos) are recognised in the

consolidated balance sheet as financing granted,

based on the nature of the debtor, under 'Loans and

advances with central banks', 'Loans and advances to

credit institutions' or 'Loans and advances to

customers. Differences between the purchase and

sale prices are recognised as interest over the

contract term.

• Changes in the fair value of hedged items in portfolio

hedges of interest rate risk: this item is the balancing

entry for the amounts credited to the income

statement in respect of the measurement of the

portfolios of financial instruments which are

effectively hedged against interest rate risk through

fair value hedging derivatives.

• Hedging derivatives: Includes the fair value in favour

of the Bank derivatives, including embedded

derivatives separated from hybrid financial

instruments, designated as hedging instruments in

hedge accounting.

iii. Classification of financial liabilities for

measurement purposes

Financial liabilities are initially classified into the various

categories used for management and measurement

purposes, unless they have to be presented as 'Liabilities

associated with non-current assets held for sale' or they

relate to 'Hedging derivatives' or the changes in the fair

value of hedged items in portfolio hedges of interest rate

risk (liability side), which are reported separately.

In most cases, changes in the fair value of financial

liabilities designated at fair value through profit or loss,

caused by the entity's credit risk, are recognized in other

comprehensive income, unless this treatment results in

an accounting asymmetry, in which case the full effect is

recognized in the profit or loss for the period.

Financial liabilities are included for measurement

purposes in one of the following categories:

• Financial liabilities held for trading (at fair value

through profit or loss): this category includes

financial liabilities incurred for the purpose of

generating a profit in the near term from fluctuations

in their prices, financial derivatives not designated in

accounting hedging relationships, and financial

liabilities arising from the outright sale of financial

assets temporarily acquired or received on loan

(short positions).

23

• Financial liabilities designated at fair value through

profit or loss: financial liabilities are included in this

category when they provide more relevant

information, either because this eliminates or

significantly reduces recognition or measurement

inconsistencies (accounting mismatches) that would

otherwise arise from measuring assets or liabilities

or recognising the gains or losses on them on

different bases, or because a group of financial

liabilities or financial assets and liabilities is

managed and its performance is evaluated on a fair

value basis, in accordance with a documented risk

management or investment strategy, and

information about the group is provided on that basis

to the Bank's key management personnel.

Liabilities may only be included in this category on

the date when they are incurred or originated.

• Financial liabilities at amortised cost: financial

liabilities, irrespective of their instrumentation and

maturity, not included in any of the above-

mentioned categories which arise from the ordinary

borrowing activities carried on by financial

institutions.

iv. Classification of financial liabilities for

presentation purposes

Financial liabilities are classified by nature into the

following items in the balance sheet:

• Deposits: includes all repayable balances received in

cash by the Bank, other than those instrumented as

marketable securities and those having the

substance of subordinated liabilities (amount of the

loans received, which for credit priority purposes are

after common creditors), except for the debt

instruments issued. This item also includes cash

bonds and cash consignments received the amount

of which may be invested without restriction.

Deposits are classified on the basis of the creditor’s

institutional sector into:

– Central banks: deposits of any nature, including

credit received and money market transactions

received from the Bank of Spain or other central

banks.

– Credit institutions: deposits of any nature,

including credit received and money market

transactions in the name of credit institutions.

– Customer: includes the remaining deposits,

including money market transactions through

central counterparties.

• Marketable debt securities: includes the amount of

bonds, debentures and other debt represented by

marketable securities, other than those having the

substance of subordinated liabilities (amount of the

loans received, which for credit priority purposes are

after common creditors, and includes the amount of

the financial instruments issued by the Bank which,

having the legal nature of capital, do not meet the

requirements to qualify as equity, such as certain

preferred shares issued). This item includes the

component that has the consideration of financial

liability of the securities issued that are compound

financial instruments.

▪ Derivatives: includes the fair value, with a negative

balance for Banco Santander, separated from the

host contract, which do not form part of hedge

accounting.

• Short positions: includes the amount of financial

liabilities arising from the outright sale of financial

assets acquired under reverse repurchase

agreements or borrowed.

▪ Other financial liabilities: includes the amount of

payment obligations having the nature of financial

liabilities not included in other items (includes,

among others, the balance of lease liabilities

recognized in accordance with IFRS 16), and

liabilities under financial guarantee contracts, unless

they have been classified as non-performing.

▪ Repurchase agreements and reverse repurchase

agreements: Sales of financial instruments under a

non-optional resale (repurchase) agreement at a

fixed price (repos) are recognised in the consolidated

balance sheet as financing received, based on the

nature of the creditor, under 'Deposits from central

banks', 'Deposits from credit institutions' or

'Customer deposits'. Differences between the

purchase and sale prices is recorded as interest

accrued over the life of the contract, using the

effective interest rate method..

• Changes in the fair value of hedged items in portfolio

hedges of interest rate risk: this item is the balancing

entry for the amounts charged to the income

statement in respect of the measurement of the

portfolios of financial instruments which are

effectively hedged against interest rate risk through

fair value hedging derivatives.

▪ Hedging derivatives: includes the fair value of the

Bank’s liability in respect of derivatives, including

embedded derivatives separated from hybrid

financial instruments, designated as hedging

instruments in hedge accounting.

24

▪ The preference shares contingently convertible into

ordinary shares eligible as Additional Tier 1 capital

(PPCC) -perpetual shares, which may be repurchased

by the issuer in certain circumstances, the interest on

which is discretionary, and would convert into

variable number of newly issued ordinary shares if

the capital ratio of the Bank or its consolidated group

falls below a given percentage (trigger event), as

those two terms are defined in the related issue

prospectuses are recognised for accounting purposes

by the Bank as compound instruments in accordance

with IAS 32. The liability component reflects the

issuer’s obligation to deliver a variable number of

shares and the equity component reflects the issuer’s

discretion in relation to the payment of the related

coupons. In order to effect the initial allocation, the

Bank estimates the fair value of the liability as the

amount that would have to be delivered if the trigger

event were to occur immediately and, accordingly,

the equity component, calculated as the residual

amount, is zero. In view of the aforementioned

discretionary nature of the payment of the coupons,

they are deducted directly from equity.

▪ Capital perpetual preference shares (PPCA), with the

possibility of purchase by the issuer in certain

circumstances, whose remuneration is discretionary,

and which will be amortised permanently, totally or

partially, in the event that the bank or its

consolidated group submits a capital ratio lesser

than a certain percentage (trigger event), as defined

in the corresponding prospectuses, are accounted for

by the Bank as equity instruments.

▪ Derivatives embedded in other financial instruments

or in other host contracts are accounted for

separately as derivatives if their risks and

characteristics are not closely related to those of the

host contracts, provided that the host contracts are

not classified as financial assets/liabilities

designated at fair value through profit or loss or as

'Financial assets/liabilities held for trading'.

d) Measurement of financial assets and liabilities

and recognition of fair value changes

In general, financial assets and liabilities are initially

recognised at fair value which, in the absence of

evidence to the contrary, is deemed to be the transaction

price.

In this regard, Bank of Spain Circular 4/2017 states that

regular way purchases or sales of financial assets shall

be recognised and derecognised on the trade date or on

the settlement date. Banco Santander has opted to make

such recognition on the trading date or settlement date,

depending on the convention of each of the markets in

which the transactions are carried out. For example, in

relation to the purchase or sale of debt securities or

equity instruments traded in the Spanish market,

securities market regulations stipulate their effective

transfer at the time of settlement and, therefore, the

same time has been established for the accounting

record to be made.

The fair value of instruments not measured at fair value

through profit and loss is adjusted by transaction costs.

Subsequently, and on the occasion of each accounting

close, they are valued in accordance with the following

criteria:

i. Measurement of financial assets

Financial assets are measured at fair value are valued

mainly at their fair value without deducting any

transaction cost for their sale.

The fair value of a financial instrument on a given date is

taken to be the price that would be received to sell an

asset or paid to transfer a liability in an orderly

transaction between market participants. The most

objective and common reference for the fair value of a

financial instrument is the price that would be paid for it

on an active, transparent and deep market (quoted price

or market price). At 31 December 2025, there were no

significant investments in quoted financial instruments

that had ceased to be recognised at their quoted price

because their market could not be deemed to be active.

If there is no market price for a given financial

instrument, its fair value is estimated on the basis of the

price established in recent transactions involving similar

instruments and, in the absence thereof, of valuation

techniques commonly used by the international financial

community, taking into account the specific features of

the instrument to be measured and, particularly, the

various types of risk associated with it.

All derivatives are recognised in the balance sheet at fair

value from the trade date. If the fair value is positive,

they are recognised as an asset and if the fair value is

negative, they are recognised as a liability. The fair value

on the trade date is deemed, in the absence of evidence

to the contrary, to be the transaction price. The changes

in the fair value of derivatives from the trade date are

recorded in the   income statement. Specifically,  the fair

value of financial derivatives traded in organised

markets included in the portfolios of financial assets or

liabilities held for trading is deemed to be their daily

quoted price and if, for exceptional reasons, the quoted

price cannot be determined on a given date, these

financial derivatives are measured using methods similar

to those used to measure derivatives.

25

The fair value of derivatives is taken to be the sum of the

future cash flows arising from the instrument,

discounted to present value at the date of measurement

(present value or theoretical close) using valuation

techniques commonly used by the financial markets: net

present value, option pricing models and other methods.

The amount of debt securities and loans and advances

under a business model whose objective is to collect the

principal and interest flows are valued at their amortised

cost, as long as they comply with the 'SPPI' (Solely

Payments of Principal and Interest) test, using the

effective interest rate method in their determination.

Amortised cost refers to the acquisition cost of a

corrected financial asset or liability (more or less, as the

case may be) for repayments of principal and the part

systematically charged to the income statement of the

difference between the initial cost and the

corresponding reimbursement value at expiration. In the

case of financial assets, the amortised cost includes, in

addition, the corrections to their value due to the

impairment. In the loans and advances covered in fair

value hedging transactions, the changes that occur in

their fair value related to the risk or the risks covered in

these hedging transactions are recorded.

The effective interest rate is the discount rate that

exactly matches the carrying amount of a financial

instrument to all its estimated cash flows of all kinds

over its remaining life.

For fixed rate financial instruments, the effective interest

rate coincides with the contractual interest rate

established on the acquisition date plus, where

applicable, the fees and transaction costs that, because

of their nature, form part of their financial return. In the

case of floating rate financial instruments, the effective

interest rate coincides with the rate of return prevailing

in all connections until the next benchmark interest reset

date.

Equity instruments and contracts related with these

instruments are measured at fair value. However, in

certain circumstances the Bank estimates cost value as a

suitable estimate of the fair value. This can happen if the

recent event available information is not enough to

measure the fair value or if there is a broad range of

possible measures and the cost value represents the

best estimates of fair value within this range.

The amounts at which the financial assets are recognised

represent, in all material respects, the Bank´s maximum

exposure to credit risk at each reporting date. Also Banco

Santander has received collateral and other credit

enhancements to mitigate its exposure to credit risk,

which consist mainly of mortgage guarantees, cash

collateral, equity instruments and personal security,

assets leased out under finance lease and full-service

lease agreements, assets acquired under repurchase

agreements, securities loans and credit derivatives.

ii. Measurement of financial liabilities

In general, financial liabilities are measured at amortised

cost, as defined above, except for those included under

'Financial liabilities held for trading' and 'Financial

liabilities designated at fair value through profit or loss'

and financial liabilities designated as hedged items (or

hedging instruments) in fair value hedges, which are

measured at fair value. The changes in credit risk arising

from financial liabilities designated at fair value through

profit or loss are recognised in accumulated other

comprehensive income, unless they generate or increase

an accounting mismatch, in which case changes in the

fair value of the financial liability in all respects are

recognised in the income statement.

iii. Valuation techniques

The financial instruments at fair value determined on the

basis of published price quotations in active markets

(level 1) include government debt securities, private-

sector debt securities, derivatives traded in organised

markets, securitised assets, shares, short positions and

fixed-income securities issued.

In cases where price quotations cannot be observed,

management makes its best estimate of the price that

the market would set, using its own internal models,

described in note 48. In most cases, these internal

models use data based on observable market

parameters as significant inputs (level 2) and, in cases,

they use significant inputs not observable in market data

(level 3). In order to make these estimates, various

techniques are employed, including the extrapolation of

observable market data. The best evidence of the fair

value of a financial instrument on initial recognition is

the transaction price, unless the fair value of the

instrument can be obtained from other market

transactions performed with the same or similar

instruments or can be measured by using a valuation

technique in which the variables used include only

observable market data, mainly interest rates.

iv. Recognition of fair value changes

As a general rule, changes in the carrying amount of

financial assets and liabilities are recognised in the

income statement. A distinction is made between the

changes resulting from the accrual of interest and

similar items, (which are recognised under Interest

income or Interest expense, as appropriate), and those

arising for other reasons, which are recognised at their

net amount under 'Gains/losses on financial assets and

liabilities'.

26

Adjustments due to changes in fair value arising from:

• 'Financial assets at fair value with changes in other

comprehensive income' are recorded temporarily, in

the case of debt instruments in 'Other comprehensive

income - Elements that can be reclassified to profit or

loss - Financial assets at fair value with changes in

other comprehensive income', while in the case of

equity instruments are recorded in 'other

comprehensive income - Elements that will not be

reclassified to line item - Changes in the fair value of

equity instruments valued at fair value with changes in

other comprehensive income'.

Exchange differences on debt instruments measured at

fair value with changes in other comprehensive income

are recognised under 'Exchange Differences, net' of the

income statement. Exchange differences on equity

instruments, in which the irrevocable option of being

measured at fair value with changes in other

comprehensive income has been chosen, are

recognised in 'Other comprehensive income - Items

that will not be reclassified to profit or loss - Changes

in the fair value of equity instruments measured at fair

value with changes in other comprehensive income'.

• Items charged or credited to 'Items that may be

reclassified to profit or loss – Financial assets at fair

value through other comprehensive income' and

'Other comprehensive income – Items that may be

reclassified to profit or loss – Exchange differences in

equity' remain in the Bank´s equity until the asset

giving rise to them is impaired or derecognised, at

which time they are recognised in the income

statement.

• Unrealized capital gains on financial assets at fair

value through other comprehensive income classified

as 'Non-current assets held for sale' because they form

part of a disposal group or a discontinued operation

that  are recorded in the equity balancing entry 'Other

accumulated comprehensive income - Items that can

be reclassified in income - Non-current assets as held

for sale.

v. Hedging transactions

The objective of hedge accounting is to represent in the

financial statements the effect of an entity's risk

management activities when it uses financial

instruments to manage exposures arising from specific

risks that could affect profit or loss or other

comprehensive income (in the case of investments in

equity instruments for which the entity has opted to

represent changes in the fair value of other

comprehensive income).

As described in Note 1.b, the Group has adopted IFRS 9

for hedge accounting prospectively, while continuing to

apply IAS 39 for fair value hedges in portfolios where the

hedged risk is interest rate risk. This change has not

resulted in any modifications to the accounting

treatment of hedges designated under IAS 39, which

remain unchanged in both their designation and

accounting treatment

For a hedging relationship to meet the requirements set

out in Bank of Spain Circular 4/2017, it must meet the

following conditions:

1. Instruments that can be designated as hedging

instruments include all derivative financial

instruments or non-derivative financial instruments

measured at fair value through profit or loss, or a

combination thereof. In the case of foreign exchange

risk hedges, any type of non-derivative financial

instrument can also be designated, regardless of its

measurement method.

2. Items that can be designated as covered items are all

those that are recognized assets or liabilities, firm

commitments, highly probable anticipated

transactions, and net investments abroad.

3. At the start of coverage, a formal designation and

documentation of the hedging relationship must be

made, which will include the entity's risk management

strategy and objective, identification of the hedging

instrument and the covered item, the nature of the

covered risk, the methodology for measuring

effectiveness, which includes an analysis of the

sources of ineffectiveness, and the coverage ratio.

The main sources of ineffectiveness based on the risk

covered are:

a. Interest rate risk: mismatches in time horizons,

principal, repricing and payment dates, time value

of options, modifications in the hedged item or the

hedging instrument.

b. Exchange rate risk: in addition to the above, the

difference between the interest rates of the two

currencies that represents the net cost or benefit of

switching cash flows between two currencies with

different interest rates.

4. The hedging relationship must be effective, for which

there must be an economic relationship between the

hedged item and the hedging instrument, credit risk

must not have a dominant effect on changes in the

value of the economic relationship between the

hedging instrument and the hedged item, and the

hedging ratio must coincide with that used by the

entity in its management.

27

The Group assesses these effectiveness requirements, at

the time of designation and on each submission date,

through:

• The economic relationship between the hedged item

and the hedging instrument is demonstrated through a

qualitative test, and in the event of non-compliance,

through quantitative tests that compare the market

value of the hedged items—corresponding to the

hedged risk—and the hedging instruments. Likewise, a

quantitative analysis of variations in the market values

of the hedging instrument and the hedged item is

performed prospectively.

• The hedge ratio is determined based on the proportion

between the amount of the hedged item and the

amount of the instrument actually designated by the

Group in each hedging relationship.

• The credit risk domain assessment is performed

through an analysis of the credit exposure of the

hedged items and the hedging instruments.

Accounting hedges are classified and recorded according

to the type of risk they cover, based on the following

criteria:

• Fair value hedges: These are hedges against exposure

to changes in the fair value of the hedged item,

attributable to a specific risk.

The differences arising from both the hedging

instruments and the hedged items (due to the hedged

risk) are recognized directly in the profit and loss

account.

When the fair value hedge is discontinued, the

adjustments previously recorded in the hedged item are

charged to profit or loss using the effective interest rate

method recalculated at the date the hedge ceases to be

covered, and must be fully amortized at maturity.

In fair value hedges of interest rate risk of a portfolio of

financial instruments (macro hedges), regulated by IAS

39, the gains or losses arising from the valuation of the

hedging instruments are recognized directly in the profit

and loss account, while the gains or losses due to

changes in the fair value of the hedged amount

(attributable to the hedged risk) are recognized in the

profit and loss account using as a counterpart the

headings 'Changes in the fair value of hedged items' of a

portfolio with interest rate risk hedge (asset or liability),

as appropriate.

• Cash flow hedges: These are hedges against exposure

to changes in cash flows attributable to a specific risk

associated with the hedged item.

The effective portion of the change in the value of the

hedging instrument is temporarily recorded in the

equity account 'Other accumulated comprehensive

income - Items that may be reclassified in profit or loss

- Hedging derivatives. Cash flow hedges (effective

portion)' until the hedged item affects profit or loss.

From that point onward, it will be recorded in the profit

or loss account for the same period as the hedged

item, except in cases where it is required to be included

in the cost of the non-financial asset or liability, or the

anticipated transactions are ultimately recognized as

non-financial assets or liabilities.

When cash flow hedges are discontinued, the

accumulated result of the hedging instrument

recognized in the equity heading 'Other accumulated

global result' (while the hedge was effective) will

continue to be recognized in that heading until the

hedged transaction occurs, at which time it will be

recorded in profit or loss, unless it is expected that the

transaction will not take place, in which case it is

recorded immediately in profit or loss.

• Net investment hedges of a foreign operation: This is a

hedge of the amount corresponding to the reporting

entity's share of the net assets of said operation.

The effective portion of the hedging instrument is

temporarily recorded in the equity account 'Other

accumulated comprehensive income - Items that may

be reclassified in profit or loss - Net investment

hedges' in foreign operations until the gains or losses

on the hedged item are recognized in profit or loss.

To measure ineffectiveness,the Bank compares the

valuation of the hedging instrument with the valuation

of the hedged item based on the hedged risk, using

different methodologies such as the proxy method or the

hypothetical derivative method. The ineffective portion

of the cash flow and net investment hedge relationships

in foreign operations is recorded directly in the profit and

loss account, under the heading 'Net gains or losses

from hedge accounting'.

The Bank discontinues accounting for hedging

relationships when the hedging instrument expires, is

sold, or when the hedging relationship becomes

ineffective because it is no longer aligned with the risk

management objective. In that case, the derivative is

then treated as a trading derivative.

If a hedging relationship ceases to meet the

effectiveness requirements, but the risk management

objective remains, the Bank will assess whether to

rebalance or adjust the hedging ratio to meet the

effectiveness requirements again without discontinuing

the hedging relationship.

28

A hedging instrument is generally designated in its

entirety, as the factors contributing to its fair value are

interdependent. However, IFRS 9 allows certain parts of

a hedging instrument to be excluded from its fair value:

a. Separating the intrinsic value and the time value of an

option and designating only the intrinsic element as

the hedging instrument, which is mandatory if the

intrinsic value is designated;

b. Separating the forward and spot elements of a

forward contract and designating only the spot

element as the hedging instrument, which will be

determined for each hedging relationship. and

c. Separate the foreign currency basis spread of a

currency derivative and exclude it from the

designation of the hedging instrument, as determined

for each hedging relationship.

Separating these components will improve the

effectiveness of the hedge and allows for alternative

accounting treatment for the excluded component. This

treatment consists of recording the changes in value

under the heading 'Other accumulated comprehensive

income – Undesignated items' and recording this

component in the profit or loss statement, depending on

the nature of the hedged item, either over a period of

time or at the time the hedged transaction occurs.

Additionally, if the entity manages the credit risk of all or

part of a financial instrument through the use of credit

derivatives, there is the option of designating a fair value

credit exposure through profit or loss, provided that the

derivative matches the name and priority of the financial

instrument being hedged. This designation may be made

at the initial recognition of the designated financial

instrument or subsequently, with the designation being

documented. From its designation, fair value variations

(for all its risks, not exclusively credit risk) will be

recorded in the profit and loss account.

e) Derecognition of financial assets and liabilities

The accounting treatment of transfers of financial assets

depends on the extent to which the risks and rewards

associated with the transferred assets are transferred to

third parties:

1. If the Bank transfers substantially all the risks and

rewards to third parties unconditional -sale of

financial assets, sale of financial assets under an

agreement to repurchase them at their fair value at

the date of repurchase, sale of financial assets with a

purchased call option or written put option that is

deeply out of the money, securitisation of assets in

which the transferor does not retain a subordinated

debt or grant any credit enhancement to the new

holders, and other similar cases-, the transferred

financial asset is derecognised and any rights or

obligations retained or created in the transfer are

recognised simultaneously.

2. If the Bank retains substantially all the risks and

rewards associated with the transferred financial

asset -sale of financial assets under an agreement to

repurchase them at a fixed price or at the sale price

plus interest, a securities lending agreement in

which the borrower undertakes to return the same or

similar assets, and other similar cases-, the

transferred financial asset is not derecognised and

continues to be measured by the same criteria as

those used before the transfer. In this case, the

following items are recognised:

a. An associated financial liability, which is

recognised for an amount equal to the

consideration received and is subsequently

measured at amortised cost, unless it meets the

requirements for classification under 'Financial

liabilities designated at fair value through profit

or loss'.

b. The income from the transferred financial asset

not derecognised and any expense incurred on

the new financial liability, without offsetting.

3. If the Bank neither transfers nor retains substantially

all the risks and rewards associated with the

transferred financial asset -sale of financial assets

with a purchased call option or written put option

that is not deeply in or out of the money,

securitisation of assets in which the transferor

retains a subordinated debt or other type of credit

enhancement for a portion of the transferred asset,

and other similar cases- the following distinction is

made:

a. If the transferor does not retain control of the

transferred financial asset, the asset is

derecognised and any rights or obligations

retained or created in the transfer are recognised.

b. If the transferor retains control of the transferred

financial asset, it continues to recognise it for an

amount equal to its exposure to changes in value

and recognises a financial liability associated

with the transferred financial asset. The net

carrying amount of the transferred asset and the

associated liability is the amortised cost of the

rights and obligations retained, if the transferred

asset is measured at amortised cost, or the fair

value of the rights and obligations retained, if the

transferred asset is measured at fair value.

Accordingly, financial assets are only derecognised when

the rights to the cash flows they generate have expired

or when substantially all the inherent risks and rewards

have been transferred to third parties. Similarly, financial

liabilities are only derecognised when the obligations

they generate have been extinguished or when they are

acquired with the intention either to cancel them or to

resell them.

29

Regarding contractual modifications of financial assets,

the Bank distinguishes two main categories depending

on whether the new conditions result in the disposal of

the asset (and recognition of a new one) or imply the

continuation of the original instrument with the new

modified terms:

• Contractual modifications for commercial or market

reasons, which are generally carried out at the

request of the debtor to apply current market

conditions to the debt. The new contract is

considered a new transaction and, consequently, it is

necessary to derecognize the original financial asset

and recognize a new financial asset subject to the

classification and measurement requirements

established by Bank of Spain Circular 4/2017.  The

new financial asset will be recorded at fair value and,

if applicable, the difference between the carrying

amount of the asset derecognized and the fair value

of the new asset will be recognized in profit or loss.

• Modifications due to refinancing or restructuring, in

which the payment conditions are modified to allow

a customer that is experiencing financial difficulties

(current or foreseeable) to meet its payment

obligations and that, if such modification had not

been made, it would be reasonably certain that it

would not be able to meet such payment obligations.

In this case, the modification does not result in the

derecognition of the financial asset, but rather the

original financial asset is maintained and does not

require a new assessment of its classification and

measurement. When assessing credit impairment,

the current credit risk (considering the modified cash

flows) should be compared with the credit risk at

initial recognition. The gross carrying amount of the

financial asset (the present value of the renegotiated

or modified contractual cash flows that are

discounted at the original effective interest rate of

the financial asset) should be recalculated, with a

gain or loss recognized in profit or loss for the

difference.

f) Offsetting of financial instruments

Financial asset and liability balances are offset, i.e.

reported in the balance sheet at their net amount, only if

the Banco Santander currently have a legally

enforceable right to set off the recognised amounts and

intend either to settle on a net basis, or to realise the

asset and settle the liability simultaneously.

g) Impairment of financial assets

i. Definition

Banco Santander associates an impairment in the value

to financial assets measured at amortised cost, debt

instruments measured at fair value with changes in

other comprehensive income, lease receivables, assets

from contracts and loan commitments and the financial

guarantees issued that are not measured at fair value

through profit or loss.

The impairment for expected credit losses is recorded

with a charge to the income statement for the period in

which the impairment arises. In the event of occurrence,

the recoveries of previously recognised impairment

losses are recorded in the income statement for the

period in which the impairment no longer exists or is

reduced.

In the case of purchased or originated credit-impaired

assets, the Bank only recognizes at the reporting date

the changes in the expected credit losses during the life

of the asset since the initial recognition as a credit loss.

In the case of assets measured at fair value with changes

in other comprehensive income, the changes in the fair

value due to expected credit losses are charged in the

income statement of the year where the change

happened, reflecting the rest of the valuation in other

comprehensive income.

As a rule, the expected credit loss is estimated as the

difference between the contractual cash flows to be

recovered and the expected cash flows discounted using

the original effective interest rate. In the case of

purchased or originated credit-impaired assets, this

difference is discounted using the effective interest rate

adjusted by credit rating.

Depending on the classification of financial instruments,

which is mentioned in the following sections, the

expected credit losses may be along 12 months or during

the life of the financial instrument:

• 12-month expected credit losses: arising from the

potential default events, as defined in the following

sections that are estimated to be likely to occur

within the 12 months following the reporting date.

These losses will be associated with financial assets

classified as 'normal risk' as defined in the following

sections.

• Expected credit losses over the life of the financial

instrument: arising from the potential default events

that are estimated to be likely to occur throughout

the life of the financial instruments. These losses are

associated with financial assets classified as 'normal

risk under watchlist' or 'doubtful risk'.

30

With the purpose of estimating the expected life of the

financial instrument all the contractual terms have been

taken into account (e.g. prepayments, duration, purchase

options, etc.), being the contractual period (including

extension options) the maximum period considered to

measure the expected credit losses. In the case of

financial instruments with an uncertain maturity period

and a component of undrawn commitment (e.g.: credit

cards), the expected life is estimated through

quantitative analyses to determine the period during

which the entity is exposed to credit risk, also

considering the effectiveness of management

procedures that mitigate such exposure (e.g. the ability

to unilaterally cancel such financial instruments, etc.).

The following constitute effective guarantees:

a. Mortgage guarantees on housing as long as they are

first duly constituted and registered in favour of the

entity. The properties include:

i. Buildings and building elements,

distinguishing among:

– Houses.

– Offices, stores and multi-purpose

premises.

– Rest of buildings such as non-multi-

purpose premises and hotels.

ii. Urban and developable ordered land.

iii. Rest of properties that classify as: buildings

and building elements under construction,

such as property development in progress

and halted development, and the rest of land

types, such as rustic lands.

b. Collateral guarantees on financial instruments in the

form of cash deposits, debt securities or equity

instruments issued by creditworthy issuers.

c. Other types of real guarantees, including properties

received in guarantee and second and subsequent

mortgages on properties, as long as the entity

demonstrates its effectiveness. When assessing the

effectiveness of the second and subsequent

mortgages on properties the entity will implement

particularly restrictive criteria. It will take into

account, among others, whether the previous

charges are in favour of the entity itself or not and

the relationship between the risk guaranteed by

them and the property value.

d. Personal guarantees, as well as the incorporation of

new owners, covering the entire amount of the

financial instruments and implying direct and joint

liability to the entity of persons or other entities

whose solvency is sufficiently proven to ensure the

repayment of the loan on the agreed terms.

The different aspects that the Bank considers for the

evaluation of effective guarantees are set out below in

relation to the individual analysis.

ii. Financial instruments presentation

For the purposes of estimating the impairment amount,

and in accordance with its internal policies, the Bank

classifies its financial instruments (financial assets,

commitments and guarantees) measured at amortised

cost or fair value through other comprehensive income

in one of the following categories:

• Normal Risk ('stage 1'): includes all instruments that

do not meet the requirements to be classified in the

rest of the categories.

• Normal risk under watchlist ('stage 2'): includes all

instruments that, without meeting the criteria for

classification as doubtful or default risk, have

experienced significant increases in credit risk since

initial recognition.

In order to determine whether a financial instrument has

increased its credit risk since initial recognition and is to

be classified in stage 2, the Group and the Bank consider

the following criteria:

Quantitative criteria

Changes in the risk of a default occurring through the expected life of the financial instrument are analysed and quantified with respect to its credit level in its initial recognition. With the purpose of determining if such changes are considered as significant, with the consequent classification into stage 2, each Group, and therefore the Bank, unit has defined the quantitative thresholds to consider in each of its portfolios taking into account corporate guidelines ensuring a consistent interpretation in all units. Within the quantitative thresholds, two types are considered: A relative threshold is those that compare current credit quality with credit quality at the time of origination in percentage terms of change. In addition, an absolute threshold compares both references in total terms, calculating the difference between the two. These absolute/relative concepts are used homogeneously (with different values) in all geographies. The use of one type of threshold or another (or both) is determined in accordance with the process described in note 50, below, and is marked by the type of portfolio and characteristics such as the starting point of the average credit quality of the portfolio.

Qualitative criteria

In addition to the quantitative criteria indicated, various indicators are used that are aligned with those used by the Bank in the normal management of credit risk. Irregular positions of more than 30 days and renewals are common criteria applied by the Bank and common to all the Group's  units. Also, each unit can define other qualitative indicators, for each of its portfolios, according to the particularities and normal management practices in line with the policies currently in force (i.e. use of management alerts, etc.). The use of these qualitative criteria is complemented with the use of an expert judgement, under the corresponding governance.

31

In the case of forbearances, instruments classified as

'normal risk under watchlist' may be generally

reclassified to 'normal risk' in the following

circumstances: at least two years have elapsed from the

date of reclassification to that category or from its

forbearance date, the client has paid the accrued

principal and interest balance, and the client has no

other instruments with more than 30 days past due

balances.

• Doubtful Risk ('stage 3'): includes financial

instruments, overdue or not, in which, without

meeting the circumstances to classify them in the

category of default risk, there are reasonable doubts

about their total repayment (principal and interests)

by the client in the terms contractually agreed.

Likewise, off-balance-sheet exposures whose

payment is probable and their recovery doubtful are

considered in stage 3. Within this category, two

situations are differentiated:

– Doubtful risk for non-performing loans: financial

instruments, irrespective of the client and

guarantee, with balances more than 90

consecutive days on material arrears for

principal, interest or expenses contractually

agreed.

This category also includes all loan balances for a

client  when the operations with more than 90

consecutive days on material arrears are greater

than 20% of the amounts pending collection.

These instruments may be reclassified to other

categories if, as a result of the collection of part

of the past due balances, the reasons for their

classification in this category do not remain and

the client does not have balances more than 90

consecutive days on material arrears in other

loans.

– Doubtful risk for reasons other than non-

performing loans: this category includes doubtful

recovery financial instruments that are not more

than 90 consecutive days on material arrears.

Banco Santander considers that a financial instrument to

be doubtful for reasons other than delinquency when

one or more combined events have occurred with a

negative impact on the estimated future cash flows of

the financial instrument. To this end, the following

indicators, among others, are considered:

a) Negative net equity or decrease because of losses of

the client's net equity by at least 50% during the last

financial year.

b) Continued losses or significant decrease in revenue

or, in general, in the client's recurring cash flows.

c) Generalised delay in payments or insufficient cash

flows to service debts.

d) Significantly inadequate economic or financial

structure or inability to obtain additional financing by

the client.

e) Existence of an internal or external credit rating

showing that the client is in default.

f) Existence of overdue customer commitments with a

significant amount to public institutions or

employees.

These financial instruments may be reclassified to other

categories if, as a result of an individualised study,

reasonable doubts do not remain about the total

repayment under the contractually agreed terms and the

client does not have balances of 90 days on material

arrears .

In the case of forbearances, instruments classified as

doubtful risk may be reclassified to the category of

'normal risk under watchlist' when the following

circumstances are present: a minimum period of one

year has elapsed from the forbearance date, the client

has paid the accrued principal and interest amounts, and

the client has no other loan balances of 90 days on

material arrears.

• Default Risk: includes all financial assets, or part of

them, for which, after an individualised analysis, their

recovery is considered remote due to a notorious and

irrecoverable deterioration of their solvency.

In any case, except in the case of operations with real

guarantees that cover more than 10% of the amount of

the operation, in general the Bank considers as remote

recovery: the operations of holders that are in the

liquidation phase of the insolvency creditors, doubtful

operations due to delinquency that have been in this

category for more than 4 years and doubtful operations

due to delinquency whose part not covered by real

guarantees has been maintained with 100% credit risk

coverage for more than two years.

A financial asset amount is maintained in the balance

sheet until they are considered as a 'default risk', either

all or a part of it, and the write-off is registered against

the balance sheet.

In the case of operations that have only been partially

derecognised, for forgiveness reasons or because part of

the total balance is considered unrecoverable, the

remaining amount shall be fully classified in the

category of 'doubtful risk', except where duly justified.

The classification of a financial asset, or part of it, as a

'default risk' does not involve the disruption of

negotiations and legal proceedings to recover the

amount.

32

iii. Impairment valuation assessment

Banco Santander has policies, methods and procedures

in place to hedge its credit risk, both due to the

insolvency attributable to counterparties and its

residence in a specific country.

These policies, methods and procedures are applied in

the concession, study and documentation of financial

assets, commitments and guarantees, as well as in the

identification of their impairment and in the calculation

of the amounts needed to cover their credit risk.

The impairment represents the best estimation of the

financial assets expected credit losses at the balance

sheet date, assessed both individually and collectively.

• Individually: for the purposes of estimating the

provisions for credit risk arising from the insolvency of

a financial instrument, the Bank individually assesses

impairment by estimating the expected credit losses

on those financial instruments that are considered to

be significant and with sufficient information to make

such an estimate.

Therefore, this classification mostly includes

wholesale banking customers —Corporations,

specialised financing— as well as some of the largest

companies —Chartered and real estate developers—

from retail banking. The determination of the

perimeter in which the individualised estimate is

applied is detailed in a later section.

The individually assessed impairment estimate is equal

to the difference between the gross carrying amount

of the financial instrument and the estimated value of

the expected cash flows receivable discounted using

the original effective interest rate of the transaction.

The estimate of these cash flows takes into account all

available information on the financial asset and the

effective guarantees associated with that asset. This

estimation process is detailed below.

• Collectively: the Bank also assesses impairment by

estimating the expected credit losses collectively in

cases where they are not assessed on an individual

basis. This includes, for example, loans with

individuals, sole proprietors or businesses in retail

banking  subject to a standardised risk management.

For the purposes of the collective assessment of

expected credit losses, the Bank has consistent and

reliable internal models. For the development of these

models, instruments with similar credit risk

characteristics that are indicative of the debtors'

capacity to pay are considered.

The credit risk characteristics used to group the

instruments are, among others: type of instrument,

debtor's sector of activity, geographical area of activity,

type of guarantee, aging of past due balances and any

other factor relevant to estimating the future cash

flows.

Banco Santander performs retrospective and monitoring

tests to evaluate the reasonableness of the collective

estimate.

On the other hand, the methodology required to

estimate the expected credit loss due to credit events is

based on an unbiased and weighted consideration by the

probability of occurrence of a series of scenarios,

considering a range of three to five possible future

scenarios, which could have an impact on the collection

of contractual cash flows, always taking into account the

time value of money, as well as all available, reasonable

and sustainable information on past events, current

conditions and forecasts of the evolution of

macroeconomic scenarios that are shown to be relevant

for the estimation of this amount (for example: GDP

(Gross Domestic Product), housing price, unemployment

rate, etc.).

The estimation of expected losses requires expert

judgment and the support of historical, current and

future information. The probability of loss is measured

considering past events, the present situation and future

trends of macroeconomic scenarios.

Banco Santander uses forward-looking information in

both internal risk management and prudential

regulation processes, so that for the calculation of the

impairment loss allowance, various scenarios are

incorporated that take advantage of the experience with

such information, thus ensuring consistency in obtaining

the expected loss.

The complexity of the estimation in this exercise has

been derived from the current macroeconomic scenario

as a consequence of the complex geopolitical situation,

as well changes in inflations levels and interest rates,

which has generated uncertainty in economic evolution.

Banco Santander has internally ensured the criteria to be

followed for guarantees received from government

bodies, both through credit lines and other public

guarantees, so that when they are adequately reflected

in each of the contracts, they are recognised as

mitigating factors of the potential expected losses, and

therefore of the provisions to be recognised, based on

the provisions of the applicable standard. Furthermore,

where applicable, these guarantees are appropriately

reflected in the mitigation of the significant increase in

risk, considering their nature as personal guarantees.

For the estimation of the parameters used in the

estimation of impairment provisions -EAD (exposure at

default), PD (probability of default), LGD (loss given

default)-, the Bank based their experience in developing

internal models for the estimation of parameters both in

the regulatory area and for management purposes,

adapting the development of the impairment provision

models under Bank of Spain Circular 4/2017 and

subsequent modifications.

• Exposure at default: is the amount of estimated risk

incurred at the time of the counterparty's analysis.

33

• Probability of default: is the estimated probability that

the counterparty will default on its principal and/or

interest payment obligations.

• Loss given default: is the estimate of the severity of the

loss incurred in the event of non-compliance. It

depends mainly on the updating of the guarantees

associated with the operation and the future cash

flows that are expected to be recovered.

In any case, when estimating the flows expected to be

recovered, portfolio sales are included. It should be

noted that due to the Bank's recovery policy and the

experience observed in relation to the prices of past

sales of assets classified as stage 3 and/or default risk,

there is no substantial divergence between the flows

obtained from recoveries after performing recovery

management of the assets with those obtained from the

sale of portfolios of assets discounting structural

expenses and other costs incurred.

The definition of default implemented by the Bank for

the purpose of calculating the impairment provision

models is based on the definition in Article 178 of

Regulation 575/2013 of the European Union (CRR),

which is fully aligned with the requirements of Bank of

Spain Circular 4/2017, which considers that a 'default'

exists in relation to a specific customer/contract when at

least one of the following circumstances exists: the

entity considers that there are reasonable doubts about

the payment of all its credit obligations or that the

customer/contract is in an irregular situation for more

than 90 consecutive days past due material balances

with respect to any significant credit obligation.

Banco Santander aligned partially and voluntarily during

2022 the accounting definition of Stage 3, as well as the

calculation of impairment provision models, to the New

Definition of Default, incorporating the criteria defined

by the EBA in its implementation guide of the definition

of default, capturing the economic deterioration of the

operations (days in default - on a daily basis - and

materiality thresholds - minimum amount in arrears).

The alignment of criteria was done taking into account

the criteria of IFRS 9 as well as the accounting principles

of unbiased presentation of financial information. Banco

Santander  registered an increase in the default rate at

around 19 basis points, with no material impact on the

provision figures for credit risk.

In addition, the Bank considers the risk generated in all

cross-border transactions due to circumstances other

than the usual commercial risk of insolvency (sovereign

risk, transfer risk or risks arising from international

financial activity, such as wars, natural catastrophes,

balance of payments crisis, etc.).

Bank of Spain Circular 4/2017 includes a series of

practical solutions that can be implemented by entities,

with the aim of facilitating its implementation. In order

to achieve a complete and high-level implementation of

the standard, and following the best practices of the

industry, the  Bank these practical solutions adapting

them to their own characteristics and circumstances:

• Rebuttable presumption that the credit risk has

increased significantly, when payments are more than

30 days past due: this threshold is used as an

additional, but not primary, indicator of significant risk

increase.

• Assets with low credit risk at the reporting date: the

Bank adopts this practice prioritizing its reduced and

punctual use and its systematic and periodic

justification through quantitative evidence.

This information is provided in more detail in note 50.b.

iv. Detail of individual estimate of impairment

For the individual estimate of the assessment for

impairment of the financial asset, the Bank has a specific

methodology to estimate the value of the cash flows

expected to be collected:

• Recovery through the debtor's ordinary activities

(going approach).

• Recovery through the execution and sale of the

collateral guaranteeing the operations (gone

approach).

Gone approach:

a. Evaluation of the effectiveness of guarantees

Banco Santander assesses the effectiveness of all the

guarantees associated considering the following:

• The time required to execute these guarantees.

• Banco Santander's ability to enforce or assert these

guarantees in its favour.

• The existence of limitations imposed by each local unit

´s regulation on the foreclosure of collateral.

Under no circumstances the Bank considers that a

guarantee is effective if its effectiveness depends

substantially on the solvency of the debtor, as could be

the case:

• Promises of shares or other securities of the debtor

himself when their valuation may be significantly

affected by a debtor's default.

• Personal cross-collateralisation: when the guarantor of

a transaction is, at the same time, guaranteed by the

holder of that transaction.

The different types of effective guarantees have been

detailed in section i. Definition

34

b. Valuation of guarantees

Banco Santander assesses the guarantees on the basis of

their nature in accordance with the following:

• Mortgage guarantees on properties associated with

financial instruments, using complete individual

valuations carried out by independent valuation

experts and under generally accepted valuation

standards. If this is not possible, alternative valuations

are used with duly documented and approved internal

valuation models.

• Personal guarantees are valued individually on the

basis of the guarantor´s updated information.

• The rest of the guarantees are valued based on current

market values.

c. Adjustments to the value of guarantees and estimation

of future cash flow inflows and outflows.

Banco Santander applies a series of adjustments to the

value of the guarantees in order to improve the

reference values:

• Adjustments based on the historical sales experience

for certain types of assets.

• Individual expert adjustments based on additional

management information.

Likewise, to adjust the value of the guarantees, the time

value of money is taken into account based on the

historical experience , estimating:

• Period of adjudication.

• Estimated time of sale of the asset.

In addition, the Bank takes into account all those cash

inflows and outflows linked to that guarantee until it is

sold:

• Possible future income commitments in favour of the

borrower which will available after the asset is

awarded.

• Estimated foreclosure costs.

• Asset maintenance costs, taxes and community costs.

• Estimated marketing or sales costs.

Finally, since it is considered that the guarantee will be

sold in the future, the Bank applies an additional

adjustment ('index forward') in order to adjust the value

of the guarantees to future valuation expectations.

v. Impairment individual assessment scope

Banco Santander determines the perimeter over which it

makes an estimate of the assessment for impairment on

an individual basis based on a relevance threshold and

the stage in which the operations are located. In general,

the Bank applies the individualised calculation of

expected losses to the significant exposures classified in

stage 3, although Banco Santander, S.A. has also

extended its analyses to some of the exposures

classified in stage 2.

It should be noted that, in any case and irrespective of

the stage in which their transactions are carried out, for

customers who do not receive standardised treatment, a

relational risk management model is applied, with

individualised treatment and monitoring by the assigned

risk analyst. In addition to wholesale customers

(Santander Corporate & Investment Banking or SCIB) and

large companies, this relational management model

also includes other segments of smaller companies for

which there is information and capacity for more

personalised and expert analysis and monitoring.  As

indicated in the Bank's wholesale credit model, the

individual treatment of the client facilitates the

continuous updating of information. The risk assumed

must be followed and monitored throughout its life

cycle, enabling anticipation and action to be taken in the

event of possible impairments. In this way, the

customer's credit quality is analysed individually, taking

into account specific aspects such as his competitive

position, financial performance, management, etc. In the

wholesale risk management model, every customer with

a credit risk position is assigned a rating, which has an

associated probability of customer default.

Thus, individual analysis of the debtor triggers a specific

rating for each customer, which determines the

appropriate parameters for calculating the expected

loss, so that it is the rating itself that initially modulates

the necessary coverage, adjusting the severity of the

possible loss to the guarantees and other mitigating

factors that the customer may have available. In

addition, if as a result of this individualised monitoring of

the customer, the analyst finally considers that his

coverage is not sufficient, he has the necessary

mechanisms to adjust it under his expert judgement,

always under the appropriate governance.

¹ The assets in a situation of 'stopped development' are included under 'land.

35

h) ‘Non-current assets’ and ‘liabilities associated

with non-current assets held for sale’

Non-current assets held for sale' includes the carrying

amount of individual items, disposal groups or items

forming part of a business unit earmarked for disposal

(discontinued operations), whose sale in their present

condition is highly likely to be completed within one year

from the reporting date. Therefore, the recovery of the

carrying amount of these items -which can be of a

financial nature or otherwise- will foreseeably be

effected through the proceeds from their disposal.

Specifically, property or other non-current assets

received by Banco Santander as total or partial

settlement of their debtors’ payment obligations to them

are deemed to be 'Non-current assets held for sale',

unless the Bank has decided to make continuing use of

these assets. 'Liabilities associated with non-current

assets held for sale' includes the balances payable

arising from the assets held for sale or disposal groups

and from discontinued operations.

'Non-current assets and disposal groups of items that

have been classified as held for sale' are generally

recognised at the date of their allocation to this category

and are subsequently valued at the lower of their fair

value less costs to sell or its book value. 'Non-current

assets and disposal groups of items that are classified as

held for sale' are not amortised as long as they remain in

this category.

The valuation of the portfolio of non-current assets held

for sale has been made in compliance with the

requirements of Bank of Spain Circular 4/2017 , and

subsequent amendments, in relation to the estimate of

the fair value of tangible assets and the value-in-use of

financial assets.

The value of the portfolio is determined as the sum of

the values of the individual elements that compose the

portfolio, without considering any total or batch

grouping in order to correct the individual values.

For the purposes of its consideration in initial

recognition, the Bank obtains, at the time of award, the

fair value of the corresponding asset by requesting an

appraisal from external valuation agencies.

Banco Santander has in place a corporate policy that

ensures the professional competence and the

independence and objectivity of the external appraisal

agencies, in accordance with the regulations, which

require appraisal agencies to meet independence,

neutrality and credibility requirements, so that the use of

their estimates does not reduce the reliability of its

valuations.

This policy establishes that all the appraisal companies

and agencies with which the Bank works in Spain should

be registered in the Official Register of the Bank of Spain

and that the appraisals performed by them should

follow the methodology established in Order

ECO/805/2003, of 27 March. The main appraisal

companies and agencies with which the Bank worked in

2025 are as follows: Tinsa Tasaciones Inmobiliarias,

S.A.U., Sociedad de Tasación, S.A., Global Valuation,

S.A.U., Instituto de Valoraciones, S.A., Euroevaluaciones,

S.A. and Valoraciones Mediterráneo, S.A.

At 31 December 2025 the fair value minus the costs to

sell of non-current assets held for sale exceeded their

carrying amount by EUR 172 million (EUR 161 million in

2024); however, in accordance with the applicable

legislation, this unrealised gain could not be recognised.

Banco Santander, in compliance with Bank of Spain

Circular 4/2017 , and subsequent amendments, on public

and private financial reporting standards and financial

statement models, has developed a methodology that

enables it to estimate the fair value and costs of sale of

assets foreclosed or received in payment of debts. This

methodology is based on the classification of the

portfolio of foreclosed assets into different segments.

Segmentation enables the intrinsic characteristics of

Banco Santander's portfolio of foreclosed assets to be

differentiated, so that assets with homogeneous

characteristics are grouped by segment.

Thus, the portfolio is segmented into (i) finished assets

of a residential and tertiary nature, (ii) developments in

progress and (iii) land 1 .

In determining the critical segments in the overall

portfolio, assets are classified on the basis of the nature

of the asset and its stage of development. This

segmentation is made in order to seek the liquidation of

the asset (which should be carried out in the shortest

possible time).

When making decisions, the situation and/or

characteristics of the asset are fundamentally taken into

account, as well as the evaluation of all the determining

factors that favour the recovery of the debt. For them,

the following aspects are analyzed, among others:

• The time that has elapsed since the adjudication.

• The transferability and contingencies of the

foreclosed asset.

• The economic viability from the real estate point of

view with the necessary investment estimate.

• The expenses that may arise from the marketing

process.

• The offers received, as well as the difficulties in

finding buyers.

² Assets qualified as protected housing are taken into account. The maximum legal value of these assets is determined by the VPO module, obtained from the

result of multiplying the State Basic Module (MBE) by a zone coefficient determined by each autonomous community. To carry out the valuation of a protected

property, the useful surface area is used in accordance with current regulations.

36

In the case of real estate assets foreclosed in Spain,

which represent 76% of the Group’s total non-current

assets held for sale, the valuation of the portfolio is

carried out by applying the following models:

• Market Value Model used in the valuation of finished

properties of a residential nature (mainly homes and

car parks) and properties of a tertiary nature (offices,

commercial premises and multipurpose buildings).

For the valuation of finished assets whose

availability for sale is immediate, a market sale value

provided by a third party external to Banco Santander

is considered, calculated under the AVM

methodology by the comparable properties method

adjusted by our experience in selling similar assets,

given the term, price, volume, trend in the value of

these assets and the time elapsing until their sale

and discounting the estimated costs of sale.

The market value is determined on the basis of the

definition established by the International Valuation

Standards drawn up by the IVSC (International

Valuation Standards Council), understood as the

estimated amount for which an asset or a liability

should be exchanged on the measurement date

between a willing buyer and a willing seller, in an

arm's length transaction, after appropriate marketing,

and in which the parties have acted with sufficient

information, prudently and without coercion.

The current market value of the properties is estimated

on the basis of automated valuations obtained by

taking comparable properties as a reference;

simulating the procedure carried out by an appraiser in

a physical valuation according to Order ECO 805/2003:

selection of properties and obtaining the unit value by

applying homogenisation adjustments. The selection

of the properties is carried out by location within the

same real estate cluster and according to the

characteristics of the properties, filtering by type 2 ,

surface area range and age. The model enables a

distinction to be made within the municipality under

study as to which areas are similar and comparable

and therefore have a similar value in the property

market, discriminating between which properties are

good comparators and which are not.

Adjustments to homogenize the properties are made

according to: (i) the age of the property according to

the age of the property to be valued, (ii) the deviation

of the built area from the common area with respect to

the property to be valued and (iii) by age of the date of

capture of the property according to the price evolution

index of the real estate market.

In addition, for individually significant assets, complete

individual valuations are carried out, including a visit to

the asset, market analysis (data relating to supply,

demand, current sale or rental price ranges and supply-

demand and revaluation expectations) and an estimate

of expected income and costs.

For this segmentation of assets, when they are

completed, the real costs are known and the actual

expenses for the marketing and sale of the asset must

be taken into account. Therefore, Banco Santander

uses the actual costs in its calculation engine or, failing

that, those estimated on the basis of its observed

experience.

• Market Value Model according to Evolution of Market

Values used to update the valuation of developments

in progress. The valuation model estimates the current

market value of the properties based on complete

individual valuations by third parties, calculated from

the values of the feasibility studies and development

costs of the promotion, as well as the selling costs,

distinguishing by location, size and type of property.

The inputs used in the valuation model for residential

assets under construction are actual revenues and

costs.

For this purpose, in order to calculate the investment

flows, Banco Santander considers, on the basis of the

feasibility studies, the expenditure required for

construction, the professional fees relating to the

project and to project management, the premiums for

mandatory building insurance, the developer's

administrative expenses, licenses, taxes on new

construction and fees, and urban development

charges.

With respect to the calculation of income flows, Banco

Santander takes into account the square metres built,

the number of homes under construction and the

estimated selling price over 1.5 years.

The market value will be the result of the difference

between the income flows and the investment flows

estimated at each moment.

• Land Valuation model. The methodology followed by

the Bank regarding land valuation consists of updating

the individual reference valuation of each of the land

on an annual basis, through updated valuation

valuations carried out by independent professionals

and following the methodology established in the

Order ECO/805/2003, of 27 March, whose main

verifications in the case of land valuation, regardless of

the degree of urbanisation of the land, correspond to:

– Visual verification of the assessed property.

– Registry description.

37

– Urban planning.

– Visible easements.

– Visible state of occupation, possession, use and

exploitation.

– Protection regime.

– Apparent state of preservation.

– Correspondence with cadastral property.

– Existence of expropriation procedure,

expropriation plan or project, administrative

resolution or file that may lead to expropriation.

– Expiry of the urbanization or building deadlines.

– Existence of a procedure for failure to comply

with obligations.

– Verification of surfaces.

For the purposes of valuation, the land will be classified

in the following levels:

– Level I: It will include all the lands that do not

belong to level II.

– Level II: It shall include land classified as

undeveloped where building is not allowed for

uses other than agriculture, forestry, livestock or

linked to an economic exploitation permitted by

the regulations in force. Also included are lands

classified as developable that are not included in

a development area of urban planning or that, in

such an area, the conditions for its development

have not been defined.

In those cases where Banco Santander does not have an

updated reference value through an ECO valuation for

the current year, we use as a reference value the latest

available ECO valuation reduced or corrected by the

average annual coverage ratio of the land on which we

have obtained an updated reference value, through an

ECO valuation.

Banco Santander applies a discount to the

aforementioned reference values that takes into account

both the discount on the reference value in the sales

process and the estimated costs of marketing or selling

the land ; discount on reference value = % discount on

sales + % marketing costs being:

– % discount on Sales: = 100 - (sales price /

updated appraisal value).

– marketing costs: calculated on the basis of our

historical experience in sales and in accordance

with the marketing management fees negotiated

with our suppliers of this type of service.

In this way Banco Santander obtains the corrected

market value, an amount that we compare with the net

cost of each piece of land to determine its correct

valuation and conclude with our valuation process.

In addition, in relation to the previously mentioned

valuations, less costs to sell, are contrasted with the

sales experience of each type of asset in order to confirm

that there is no significant difference between the sale

price and the valuation.

Impairment losses on an asset or disposal group arising

from a reduction in its carrying amount to its fair value

(less costs to sell) are recognised under 'Gains or (losses)

on non-current assets held for sale not classified as

discontinued operations' in the income statement.

The gains on a non-current asset held for sale resulting

from subsequent increases in fair value (less costs to

sell) increase its carrying amount and are recognised in

the consolidated income statement up to an amount

equal to the impairment losses previously recognised.

i) Insurance contracts linked to pensions

The item 'Insurance contracts linked to pensions',

included within the heading 'Other assets' (see note

2.m), will include the fair value of the insurance policies

to cover pension commitments that must be recorded as

a separate asset for not meeting the requirements

established in regulation 35 of Bank of Spain Circular

4/2017 and subsequent modifications, to be considered

plan assets.

j) Tangible assets

Tangible assets includes the amount of buildings, land,

furniture, vehicles, computer hardware and other

fixtures owned by Banco Santander or acquired under

finance leases. Tangible assets are classified by use as

follows:

i. Property, plant and equipment for own use

Property, plant and equipment for own use – including

tangible assets received by the Bank in full or partial

satisfaction of financial assets representing receivables

from third parties which are intended to be held for

continuing use and tangible assets acquired under

finance leases– are presented at acquisition cost, less

the related accumulated depreciation and any estimated

impairment losses (carrying amount higher than

recoverable amount).

Depreciation is calculated, using the straight-line

method, on the basis of the acquisition cost of the assets

less their residual value. The land on which the buildings

and other structures stand has an indefinite life and,

therefore, is not depreciated.

The annual tangible asset depreciation charge is

recognised in the income statement and are essentially

equivalent to the following amortization percentages

(determined based on the years of estimated useful life,

on average, of the different elements):

38

	Average annual rate
Buildings for own use	2.00%
Furniture	10.00%
Fixtures	5.00%
IT equipment	25.00%
Vehicles	16.00%
Other	5.00%
Lease use rights	Less than the lease term or the useful life of the underlying asset

At the end of each reporting period, Banco Santander

assesses whether there is any indication that the

carrying amount of an asset exceeds its recoverable

amount, in which case they write down the carrying

amount of the asset to its recoverable amount and

adjust future depreciation charges in proportion to its

adjusted carrying amount and to its new remaining

useful life, if the useful life needs to be re-estimated.

Similarly, if there is an indication of a recovery in the

value of a tangible asset, Banco Santander recognises

the reversal of the impairment loss recognised in prior

periods and adjust the future depreciation charges

accordingly. In no circumstances may the reversal of an

impairment loss on an asset raise its carrying amount

above that which it would have if no impairment losses

had been recognised in prior years.

The estimated useful lives of the items of property, plant

and equipment for own use are reviewed at least at the

end of the reporting period with a view to detecting

significant changes therein. If changes are detected, the

useful lives of the assets are adjusted by correcting the

depreciation charge to be recognised in the income

statement in future years on the basis of the new useful

lives.

Upkeep and maintenance expenses relating to property,

plant and equipment for own use are recognised as an

expense in the period in which they are incurred, since

they do not increase the useful lives of the assets.

ii. Investment property

'Investment property' reflects the net values of the land,

buildings and other structures held either to earn rentals

or for obtaining profits by sales due to future increase in

market prices.

The criteria used to recognise the acquisition cost of

investment property, to calculate its depreciation and its

estimated useful life and to recognise any impairment

losses thereon are consistent with those described in

relation to property, plant and equipment for own use.

In the case of investment properties that support

obligations to pay a return directly linked to fair value, or

to the returns of certain assets including the investment

property itself, such properties are measured using the

fair value model.

In order to evaluate the possible impairment Banco

Santander determines periodically the fair value of its

investment property so that, at the end of the reporting

period, the fair value reflects the market conditions of

the investment property at that date. This fair value is

determined annually, taking as benchmarks the

valuations performed by independent experts. The

methodology used to determine the fair value of

investment property is selected based on the status of

the asset in question; thus, for properties earmarked for

lease, the valuations are performed using the sales

comparison approach, whereas for leased properties the

valuations are made primarily using the income

capitalisation approach and, exceptionally, the sales

comparison approach.

In the sales comparison approach, the property market

segment for comparable properties is analysed, inter

alia, and, based on specific information on actual

transactions and firm offers, current prices are obtained

for cash sales of those properties. The valuations

performed using this approach are considered as Level 2

valuations.

In the income capitalisation approach, the cash flows

estimated to be obtained over the useful life of the

property are discounted taking into account factors that

may influence the amount and actual obtainment

thereof, such as: (i) the payments that are normally

received on comparable properties; (ii) current and

probable future occupancy; (iii) the current or

foreseeable default rate on payments. The valuations

performed using this approach are considered as Level 3

valuations, since significant unobservable inputs are

used, such as current and probable future occupancy

and/or the current or foreseeable default rate on

payments.

iii. Assets leased out under an operating lease

'Property, plant and equipment' - Leased out under an

operating lease reflects the amount of the tangible

assets, other than land and buildings, leased out by the

Bank under an operating lease.

The criteria used to recognise the acquisition cost of

assets leased out under operating leases, to calculate

their depreciation and their respective estimated useful

lives and to recognise the impairment losses thereon are

consistent with those described in relation to property,

plant and equipment for own use.

k) Accounting for leases

The main aspects contained in the regulation Bank of

Spain Circular 2/2018 adopted by the Bank are included

below:

When the Bank acts as lessee, it recognises a right-of-

use asset representing its right to use the underlying

leased asset with a corresponding lease liability on the

date on which the leased asset is available for use by the

Bank.

39

Each lease payment is allocated between liability and

finance charge. The finance charge is allocated to the

income statement during the term of the lease in such a

way as to produce a constant periodic interest rate on

the remaining balance of the liability for each year.

The right-of-use asset is depreciated over the useful life

of the asset or the lease term, whichever is shorter, on a

straight-line basis. If the Bank is reasonably certain to

exercise a purchase option, the right-of-use asset is

amortized over the useful life of the underlying asset.

Assets and liabilities arising from a lease are initially

measured at present value. Lease liabilities include the

net present value of the following lease payments:

• Fixed payments (including inflation-linked

payments), less any lease incentive receivable.

• Variable lease payments that depend on an index or

rate.

• The amounts expected to be paid by the lessee under

residual value guarantees.

• The exercise price of a purchase option if the lessee

is reasonably certain that it will exercise that option.

• Lease termination penalty payments, if the term of

the lease reflects the lessee's exercise of that option.

Lease payments are discounted using the interest rate

implicit in the lease. When this interest rate cannot be

obtained, the interest rate used in these cases, is the

lessee's incremental borrowing rate at the related date.

For this purpose, the entity has calculated this

incremental borrowing rate taking as reference the listed

debt instruments issued by the Bank; in this regard, the

Bank has estimated different interest rate curves

depending on the currency and economic environment in

which the contracts are located.

In order to construct the incremental borrowing rate, a

methodology has been developed at the corporate level.

This methodology is based on the need for each entity to

consider its economic and financial situation, for which

the following factors must be considered:

• Economic and political situation (country risk).

• Credit risk of the company.

• Monetary policy.

• Volume and seniority of the company’s debt

instrument issues.

The incremental borrowing rate is defined as the interest

rate that a lessee would have to pay for borrowing, given

a similar period to the duration of the lease and with

similar security, the funds necessary to obtain an asset

of similar value to the right-of-use asset in a similar

economic environment . The Group entities have a wide

stock and variety of financing instruments issued in

different currencies to that of the euro (pound, dollar,

etc.) that provide sufficient information to be able to

determine an 'all in rate' (reference rate plus adjustment

for credit spread at different terms and in different

currencies). In circumstances, where the Bank, has its

own financing, this has been used as the starting point

for determining the incremental borrowing rate .

Right-of-use assets are valued at cost which includes the

following:

• The amount of the initial measurement of the lease

liability.

• Any lease payment made at or before the

commencement date less any lease incentive

received.

• Any initial direct costs.

• Restoration costs.

Banco Santander recognises the payments associated

with short-term leases and leases of low-value assets on

a straight-line basis as an expense in the income

statement. Short-term leases are leases with a lease

term less than or equal to 12 months (a lease that

contains a purchase option is not a short term lease).

l) Intangible assets

Intangible assets are identifiable non-monetary assets

(separable from other assets) without physical

substance which arise as a result of a legal transaction or

which are developed internally by Banco Santander.

Only assets whose cost can be measured reliably and it

is likely that the Bank obtains future economic benefits

are recognised.

Intangible assets are recognised initially at acquisition or

production cost and are subsequently measured at cost

less any accumulated amortisation and any accumulated

impairment losses.

i. Goodwill

Any excess of the cost of the investments in the

subsidiaries, joint ventures and associates accounted for

using the equity method over the corresponding

underlying carrying amounts acquired, adjusted at the

date of first-time consolidation, is allocated as follows:

a. If it is attributable to specific assets and liabilities of

the companies acquired, by increasing the value of

the assets (or reducing the value of the liabilities)

whose fair values were higher (lower) than the

carrying amounts at which they had been recognised

in the acquired entities’ balance sheets.

40

b. If it is attributable to specific intangible assets, by

recognising it explicitly in the balance sheet provided

that the fair value of these assets within twelve

months following the date of acquisition can be

measured reliably.

c. The remaining amount is recognised as goodwill,

which is allocated to one or more cash-generating

units (CGU) (a cash-generating unit is the smallest

identifiable group of assets that, as a result of

continuing operation, generates cash inflows that are

largely independent of the cash inflows from other

assets or groups of assets). The cash-generating

units represent the Bank’s geographical and/or

business segments.

Goodwill (only recognised when it has been acquired by

consideration) represents, therefore, a payment made by

the acquirer in anticipation of future economic benefits

from assets of the acquired entity that are not capable of

being individually identified and separately

recognised. Goodwill, in accordance with Bank of Spain

Circular 4/2017, is to be amortized over a 10-year period

unless otherwise stated. The debits to the income

statements for the amortisation of these assets are

recorded under the section ‘Amortisation’ in the income

statement.

At the end of each annual reporting period or whenever

there is any indication of impairment goodwill is

reviewed for impairment (i.e. a reduction in its

recoverable amount to below its carrying amount) and, if

there is any impairment, the goodwill is written down

with a charge to 'Impairment or reversal of impairment

on non-financial assets, net - Intangible assets' in the

income statement.

An impairment loss recognised for goodwill is not

reversed in a subsequent period.

In the event of sale or departure of an activity that is part

of a CGU, the part of the goodwill that can be assigned to

said activity would be written-off, taking as a reference

the relative value of the same over the total of the CGU

at the time of sale or abandonment. If applicable, the

distribution by currency of the remaining goodwill will

be performed based on the relative values of the

remaining activities.

ii. Other intangible assets

Other intangible assets includes the amount of

identifiable intangible assets, such as purchased

customer lists and computer software.

In accordance with Rule Twenty Eight of Bank of Spain

Circular 4/2017, for the financial statements (individual

and consolidated) not subject to the framework of

International Financial Reporting Standards, intangible

assets will be considered assets with a limited useful

life.

An intangible assets useful life may not exceed the

period during which the entity is entitled to use the

asset. If the right of use is for a limited period that can be

renewed, the useful life will include the renewal period

only when there is evidence that the renewal will be

carried out without significant cost.

Intangible assets shall be amortized in accordance with

their useful life. Banco Santander reviews, at least at the

end of each year, the amortisation period and the

amortisation method of each of its intangible assets and,

if it considers that they are not appropriate, the impact

will be treated as a change in its accounting estimates.

The intangible asset amortisation charge is recognised

under 'Depreciation and amortisation' in the income

statement.

In both cases Banco Santander recognises any

impairment loss on the carrying amount of these assets

with a charge to 'Impairment or reversal of impairment

on non-financial assets, net - Intangible assets in the

income statement.

The criteria used to recognise the impairment losses on

these assets and, where applicable, the reversal of

impairment losses recognised in prior years are similar

to those used for tangible assets (see note 2.j).

Internally developed computer software

Internally developed computer software is recognised as

an intangible asset if, among other requisites (basically

the Bank’s ability to use or sell it), it can be identified and

its ability to generate future economic benefits can be

demonstrated.

Expenditure on research activities is recognised as an

expense in the year in which it is incurred and cannot be

subsequently capitalised into the carrying amount of the

intangible asset.

m) Other assets

Other assets' in the balance sheet includes the amount

of assets not recorded in other items, the breakdown

being as follows:

• Inventories: this item includes the amount of assets,

other than financial instruments, that are held for

sale in the ordinary course of business, that are in the

process of production, construction or development

for such purpose, or that are to be consumed in the

production process or in the provision of services.

Inventories include land and other property held for

sale in the property development business.

Inventories are measured at the lower of cost and

net realisable value, which is the estimated selling

price of the inventories in the ordinary course of

business, less the estimated costs of completion and

the estimated costs required to make the sale.

41

Any write-downs of inventories -such as those due to

damage, obsolescence or reduction of selling price-

to net realisable value and other impairment losses

are recognised as expenses for the year in which the

impairment or loss occurs. Subsequent reversals are

recognised in the income statement for the year in

which they occur.

The carrying amount of inventories is derecognised

and recognised as an expense in the period in which

the revenue from their sale is recognised.

▪ Other: this item includes the balance of all

prepayments and accrued income (excluding accrued

interest, fees and commissions), the net amount of

the difference between pension plan obligations and

the value of the plan assets with a balance in the

entity’s favour, when this net amount is to be

reported in the balance sheet, and the amount of any

other assets not included in other items.

n) Other liabilities

'Other liabilities' includes the balance of all accrued

expenses and deferred income, excluding those related

to interests and fees on financial instruments, as well as

the amount of any other liabilities not included in other

categories.

o) Provisions and contingent liabilities (assets)

When preparing the financial statements of the Bank,

Banco Santander makes a distinction between:

• Provisions: credit balances covering present

obligations at the reporting date arising from past

events which could give rise to a loss for the Banco

Santander, which is considered to be likely to occur

and certain as to its nature but uncertain as to its

amount and/or timing.

▪ Contingent liabilities: possible obligations that arise

from past events and whose existence will be

confirmed only by the occurrence or non-occurrence

of one or more future events not wholly within the

control of the Bank. They include the present

obligations of the Bank when it is not probable that an

outflow of resources embodying economic benefits

will be required to settle them. Banco Santander does

not recognise the contingent liability. The Bank will

disclose a contingent liability, unless the possibility of

an outflow of resources embodying economic benefits

is remote.

Irrevocable contingent payments (ICPs), corresponding

to payment facilities allowed under the annual

contributions of certain levies, are recorded in

accordance with the definitions mentioned above. In

this regard, on 14 November 2025, the Group learned

that the CJEU had definitively resolved the dispute

concerning the CPI contributions made by a financial

institution to the Single Resolution Fund, upholding the

judgment of the General Court of 25 October 2023,

which ruled against said financial institution regarding

its request for the return of guarantees linked to

irrevocable payment commitments for a Group entity

whose license had been withdrawn. In light of this

ruling, it was concluded that it was not necessary to

modify the accounting entries that the Santander

Group has made when using these facilities to make

contributions corresponding to this levy or to other

similar levies that also allow for such contributions.

▪ Contingent assets: possible assets that arise from past

events and whose existence is conditional on, and will

be confirmed only by, the occurrence or non-

occurrence of one or more uncertain future events not

wholly within the control of the Bank. Contingent

assets are not recognised in the balance sheet or in

the income statement, but rather are disclosed in the

notes, provided that it is probable that these assets

will give rise to an increase in resources embodying

economic benefits.

Banco Santander´s financial statements include all the

material provisions with respect to which it is considered

that it is more likely than not the obligation will have to

be settled. In accordance with accounting standards,

contingent liabilities must not be recognised in the

consolidated financial statements, but must rather be

disclosed in the Notes.

Provisions (which are quantified on the basis of the best

information available on the consequences of the event

giving rise to them and are reviewed and adjusted at the

end of each year) are used to cater for the specific

obligations for which they were originally recognised.

Provisions are fully or partially reversed when such

obligations cease to exist or are reduced.

Provisions are classified according to the obligations

covered as follows (see note 23):

• Provision for pensions and similar obligations:

includes the amount of all the provisions made to

cover post-employment benefits, including

obligations to pre-retirees and similar obligations.

42

• Provisions for contingent liabilities and commitments:

include the amount of the provisions made to cover

contingent liabilities -defined as those transactions in

which the Bank guarantees the obligations of a third

party, arising as a result of financial guarantees

granted or contracts of another kind- and contingent

commitments -defined as irrevocable commitments

that may give rise to the recognition of financial

assets.

• Provisions for taxes and other legal contingencies and

Other provisions: include the amount of the provisions

recognised to cover tax and legal contingencies and

litigation and the other provisions recognised by

Banco Santander. Other provisions includes, inter alia,

any provisions for restructuring costs and

environmental measures.

p) Own equity instruments

Own equity instruments are those meeting both of the

following conditions:

▪ The instruments do not include any contractual

obligation for the issuer (i) to deliver cash or another

financial asset to a third party; or (ii) to exchange

financial assets or financial liabilities with a third

party under conditions that are potentially

unfavourable to the issuer.

▪ The instruments will or may be settled in the issuer’s

own equity instruments and are: (i) a non-derivative

that includes no contractual obligation for the issuer

to deliver a variable number of its own equity

instruments; or (ii) a derivative that will be settled by

the issuer through the exchange of a fixed amount of

cash or another financial asset for a fixed number of

its own equity instruments.

Transactions involving own equity instruments, including

their issuance and cancellation, are charged directly to

equity.

Changes in the value of instruments classified as own

equity instruments are not recognised in the financial

statements. Consideration received or paid in exchange

for such instruments, including the coupons on

preference shares contingently convertible into ordinary

shares and the coupons associated with CCPP, is directly

added to or deducted from equity.

q) Equity-instrument-based employee

remuneration

Own equity instruments delivered to employees in

consideration for their services, if the instruments are

delivered once the specific period of service has ended,

are recognised as an expense for services (with the

corresponding increase in equity) as the services are

rendered by employees during the service period. At the

grant date the services received (and the related increase

in equity) are measured at the fair value of the equity

instruments granted. If the equity instruments granted

are vested immediately,   Banco Santander recognises in

full, at the grant date, the expense for the services

received.

When the requirements stipulated in the remuneration

agreement include external market conditions (such as

equity instruments reaching a certain quoted price), the

amount ultimately to be recognised in equity will

depend on the other conditions being met by the

employees (normally length of service requirements),

irrespective of whether the market conditions are

satisfied.

If the conditions of the agreement are met but the

external market conditions are not satisfied, the

amounts previously recognised in equity are not

reversed, even if the employees do not exercise their

right to receive the equity instruments.

r) Recognition of income and expenses

The most significant criteria used by Banco Santander to

recognise its income and expenses are summarised as

follows:

i. Interest income, interest expenses and similar

items

Interest income, interest expenses and similar items are

generally recognised on an accrual basis using the

effective interest method. Dividends received from other

companies are recognised as income when the Banco

Santander right to receive them arises.

ii. Commissions, fees and similar items

Fee and commission income and expenses are

recognised in the income statement using criteria that

vary according to their nature. The main criteria are as

follows:

• Fee and commission income and expenses relating to

financial assets and financial liabilities measured at

fair value through profit or loss are recognised when

paid.

• Those arising from transactions or services that are

performed over a period of time are recognised over

the life of these transactions or services.

• Those relating to services provided in a single act are

recognised when the single act is carried out.

43

iii. Non-finance income and expenses

They are recognised for accounting purposes when the

good is delivered or the non-financial service is rendered.

To determine the amount and timing of recognition, a

five-step model is followed: identification of the contract

with the customer, identification of the separate

obligations of the contract, determination of the

transaction price, distribution of the transaction price

among the identified obligations and finally recording of

income as the obligations are satisfied.

iv. Deferred collections and payments

These are recognised for accounting purposes at the

amount resulting from discounting the expected cash

flows at market rates.

v. Loan arrangement fees

Loan arrangement fees, mainly loan origination,

application and information fees, are accrued and

recognised in income over the term of the loan.

s) Financial guarantees

Financial guarantees are considered contracts that

require the issuer to make specific payments to

reimburse the creditor for the loss it incurs when a

specific debtor defaults on its due date payment

obligation in accordance with the original or modified

conditions of debt instrument, regardless of its legal

form, which may be, among others, a deposit, financial

guarantee, insurance contract or credit derivative.

Banco Santander initially recognises the financial

guarantees provided on the liability side of the balance

sheet at fair value, which is generally the present value

of the fees, commissions and interest receivable from

these contracts over the term thereof, and

simultaneously the Bank recognises the amount of the

fees, commissions and similar interest received at the

inception of the transactions and a credit on the asset

side of the balance sheet for the present value of the

fees, commissions and interest outstanding.

Financial guarantees, regardless of the guarantor,

instrumentation or other circumstances, are reviewed

periodically so as to determine the credit risk to which

they are exposed and, if appropriate, to consider

whether a provision is required. The credit risk is

determined by application of criteria similar to those

established for quantifying impairment losses on debt

instruments carried at amortised cost (described in note

2.g above).

The provisions made for these transactions are

recognised under 'Provisions - Provisions for

commitments and guarantees given in the consolidated

balance sheet' (see note 23). These provisions are

recognised and reversed with a charge or credit,

respectively, to 'Provisions or reversal of provisions', net,

in the income statement.

t) Post-employment benefits

Under the collective agreements currently in force and

other arrangements, the Spanish banks included in the

Group and certain other Spanish and foreign

consolidated entities have undertaken to supplement

the public social security system benefits accruing to

certain employees, and to their beneficiary right holders,

for retirement, permanent disability or death, and the

post-employment welfare benefits.

Banco Santander’s post-employment obligations to its

employees are deemed to be defined contribution plans

when the Bank makes pre-determined contributions

(recognised under Personnel expenses in the income

statement) to a separate entity and will have no legal or

effective obligation to make further contributions if the

separate entity cannot pay the employee benefits

relating to the service rendered in the current and prior

periods. Post-employment obligations that do not meet

the aforementioned conditions are classified as defined

benefit plans (see note 23).

Defined contribution plans

The contributions made in this connection in each year

are recognised under 'Personnel expenses' in the income

statement.

The amounts not yet contributed at each year-end are

recognised, at their present value, under 'Provisions -

Provision for pensions' and similar obligations on the

liability side of the balance sheet.

Defined benefit plans

Banco Santander recognises under 'Provisions - Provision

for pensions and similar obligations on the liability side

of the balance sheet' (or under 'Other assets' on the

asset side, as appropriate) the present value of its

defined benefit post-employment obligations, net of the

fair value of the plan assets.

Plan assets are defined as those that will be directly

used to settle obligations and that meet the following

conditions:

• They are not owned by Banco Santander, but by a

legally separate third party that is not a party related

to the Bank.

• They are only available to pay or fund post-

employment benefits and they cannot be returned to

the Bank unless the assets remaining in the plan are

sufficient to meet all the benefit obligations of the

plan and of the entity to current and former

employees, or they are returned to reimburse

employee benefits already paid by the Bank.

44

If Banco Santander can look to an insurer to pay part or

all of the expenditure required to settle a defined benefit

obligation, and it is practically certain that said insurer

will reimburse some or all of the expenditure required to

settle that obligation, but the insurance policy does not

qualify as a plan asset, the  Bank recognises its right to

reimbursement -which, in all other respects, is treated as

a plan asset- under 'Insurance contracts linked to

pensions' on the asset side of the  balance sheet.

Banco Santander will recognise the following items in

the income statement:

• Current service cost, (the increase in the present

value of the obligations resulting from employee

service in the current period), is recognised under

'Staff costs'.

• The past service cost, which arises from changes to

existing post-employment benefits or from the

introduction of new benefits and includes the cost of

reductions, is recognised under 'Provisions or

reversal of provisions'.

• Any gain or loss arising from a liquidation of the plan

is included in the 'Provisions or reversion of

provisions'.

• Net interest on the net defined benefit liability

(asset), i.e. the change during the period in the net

defined benefit liability (asset) that arises from the

passage of time, is recognised under 'Interest

expense' and similar charges ('Interest and similar

income' if it constitutes income) in the income

statement.

The remeasurement of the net defined benefit liability

(asset) is recognised in 'Other comprehensive income'

under Items not reclassified to profit or loss and

includes:

• Actuarial gains and losses generated in the year,

arising from the differences between the previous

actuarial assumptions and what has actually

occurred and from the effects of changes in actuarial

assumptions.

• The return on plan assets, excluding amounts

included in net interest on the net defined benefit

liability (asset).

• Any change in the effect of the asset ceiling,

excluding amounts included in net interest on the net

defined benefit liability (asset).

u) Other long-term employee benefits

Other long-term employee benefits, defined as

obligations to pre-retirees -taken to be those who have

ceased to render services at the entity but who, without

being legally retired, continue to have economic rights

vis-à-vis the entity until they acquire the legal status of

retiree-, long-service bonuses, obligations for death of

spouse or disability before retirement that depend on

the employee’s length of service at the entity and other

similar items, are treated for accounting purposes,

where applicable, as established above for defined

benefit post-employment plans, except that actuarial

gains and losses are recognised under 'Provisions or

reversal of provisions', net, in the income statement (see

note 23).

v) Termination benefits

Termination benefits are recognised when there is a

detailed formal plan identifying the basic changes to be

made, provided that implementation of the plan has

begun, its main features have been publicly announced

or objective facts concerning its implementation have

been disclosed.

w) Income tax

The income tax expense is recognised in the income

statement, except when they arise from a transaction

whose results are recognised directly in equity.

The current income tax expense is calculated as the sum

of the current tax resulting from application of the

appropriate tax rate to the taxable profit for the year (net

of any deductions allowable for tax purposes), and of the

changes in deferred tax assets and liabilities recognised

in the income statement.

'Deferred tax assets' and liabilities include temporary

differences, which are identified as the amounts

expected to be payable or recoverable on differences

between the carrying amounts of assets and liabilities

and their related tax bases, and tax loss and tax credit

carryforwards. These amounts are measured at the tax

rates that are expected to apply in the period when the

asset is realised or the liability is settled.

'Tax assets' include the amount of all tax assets, which

are broken down into current -amounts of tax to be

recovered within the next twelve months- and deferred -

amounts of tax to be recovered in future years, including

those arising from tax loss or tax credit carryforwards.

45

Tax liabilities' includes the amount of all tax liabilities

(except provisions for taxes), which are broken down

into current -the amount payable in respect of the

income tax on the taxable profit for the year and other

taxes in the next twelve months- and deferred -the

amount of income tax payable in future years.

Deferred tax liabilities are recognised in respect of

taxable temporary differences associated with

investments in subsidiaries, associates or joint ventures,

except when the Bank is able to control the timing of the

reversal of the temporary difference and, in addition, it is

probable that the temporary difference will not reverse

in the foreseeable future.

Deferred tax assets are only recognised for temporary

differences to the extent that it is considered probable

that the Bank will have sufficient future taxable profits

against which the deferred tax assets can be utilised, and

the deferred tax assets do not arise from, in its initial

recognition of (i)a business combination, (ii) an operation

that does not affect either the tax result or the

accounting result or (iii) on the date of the transaction,

does not generate deductible and taxable temporary

differences for the same amount (in which case assets

and deferred tax liabilities). Other deferred tax assets

(tax loss and tax credit carryforwards) are only

recognised if it is considered probable that the Bank

entities will have sufficient future taxable profits against

which they can be utilised.

Differences generated by the different accounting and

tax treatment of any of the income and expenses

recorded directly in equity to be paid or recovered in the

future are accounted for as temporary differences.

The deferred tax assets and liabilities are reassessed at

the reporting date in order to ascertain whether any

adjustments need to be made on the basis of the

findings of the analyses performed.

Regarding taxes on profits arising from the application of

tax laws for the implementation of the Pillar Two model

rules, including those related to national minimum

complementary taxes, the Group applies the mandatory

and temporary exception to the recognition of deferred

tax assets and liabilities derived from said tax laws (see

note 24.f).

x) Residual maturity periods

In note 49 it is provided on analysis of the maturities of

the balances of certain items in the balance sheet.

Grupo and Banco Santander have recorded as 'time

liabilities' those recognised financial liabilities in which

the counterparty may require payments.

Likewise, when Grupo and Banco Santander have

committed to having amounts available at different

maturity periods, these amounts have been recorded in

the first year in which they may be required.

Additionally, for the financial guarantee contracts issued,

the Group and the Bank have recorded the maximum

amount of the financial guarantee issued in the first year

in which the guarantee can be executed.

y) Statement of recognised income and expenses

This statement presents the income and expenses

generated by the Bank as a result of its business activity

in the year, and a distinction is made between the

income and expenses recognised in the income

statement for the year and the other income and

expenses recognised directly in equity.

Accordingly, this statement presents:

a. The profit for the year.

b. The net amount of the income and expenses

recognised in 'Other comprehensive income' under

items that will not be reclassified to profit or loss.

c. The net amount of the income and expenses

recognised in Other comprehensive income under

items that may be reclassified subsequently to profit

or loss.

d. The income tax incurred in respect of the items

indicated in b and c above, except for the valuation

adjustments arising from investments in associates

or joint ventures accounted for using the equity

method, which are presented net.

e. Total recognised income and expense, calculated as

the sum of a) to d) above , presenting separately the

amount attributable to the parent company and the

amount relating to non-controlling interests.

The statement presents the items separately by nature,

grouping together items that, in accordance with the

applicable accounting standards, will not be reclassified

subsequently to profit and loss since the requirements

established by the corresponding accounting standards

are met.

z) Statement of changes in total equity

This statement presents all the changes in equity,

including those arising from changes in accounting

policies and from the correction of errors. Accordingly,

this statement presents a reconciliation of the carrying

amount at the beginning and end of the year of all the

equity items, and the changes are grouped together on

the basis of their nature into the following items:

a. Adjustments due to changes in accounting policies

and to errors: include the changes in equity arising as

a result of the retrospective restatement of the

balances in the financial statements, distinguishing

between those resulting from changes in accounting

policies and those relating to the correction of errors.

46

b. Income and expense recognised in the year: includes,

in aggregate form, the total of the aforementioned

items recognised in the statement of recognised

'Income and expense'.

c. Other changes in equity: includes the remaining

items recognised in equity, including, inter alia,

increases and decreases in capital, distribution of

profit, transactions involving own equity

instruments, equity-instrument-based payments,

transfers between equity items and any other

increases or decreases in equity.

aa) Statement of cash flows

The following terms are used in the statements of cash

flows with the meanings specified:

• Cash flows: inflows and outflows of cash and cash

equivalents, which are short-term, highly liquid

investments that are subject to an insignificant risk

of changes in value, irrespective of the portfolio in

which they are classified.

Banco Santander classifies as cash and cash

equivalents the balances recognised under 'Cash,

cash balances at central banks' and 'Other deposits

on demand' in the balance sheet.

• Operating activities: the principal revenue-producing

activities of credit institutions and other activities

that are not investing or financing activities.

• Investing activities: the acquisition or disposal of

long-term assets and other investments not included

in cash and cash equivalents.

• Financing activities: activities that result in changes

in the size and composition of the equity and

liabilities that are not operating activities.

During 2025, Banco Santander received interest

amounting to EUR 24,964 million and paid interest

amount to EUR 19,244 million (EUR 27,005 and 20,122

million, respectively, in 2024).

Also, the dividends received and paid by Banco

Santander are detailed in notes 4 and 36.

3. Grupo Santander

a) Banco Santander, S.A. and international Group

structure

The growth of Grupo Santander in the last decades has

led Banco Santander to also act, in practice, as a holding

entity of the shares of the various companies in its

Group, and its results are becoming progressively less

representative of the performance and earnings of the

Group. Therefore, each year the bank determines the

amount of the dividends to be distributed to its

shareholders on the basis of the consolidated net profit,

while maintaining the Group’s objectives of

capitalisation and taking into account that the

transactions of the Bank and of the rest of the Group are

managed on a consolidated basis (notwithstanding the

allocation to each company of the related net worth

effect).

At the international level, the various banks and other

subsidiaries, joint ventures and associates of the Group

are integrated in a corporate structure comprising

various holding companies which are the ultimate

shareholders of the banks and subsidiaries abroad.

The purpose of this structure, all of which is controlled

Banco Santander, is to optimise the international

organisation from the strategic, economic, financial and

tax standpoints, since it makes it possible to define the

most appropriate units to be entrusted with acquiring,

selling or holding stakes in other international entities,

the most appropriate financing method for these

transactions and the most appropriate means of

remitting the profits obtained by the group’s various

operating units to Spain.

The Appendices provide relevant data on the

consolidated group companies and on the companies

accounted for using the equity method.

b)  Acquisitions and disposals

Following is a summary of the main acquisitions and

disposals of ownership interests in the share capital of

other entities and other significant corporate

transactions performed in the last two years or pending

to be completed:

47

i. Agreement for the sale of 49% of Santander Bank

Polska S.A. and accelerated placement of ordinary

shares

On 5 May 2025, Banco Santander announced an

agreement to sell approximately 49% of the share

capital of Santander Bank Polska S.A. (Santander Polska)

to Erste Group Bank AG at a price of 584 zlotys per share,

as well as the 50% of Santander Towarzystwo Funduszy

Inwestycyjnych S.A. (TFI, the asset management

business in Poland) owned directly by Banco Santander,

S.A., for a total amount of approximately EUR

7,000 million. Following the transaction and the

accelerated placement of ordinary shares announced on

2 December 2025, of 3,576,626 ordinary shares of

Santander Polska, representing approximately 3.5% of

its share capital, for a total import of EUR 407 million,

Santander will hold 9.7% of Santander Polska's share

capital (58.7% as of 31 December 2025). The

transaction was completed on 9 January 2026 (see Note

1.g. Introduction, basis of presentation of the

consolidated annual accounts, and other information,

subsequent events).

As a result of the agreement, the Group has reclassified

the assets of Santander Polska and TFI in the

consolidated balance sheet as of 31 December 2025, to

the heading 'Non-current assets held for sale', and their

liabilities to the heading 'Liabilities associated with non-

current assets held for sale'. Furthermore, the effect of

these businesses on the profit and loss account for the

2025 financial year has been classified under the

heading 'Profit/(loss) after tax from discontinued

operations' (see Note 12), with the same classification

being applied for comparative purposes in the profit and

loss accounts for the 2024 and 2023 financial years.

As part of this transaction, on 23 December 2025,

Santander Consumer, S.A. acquired 60% of Santander

Consumer Bank Polska, which was owned by Santander

Polska, for PLN  3,105  million (EUR 726 million). This

transaction had no significant impact on the Group's

consolidated financial statements.

ii. Agreement for the acquisition of TSB Banking

Group plc

On 1 July 2025, Banco Santander announced an

agreement with Banco de Sabadell, S.A. for the

acquisition of TSB Banking Group plc for approximately

GBP 2,650 million (EUR 3,100 million) plus the results

generated by this business between 31 March 2025, and

the closing of the transaction.

The completion of the transaction is subject to the usual

conditions for this type of deal, including obtaining the

relevant regulatory authorizations.

iii. Agreement for the sale of the stake in Caceis

On 19 December 2024, Grupo Santander signed an

agreement with Crédit Agricole S.A. for the sale of its

30.5% stake in the share capital of CACEIS. As a result of

the above, as of 31 December 2024, this participation

was reclassified, at its carrying value, from the line item

'investments' to the line item 'Non-current assets held

for sale' in the balance sheet (see Note 6). The

transaction was formalized in 2025 after obtaining the

relevant regulatory approvals, generating a profit before

taxes of EUR 231 million registered in the line item

'Gains or losses on non-current assets held for sale not

classified as discontinued operations' of the income

statement. Following the completion of the planned

transaction, Crédit Agricole S.A. holds the 100% of

CACEIS’s share capital.

The joint depositary, custody and related asset servicing

services of Santander and CACEIS in Latin America is not

included in the scope of the transaction and continues to

be jointly controlled by Santander and CACEIS.

iv.Accelerated placement of ordinary shares of

Santander Bank Polska  

On 10 September 2024, Banco Santander, S.A.

announced an accelerated placement of 5,320,000

ordinary shares of its subsidiary Santander Bank Polska

S.A., representing approximately 5.2% of its share

capital, at a price of PLN 463 (EUR 108 ) per ordinary

share. The transaction was settled on September 13,

with the total transaction amounting to PLN

2,463 million (EUR 575 million). Banco Santander will

continue to hold a majority stake in Santander Bank

Polska S.A. of 62.2% of the share capital (prior to this

transaction, the percentage of participation was 67.4%).

This sale has resulted in an increase in reserves and

valuation adjustments of EUR 158 million and EUR

57 million, respectively, and an increase in minority

equity of EUR 360 million.

v.Tender offers for shares of Banco Santander

México, S.A., Institución de Banca Múltiple, Grupo

Financiero Santander México

On 21 October 2022, Banco Santander, S.A. ('Banco

Santander') announced that it intends to make

concurrent cash tender offers to acquire all of the shares

of Banco Santander México, S.A., Institución de Banca

Múltiple, Grupo Financiero Santander México

('Santander Mexico') in Mexico (Shares) and United

States (American Depositary Shares ('ADSs')) which were

not owned by Grupo Santander, which amount to

approximately  3.76% of Santander Mexico’s share

capital.

48

The offers were launched on 7 February 2023 and were

originally scheduled to close on 8 March 2023. On 1

March 2023, Banco Santander announced its decision to

extend the expiration date of the offers so that they

could be concluded on 10 April 2023. Finally, after the

offers' closing, 3.6% of the capital accepted the offer,

which raised the Group's stake in Santander México from

96.2% to 99.8%will be settled on 13 March 2023.

Shareholders who participated in the offerings received

24.52 Mexican pesos (approximately EUR 1.20 ) per

Share and USD 6.6876 in cash for each ADS (i.e., the

equivalent in United States dollars of122.6 Mexican

pesos in cash for each ADS at the US dollar/Mexican peso

exchange rate on the expiration date of 10 April

2023),which corresponded to the book value of the

Santander México share according to the quarterly

report of Santander México corresponding to the fourth

quarter of the year 2022 in accordance with applicable

legislation, with a total disbursement by Banco

Santander of approximately EUR 300 million.

The operation led to an increase of EUR 13 million in

Reserves and a decrease of EUR 313 million in minority

interests of the consolidated balance sheet.

Once the offers were concluded and settled, Banco

Santander proceeded to: (i) withdraw the ADSs from the

listing on the New York Stock Exchange ('NYSE') and the

Shares from the registry before the Securities and

Exchange Commission ('SEC') in the United States and;

(ii) cancel the registration of the Shares in the National

Securities Registry of the National Banking and Securities

Commission ('CNBV') and withdraw the listing of the

Shares in the Mexican Stock Exchange, S.A.B. de C.V.

('BMV'). Said cancellation was approved by the

extraordinary general shareholders' meeting of

Santander México held on 30 November 2022, with the

favourable vote of the holders of the shares that

represent more than 95% of the shares of Santander

Mexico, as required by the Mexican Securities Market

Law.

Pursuant to Mexican law, on 12 May 2023, Banco

Santander and Santander México established a trust (the

'Repurchase Trust'), to which the holders of the Shares

that remain outstanding after the conclusion of the

offers, to sell said Shares to the repurchase trust, at the

same cash price that would have been paid to them in

the Mexican offer with respect to the same. At the end of

the year, said trust was liquidated and the Group's

effective participation amounts to 99.98%.

c) Offshore entities

Spanish regulation

According to current Spanish regulation (Law 11/2021,

of 9 July; Royal Decree 1080/1991, of 5 July; and Order

HFP/115/2023, of 9 February), at year-end 2025 Grupo

Santander has three branches in the non-cooperative

jurisdictions of Jersey, the Isle of Man and the Cayman

Islands (offshore entities). The Group also has a

subsidiary in Guernsey, which is in the process of being

wound up and is tax resident in the United Kingdom, and

is therefore subject to its tax regime.

i. Offshore branches

As previously mentioned, Grupo Santander has three

offshore branches in the non-cooperative jurisdictions of

the Cayman Islands, the Isle of Man and Jersey. They

report to, and consolidate balance sheets and income

statements with, their respective foreign headquarters.

They are taxed either with their headquarters (the

Cayman Islands branch in Brazil) or in the territories they

are located (Jersey and the Isle of Man, pertain to the

UK)

These three offshore branches have a total of 147

employees as of December 2025.

ii. Subsidiaries in non-cooperative jurisdictions that

are tax resident in the United Kingdom (UK)

Grupo Santander also has a subsidiary incorporated in

the non-cooperative jurisdiction of Guernsey, which is

not deemed an offshore entity because it operated

exclusively from the UK and is tax resident there, and is

therefore subject to UK tax law. This subsidiary is in the

process of being liquidated as of December 31,

2025.Additionally, during 2025 a subsidiary incorporated

in Bermuda  and tax resident in the United Kingdom, was

liquidated.

iii. Other offshore holdings

From Brazil, Grupo Santander manages Santander Brazil

Global Investment Fund SPC, a segregated portfolio

company located in the Cayman Islands. The Group also

holds minority, non-controlling financial interests in

entities located in non-cooperative jurisdictions, including,

among others, Klar Holdings Limited in the Cayman Islands.

49

The European Union (EU)

Santander has no presence in any of the 11 jurisdictions

included on the EU Council’s blacklist of non-cooperative

jurisdictions for tax purposes as of 31 December 2025.

Additionally, the EU grey list comprises another 11

jurisdictions which have sufficiently committed to fully

adapting their legislation to international tax standards,

subject to monitoring by the EU. Within these grey-list

jurisdictions, Santander operates only in Morocco

through one subsidiary and holds a minority interest in a

financial institution tax resident in that jurisdiction.

Organization for Economic Cooperation and

Development (OECD)

Grupo Santander has no presence in any jurisdictions

non-compliant with both OECD standards on

transparency and exchange of information for tax

purposes (the automatic exchange of information AEOI

standard and the exchange of information on request

EOIR standard), according to the last annual reports of

the OECD Global Forum on Transparency and Exchange

of Information for Tax Purposes, released on 2

December 2025.

However, Vietnam —a jurisdiction where Santander has

a subsidiary— does not comply with the EOIR standard.

Meanwhile, The Bahamas and Chile —jurisdictions

where Santander is also present—, although they have

complete legal and regulatory frameworks in place for

the implementation of the AEOI standard, they still need

to improve the effectiveness of this standard.

Santander presence in offshore territories at the end of

2025 is as follows:Group presence in non-cooperative

jurisdictions

Regulatory framework	Group presence in non- cooperative jurisdictions
	Subsidiaries	Branches
Spanish legislation a	—	3 b
Council of the EU blacklist	—	—
OECD c	—	—
2025	—	3
2024 c	—	3

a. Additionally, there is one subsidiary constituted in Guernsey (in the

process of winding up), but resident for tax purposes in the UK.

b.  The Group has three branches in Jersey, the Isle of Man and the

Cayman Islands. These jurisdictions are not included in the European

Union’s October 2025 blacklist and fully comply with both OECD

international standards on transparency and exchange of information

for tax purposes (AEOI and EOIR).

  c.    Jurisdictions non-compliant with both OECD standards (AEOI and EOIR).

Grupo Santander has the right mechanisms (risk

management, supervision, verification and review plans,

and regular reporting) to prevent reputational, tax and

legal risks in entities resident in non-cooperative

jurisdictions. Grupo Santander also maintains its policy

of limiting and reducing its presence in non-cooperative

jurisdictions when possible.

PwC member firms audited the financial statements of

Grupo Santander’s offshore entities in 2025 and 2024 .

d) Consolidated balance sheet, income statement,

statement of recognized income and expenses,

statement of changes in total equity and cash-flow

statement

Presented below are the Group´s consolidated balance

sheets as of December 31, 2025 and 2024, and the

consolidated income statements, statements of

recognized income and expense, statements of changes

in total equity and statements of cash flows for the years

ended on those dates.

50

CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR million

ASSETS	2025	2024 A
CASH, CASH BALANCES AT CENTRAL BANKS AND OTHER DEPOSITS ON DEMAND	152,281	192,208
FINANCIAL ASSETS HELD FOR TRADING	252,318	230,253
Derivatives	58,355	64,100
Equity instruments	22,030	16,636
Debt securities	98,568	82,646
Loans and advances	73,365	66,871
Central banks	14,632	12,966
Credit institutions	25,967	27,314
Customers	32,766	26,591
NON-TRADING FINANCIAL ASSETS MANDATORILY AT FAIR VALUE THROUGH PROFIT OR LOSS	7,761	6,130
Equity instruments	5,815	4,641
Debt securities	245	447
Loans and advances	1,701	1,042
Central banks	—	—
Credit institutions	—	—
Customers	1,701	1,042
FINANCIAL ASSETS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS	8,046	7,915
Debt securities	2,894	2,897
Loans and advances	5,152	5,018
Central banks	—	—
Credit institutions	413	408
Customers	4,739	4,610
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME	74,612	89,898
Equity instruments	2,281	2,193
Debt securities	58,305	76,558
Loans and advances	14,026	11,147
Central banks	—	—
Credit institutions	1,120	363
Customers	12,906	10,784
FINANCIAL ASSETS AT AMORTIZED COST	1,202,689	1,203,707
Debt securities	140,014	120,949
Loans and advances	1,062,675	1,082,758
Central banks	15,986	16,179
Credit institutions	61,513	55,537
Customers	985,176	1,011,042
HEDGING DERIVATIVES	3,931	5,672
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK	50	(704)
INVESTMENTS	7,052	7,277
Joint venture entities	1,956	2,061
Associated entities	5,096	5,216
ASSETS UNDER INSURANCE OR REINSURANCE CONTRACTS	223	222
TANGIBLE ASSETS	27,438	32,087
Property, plant and equipment	26,416	31,212
For own-use	11,663	12,636

51

ASSETS	2025	2024 A
Leased out under an operating lease	14,753	18,576
Investment properties	1,022	875
Of which leased out under an operating lease	860	749
INTANGIBLE ASSETS	17,308	19,259
Goodwill	11,958	13,438
Other intangible assets	5,350	5,821
TAX ASSETS	30,076	30,596
Current tax assets	11,132	11,426
Deferred tax assets	18,944	19,170
OTHER ASSETS	8,719	8,559
Insurance contracts linked to pensions	67	81
Inventories	7	6
Other	8,645	8,472
NON-CURRENT ASSETS HELD FOR SALE	75,011	4,002
TOTAL ASSETS	1,867,515	1,837,081

A. Presented for comparison purposes only.

52

CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR million

LIABILITIES	2025	2024 A
FINANCIAL LIABILITIES HELD FOR TRADING	171,546	152,151
Derivatives	51,968	57,753
Short positions	44,015	35,830
Deposits	75,563	58,568
Central banks	12,385	13,300
Credit institutions	27,058	26,284
Customers	36,120	18,984
Marketable debt securities	—	—
Other financial liabilities	—	—
FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS	42,148	36,360
Deposits	30,440	28,806
Central banks	3,086	1,774
Credit institutions	1,424	1,625
Customers	25,930	25,407
Marketable debt securities	11,686	7,554
Other financial liabilities	22	—
Memorandum items: subordinated liabilities	—	—
FINANCIAL LIABILITIES AT AMORTIZED COST	1,421,184	1,484,322
Deposits	1,072,384	1,126,439
Central banks	18,542	24,882
Credit institutions	74,692	90,012
Customers	979,150	1,011,545
Marketable debt securities	312,704	317,967
Other financial liabilities	36,096	39,916
Memorandum items: subordinated liabilities	29,287	35,813
HEDGING DERIVATIVES	4,248	4,752
CHANGES IN THE FAIR VALUE OF HEDGED ITEMS IN PORTFOLIO HEDGES OF INTEREST RATE RISK	49	(9)
LIABILITIES UNDER INSURANCE CONTRACTS	18,737	17,829
PROVISIONS	8,355	8,407
Pensions and other post-retirement obligations	1,656	1,731
Other long term employee benefits	993	915
Taxes and other legal contingencies	2,989	2,717
Contingent liabilities and commitments	713	710
Other provisions	2,004	2,334
TAX LIABILITIES	9,568	9,598
Current tax liabilities	3,664	3,322
Deferred tax liabilities	5,904	6,276
OTHER LIABILITIES	15,937	16,344
LIABILITIES ASSOCIATED WITH NON-CURRENT ASSETS HELD FOR SALE	62,995	—
TOTAL LIABILITIES	1,754,767	1,729,754

A. Presented for comparison purposes only.

53

CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER 2025 AND 2024

EUR million

EQUITY	2025	2024 A
SHAREHOLDERS´ EQUITY	141,144	135,196
CAPITAL	7,345	7,576
Called up paid capital	7,345	7,576
Unpaid capital which has been called up	—	—
SHARE PREMIUM	36,792	40,079
EQUITY INSTRUMENTS ISSUED OTHER THAN CAPITAL	—	—
Equity component of the compound financial instrument	—	—
Other equity instruments issued	—	—
OTHER EQUITY	273	217
ACCUMULATED RETAINED EARNINGS	91,959	82,326
REVALUATION RESERVES	—	—
OTHER RESERVES	(7,532)	(5,976)
Reserves or accumulated losses in joint venture investments	1,643	1,831
Others	(9,175)	(7,807)
(-) OWN SHARES	(96)	(68)
PROFIT OR LOSS ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT	14,101	12,574
(-) INTERIM DIVIDENDS	(1,698)	(1,532)
OTHER COMPREHENSIVE INCOME OR LOSS	(37,974)	(36,595)
Items that will not be reclassified to profit or loss	(4,121)	(4,757)
Items that may be reclassified to profit or loss	(33,853)	(31,838)
NON-CONTROLLING INTEREST	9,578	8,726
Other comprehensive income or loss	(1,947)	(2,020)
Other items	11,525	10,746
TOTAL EQUITY	112,748	107,327
TOTAL LIABILITIES AND EQUITY	1,867,515	1,837,081
MEMORANDUM ITEMS: OFF BALANCE SHEET AMOUNTS
Loan commitments granted	321,234	302,861
Financial guarantees granted	17,449	16,901
Other commitments granted	148,118	134,493

A. Presented for comparison purposes only.

54

CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

EUR million

	(Debit) Credit
	2025	2024 A
Interest income	101,710	109,012
Financial assets at fair value through other comprehensive income	5,713	6,931
Financial assets at amortized cost	76,248	80,992
Other interest income	19,749	21,089
Interest expense	(59,362)	(65,225)
Interest income/(charges)	42,348	43,787
Dividend income	715	710
Income from companies accounted for using the equity method	665	687
Commission income	17,387	16,834
Commission expense	(4,411)	(4,458)
Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net	127	(117)
Financial assets at amortized cost	(89)	(190)
Other financial assets and liabilities	216	73
Gain or losses on financial assets and liabilities held for trading, net	1,017	1,344
Reclassification of financial assets at fair value through other comprehensive income	—	—
Reclassification of financial assets at amortized cost	—	—
Other gains (losses)	1,017	1,344
Gains or losses on non-trading financial assets and liabilities mandatorily at fair value through profit or loss	1,106	495
Reclassification of financial assets at fair value through other comprehensive income	—	—
Reclassification of financial assets at amortized cost	—	—
Other gains (losses)	1,106	495
Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net	(307)	691
Gain or losses from hedge accounting, net	12	14
Exchange differences, net	407	(216)
Other operating income	1,583	846
Other operating expenses	(2,070)	(2,258)
Income from insurance and reinsurance contracts	476	470
Expenses from insurance and reinsurance contracts	(385)	(449)
Total income	58,670	58,380
Administrative expenses	(21,533)	(21,970)
Staff costs	(13,633)	(13,825)
Other general administrative expenses	(7,900)	(8,145)
Depreciation and amortisation cost	(3,178)	(3,179)
Provisions or reversal of provisions, net	(2,729)	(3,465)
Impairment or reversal of impairment at financial assets not measured at fair value through  profit or loss and net gains and losses from changes	(12,546)	(12,136)
Financial assets at fair value through other comprehensive income	(29)	1
Financial assets at amortized cost	(12,517)	(12,137)
Impairment or reversal of impairment of investments in subsidiaries, joint ventures and associates, net	—	—
Impairment or reversal of impairment on non-financial assets, net	(251)	(624)
Tangible assets	(129)	(382)
Intangible assets	(112)	(231)
Others	(10)	(11)
Gain or losses on non-financial assets and investments, net	—	368
Negative goodwill recognized in results	22	—

55

	(Debit) Credit
	2025	2024 A
Gains or losses on non-current assets held for sale not classified as discontinued operations	226	(27)
Operating profit/(loss) before tax	18,681	17,347
Tax expense or income from continuing operations	(4,723)	(4,844)
Profit/(loss) from continuing operations	13,958	12,503
Profit/(loss) after tax from discontinued operations	1,542	1,241
Profit/(loss) for the year	15,500	13,744
Profit/(loss) attributable to non-controlling interests	1,399	1,170
Profit/(loss) attributable to the parent	14,101	12,574
Earnings/(losses) per share
Basic	0.905	0.771
Diluted	0.900	0.768

A. Presented for comparison purposes only.

56

CONSOLIDATED STATEMENTS OF RECOGNIZED INCOME AND EXPENSE FOR THE YEARS ENDED 31 DECEMBER 2025 AND

2024

EUR million

	2025	2024 A
CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR	15,500	13,744
OTHER RECOGNISED INCOME AND EXPENSE	(1,858)	(2,339)
Items that will not be reclassified to profit or loss	100	219
Actuarial gains and losses on defined benefit pension plans	(73)	(584)
Non-current assets held for sale	10	—
Other recognised income and expense of investments in subsidiaries, joint ventures and associates	1	(3)
Changes in the fair value of equity instruments measured at fair value through other comprehensive income	245	447
Gains or losses resulting from the accounting for hedges of equity instruments measured at fair value through other comprehensive income, net	—	—
Changes in the fair value of equity instruments measured at fair value through other comprehensive income (hedged item)	(76)	20
Changes in the fair value of equity instruments measured at fair value through other comprehensive income (hedging instrument)	76	(20)
Changes in the fair value of financial liabilities at fair value through profit or loss attributable to changes in credit risk	(160)	277
Income tax relating to items that will not be reclassified	77	82
Items that may be reclassified to profit or loss	(1,958)	(2,558)
Hedges of net investments in foreign operations (effective portion)	195	420
Revaluation gains (losses)	195	420
Amounts transferred to income statement	—	—
Other reclassifications	—	—
Exchanges differences	(3,399)	(3,047)
Revaluation gains (losses)	(3,399)	(3,047)
Amounts transferred to income statement	—	—
Other reclassifications	—	—
Cash flow hedges (effective portion)	867	558
Revaluation gains (losses)	158	(698)
Amounts transferred to income statement	709	1,256
Transferred to initial carrying amount of hedged items	—	—
Other reclassifications	—	—
Hedging instruments (items not designated)	(14)	—
Revaluation gains (losses)	(1)	—
Amounts transferred to income statement	(13)	—
Other reclassifications	—	—
Debt instruments at fair value with changes in other comprehensive income	613	(493)
Revaluation gains (losses)	715	(447)
Amounts transferred to income statement	(102)	(46)
Other reclassifications	—	—
Non-current assets held for sale	274	—
Revaluation gains (losses)	267	—
Amounts transferred to income statement	7	—
Other reclassifications	—	—
Share of other recognised income and expense of investments	20	(108)
Income tax relating to items that may be reclassified to profit or loss	(514)	112
Total recognised income and expenses for the year	13,642	11,405
Attributable to non-controlling interests	1,452	709
Attributable to the parent	12,190	10,696

A. Presented for comparison purposes only.

57

CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2025 AND 2024

EUR million

												Non-controlling interest
	Capital	Share premium	Equity instruments issued (not capital)	Other equity instruments	Accumulated retained earnings	Revaluation reserves	Other reserves	(-) Own shares	Profit attributable to shareholders of the parent	(-) Interim dividends	Other comprehensive income	Other comprehensive income	Other items	Total
Balance at 31 December 2024A	7,576	40,079	—	217	82,326	—	(5,976)	(68)	12,574	(1,532)	(36,595)	(2,020)	10,746	107,327
Adjustments due to errors	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Adjustments due to changes in accounting policies	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Opening balance at 1 January 2024 A	7,576	40,079	—	217	82,326	—	(5,976)	(68)	12,574	(1,532)	(36,595)	(2,020)	10,746	107,327
Total recognised income and expense	—	—	—	—	—	—	—	—	14,101	—	(1,911)	53	1,399	13,642
Other changes in equity	(231)	(3,287)	—	56	9,633	—	(1,556)	(28)	(12,574)	(166)	532	20	(620)	(8,221)
Issuance of ordinary shares	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of preferred shares	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Maturity of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Conversion of financial liabilities into equity	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Capital reduction	(231)	(3,287)	—	—	—	—	231	3,287	—	—	—	—	(8)	(8)
Dividends	—	—	—	—	(1,643)	—	—	—	—	(1,698)	—	—	(896)	(4,237)
Purchase of equity instruments	—	—	—	—	—	—	—	(4,081)	—	—	—	—	—	(4,081)
Disposal of equity instruments	—	—	—	—	—	—	34	766	—	—	—	—	—	800
Transfer from equity to liabilities	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Transfer from liabilities to equity	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Transfers between equity items	—	—	—	—	11,276	—	(766)	—	(12,574)	1,532	532	20	(20)	—
Increases (decreases) due to business combinations	—	—	—	—	—	—	—	—	—	—	—	—	(5)	(5)
Share-based payment	—	—	—	(67)	—	—	—	—	—	—	—	—	—	(67)
Others increases or (-) decreases in equity	—	—	—	123	—	—	(1,055)	—	—	—	—	—	309	(623)
Balance at 31 December 2025	7,345	36,792	—	273	91,959	—	(7,532)	(96)	14,101	(1,698)	(37,974)	(1,947)	11,525	112,748

A. Presented for comparison purpose only .

58

CONSOLIDATED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR THE YEARS ENDED 31 DECEMBER 2024 AND 2023

EUR million

												Non-controlling interest
	Capital	Share premium	Equity instruments issued (not capital)	Other equity instruments	Accumulated retained earnings	Revaluation reserves	Other reserves	(-) Own shares	Profit attributable to shareholders of the parent	(-) Interim dividends	Other comprehensive income	Other comprehensi ve income	Other items	Total
Balance at 31 December 2023A	8,092	44,373	720	195	74,114	—	(5,751)	(1,078)	11,076	(1,298)	(35,020)	(1,559)	10,377	104,241
Adjustments due to errors	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Adjustments due to changes in accounting policies	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Opening balance at 1 January 2023A	8,092	44,373	720	195	74,114	—	(5,751)	(1,078)	11,076	(1,298)	(35,020)	(1,559)	10,377	104,241
Total recognised income and expense	—	—	—	—	—	—	—	—	12,574	—	(1,878)	(461)	1,170	11,405
Other changes in equity	(516)	(4,294)	(720)	22	8,212	—	(225)	1,010	(11,076)	(234)	303	—	(801)	(8,319)
Issuance of ordinary shares	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of preferred shares	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Issuance of other financial instruments	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Maturity of other financial instruments	—	—	(751)	—	—	—	—	—	—	—	—	—	(590)	(1,341)
Conversion of financial liabilities into equity	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Capital reduction	(516)	(4,294)	—	—	—	—	516	4,294	—	—	—	—	(93)	(93)
Dividends	—	—	—	—	(1,485)	—	—	—	—	(1,532)	—	—	(660)	(3,677)
Purchase of equity instruments	—	—	—	—	—	—	—	(4,038)	—	—	—	—	—	(4,038)
Disposal of equity instruments	—	—	—	—	—	—	8	754	—	—	—	—	—	762
Transfer from equity to liabilities	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Transfer from liabilities to equity	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Transfers between equity items	—	—	—	—	9,697	—	(215)	—	(11,076)	1,298	303	—	(7)	—
Increases (decreases) due to business combinations	—	—	—	—	—	—	—	—	—	—	—	—	(8)	(8)
Share-based payment	—	—	—	(62)	—	—	—	—	—	—	—	—	—	(62)
Others increases or (-) decreases in equity	—	—	31	84	—	—	(534)	—	—	—	—	—	557	138
Balance at 31 December 2024A	7,576	40,079	—	217	82,326	—	(5,976)	(68)	12,574	(1,532)	(36,595)	(2,020)	10,746	107,327

A. Presented for comparison purposes only .

59

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED 2025 AND 2024

EUR million

	2025	2024 A
A. CASH FLOWS FROM OPERATING ACTIVITIES	(14,835)	(24,155)
Profit or loss for the year	15,500	13,744
Adjustments made to obtain the cash flows from operating activities	31,347	28,361
Depreciation and amortisation cost	3,178	3,179
Other adjustments	28,169	25,182
Net increase/(decrease) in operating assets	119,257	117,996
Financial assets held-for-trading	25,776	62,460
Non-trading financial assets mandatorily at fair value through profit or loss	1,867	31
Financial assets at fair value through profit or loss	146	(1,850)
Financial assets at fair value through other comprehensive income	(6,733)	10,225
Financial assets at amortized cost	97,964	45,995
Other operating assets	237	1,135
Net increase/(decrease) in operating liabilities	62,529	57,616
Financial liabilities held-for-trading	20,654	34,256
Financial liabilities designated at fair value through profit or loss	5,858	(3,854)
Financial liabilities at amortized cost	35,719	34,164
Other operating liabilities	298	(6,950)
Income tax recovered/(paid)	(4,954)	(5,880)
B. CASH FLOWS FROM INVESTING ACTIVITIES	534	(3,712)
Payments	7,925	11,355
Tangible assets	5,854	8,494
Intangible assets	1,805	2,104
Investments	79	686
Subsidiaries and other business units	187	71
Non-current assets held for sale and associated liabilities	—	—
Other payments related to investing activities	—	—
Proceeds	8,459	7,643
Tangible assets	5,206	5,966
Intangible assets	—	—
Investments	749	681
Subsidiaries and other business units	54	8
Non-current assets held for sale and associated liabilities	2,450	988
Other proceeds related to investing activities	—	—
C. CASH FLOW FROM FINANCING ACTIVITIES	(14,203)	(5,510)
Payments	17,743	14,045
Dividends	3,341	3,017
Subordinated liabilities	8,822	4,096
Redemption of own equity instruments	—	751
Acquisition of own equity instruments	4,081	4,038
Other payments related to financing activities	1,499	2,143
Proceeds	3,540	8,535
Subordinated liabilities	2,287	7,001
Issuance of own equity instruments	—	—
Disposal of own equity instruments	815	765
Other proceeds related to financing activities	438	769
D. EFFECT OF FOREIGN EXCHANGE RATE DIFFERENCES	(8,908)	5,243
E. NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(37,412)	(28,134)

60

	2025	2024 A
F. CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR	192,208	220,342
G. CASH AND CASH EQUIVALENTS AT END OF THE YEAR	154,796	192,208
COMPONENTS OF CASH AND CASH EQUIVALENTS AT END OF THE YEAR
Cash	7,357	9,253
Cash equivalents at central banks	135,330	170,914
Other financial assets	9,594	12,041
Less, bank overdrafts refundable on demand	—	—
TOTAL CASH AND CASH EQUIVALENTS AT END OF THE YEAR	152,281	192,208
In which, restricted cash	—	—
TOTAL CASH AND CASH EQUIVALENTS AT END OF PERIOD ASSOCIATED WITH NON- CURRENT ASSETS HELD FOR SALE	2,515	—

A. Presented for comparison purposes only .

61

4. Distribution of Banco

Santander's profit, shareholder

remuneration scheme and

earnings per share

a) Distribution of Banco Santander’s profit and

shareholder remuneration scheme

The distribution of the Bank's current annual results that

the board of directors will propose for approval by the

shareholders at the annual general meeting is as

follows:

EUR million
To dividends	3,520
Dividend paid at 31 December A	1,699
Complementary dividend B	1,821
To voluntary reserves C	7,593
Net profit for the year	11,113

A. Total amount paid as interim dividend, at the rate of EUR 11.5 fixed

cents per eligible share (recorded in 'Shareholders' equity - Interim

dividends').

B. Fixed complementary dividend of EUR 12.5 gross cents per eligible

share, payable in cash as from 5 May 2026. The total amount has been

estimated on the assumption that, as a result of the partial

implementation of the buyback program announced on February 3,

2026, the number of the Bank's outstanding shares eligible for the

dividend will be 14,568,470,446 and that, as envisaged, the capital

increase submitted to the 2026 general meeting under item 6.C of the

agenda will not be executed before 5 May 2026. Therefore, the total

amount of the complementary dividend may be lower if more shares

than initially envisaged are acquired under the buy-back programme, or

higher if fewer shares are acquired under the buy-back programme or if

the capital increase submitted to this general meeting under item 6.C

of the agenda is executed before 5 May 2026.

C. Estimated amount corresponding to a complementary dividend of EUR

1,821,058,805.75. To be increased or reduced by the same amount by

which the total amount of the final dividend is lower or higher,

respectively, than its estimated amount.

The transcribed proposal comprises the part of the 2025

shareholder remuneration policy that is implemented

through cash dividends (the interim dividend paid in

November 2025 of EUR 11.5 cents per share with

dividend entitlement, approved by the board of directors

on September 30, 2025, and the complementary

dividend expected to be paid as of 5 May 2026, of EUR

12.5 cents per share with the dividend entitlement,

proposed by the board of directors on 24 February 2026,

and therefore subject to approval by the general

meeting).

The remuneration policy also provides for shareholder

remuneration through the implementation of share

buyback programmes, to which an amount equivalent to

25% of the Group’s underlying profit will be allocated.

The first programme charged to 2025 results, amounting

to approximately amount of EUR 1,700  million, was

completed between August 2025 and December 2025.

In addition, in 2025 Banco Santander announced its

objective of allocating at least EUR 10,000 million to

share buybacks in respect of 2025 and 2026 results and

expected excess capital. As part of this objective, on 4

February 2026 a second buyback programme was

launched for a maximum total amount of EUR 5,030

million, of which EUR 1,830 million corresponds to an

amount equivalent to approximately 25% of the Group’s

underlying profit in the second half of 2025, and the

remaining EUR 3,200 million corresponds to

approximately 50% of the capital released following

completion of the sale of the 49% stake in Santander

Bank Polska. A capital reduction resolution is also being

submitted to the general meeting to enable the

cancellation of the treasury shares acquired under this

second buyback programme.

The accounting statement, prepared by the Bank

pursuant to legal requirements, evidencing the existence

of sufficient liquidity for the payment of the interim

dividend on the date and for the amount mentioned

above, was as follows:

EUR million
	31 August 2025
Profit before taxes	6,193
Tax expense	635
Dividends paid in cash	—
Distributable maximum amount	5,558
Available liquidity	96,923

62

Finally, and although it does not form part of the

remuneration charged to the 2025 financial year, it is

hereby stated that, in execution of the resolution of the

general meeting held on 4 April 2025, on 2 May 2025

the Bank paid a final cash dividend of EUR 11 cents per

share charged to 2024 results.  Lastly, also charged to

2024 results, the Bank implemented two share buyback

programmes. The first of these programmes, for a

maximum amount of EUR 1,525 million, was completed

in December 2024, and the second, for a maximum

amount of EUR 1,587 million, was completed in June

2025.

b) Earnings/loss per share from continuing and

discontinued operations

i. Basic earnings / loss per share

Basic earnings/loss per share are calculated by dividing

the net profit attributable to the Group, adjusted by the

after-tax amount of the remuneration of contingently

convertible preference shares (PPCC) recognised in

equity and the capital perpetual preference shares

(PPCA) (see note 21), if applicable, by the weighted

average number of ordinary shares outstanding during

that period, excluding the average number of own

shares held through that period.

Accordingly:

	2025	2024
Profit (Loss) attributable to the Parent (EUR million)	14,101	12,574
Remuneration of PPCC and PPCA (EUR million) (note 21)	(622)	(620)
	13,479	11,954
Of which:
Profit (Loss) from discontinued operations (non controlling interest net) (EUR million)	962	822
Profit (Loss) from continuing operations (non-controlling interest and PPCC and PPCA net) (EUR million)	12,517	11,132
Weighted average number of shares outstanding	14,890.30484	15,497.607269
Basic earnings (Loss) per share (euros)	0.905	0.771
Of which, from discounted operations (euros)	0.065	0.053
Basic earnings (Loss) per share from continuing operations (euros)	0.840	0.718

ii. Diluted earnings / loss per share

Diluted earnings/loss per share are calculated by

dividing the net profit attributable to the Group, adjusted

by the after-tax amount of the remuneration of

contingently convertible preference shares recognised in

equity (PPCC) recognised in equity and the capital

perpetual preference shares (PPCA) (see note 21) , by the

weighted average number of ordinary shares

outstanding during the year, excluding the average

number of treasury shares and adjusted for all the

dilutive effects inherent to potential ordinary shares

(share options, and convertible debt securities).

Accordingly, diluted earnings/loss per share were

determined as follows:

	2025	2024
Profit (Loss) attributable to the Parent (EUR million)	14,101	12,574
Remuneration of PPCC and PPCA (EUR million) (note 21)	(622)	(620)
Dilutive effect of changes in profit for the period arising from potential conversion of ordinary shares	—	—
	13,479	11,954
Of which:
Profit (Loss) from discontinued operations (net of non-controlling interests) (EUR million)	962	822
Profit (Loss) from continuing operations (net of non- controlling interests and PPCC and PPCA) (EUR million)	12,517	11,132
Weighted average number of shares outstanding	14,890,304,840	15,497,607,269
Dilutive effect of options/rights on shares	85,269,647	70,110,570
Adjusted number of shares	14,975,574,487	15,567,717,839
Diluted earnings (Loss) per share (euros)	0.900	0.768
Of which, from discounted operations (euros)	0.064	0.053
Diluted earnings (Loss) per share from continuing operations (euros)	0.836	0.715

63

5. Remuneration and other

benefits paid to the Bank's

directors and senior managers

The following section contains qualitative and

quantitative disclosures on the remuneration paid to the

members of the board of directors —both executive and

non-executive directors— and senior managers for 2025

and 2024 .

a) Remuneration of Directors

i. Bylaw-stipulated emoluments

The annual general meeting held on 22 March 2013

approved an amendment to the Bylaws, whereby the

remuneration of directors in their capacity as board

members became an annual fixed amount determined

by the annual general meeting. This amount shall

remain in effect unless the shareholders resolve to

change it at a general meeting. However, the board of

directors may elect to reduce the amount in any years in

which it deems such action justified.

The maximum remuneration established by the annual

general meeting was EUR 6 million in 2025 (EUR

6 million in 2024), with two components: (a) an annual

emolument and (b) attendance fees.

The specific amount payable for the above-mentioned

items to each of the directors is determined by the board

of directors. For such purpose, it takes into consideration

the positions held by each director on the board, their

membership of the board and the board committees and

their attendance to the meetings thereof, and any other

objective circumstances considered by the board.

The total Bylaw-stipulated emoluments earned by the

directors in 2025 amounted to EUR 5.3 million (EUR

5.4 million in 2024 ) .

Annual allotment

For 2025, the board of directors, upon recommendation

of the remuneration committee, approved a 3% increase

in the annual allotments payable to the chair and

members of the board and its committees (including the

executive committee), as well as to the lead independent

director and the non-executive Vice Chair .Accordingly,

each director received, in respect of 2024 and 2025, the

amounts corresponding to their service on the board and

its committees, with such amounts determined by the

specific position held, as detailed in the table below.

Amount per director in euros	2025	2024
Members of the board of directors	100,940	98,000
Members of the executive committee	175,100	170,000
Members of the audit committee	44,290	43,000
Members of the appointments committee	28,840	28,000
Members of the remuneration committee	28,840	28,000
Members of the risk supervision, regulation and compliance committee	44,290	43,000
Members of the responsible banking, sustainability and culture committee	28,840	28,000
Members of the innovation and technology committee	28,840	28,000
Chair of the audit committee	72,100	70,000
Chair of the appointments committee	51,500	50,000
Chair of the remuneration committee	51,500	50,000
Chair of the risk supervision, regulation and compliance committee	72,100	70,000
Chair of the responsible banking, sustainability and culture committee	51,500	50,000
Chair of the innovation and technology committee	72,100	70,000
Lead independent directorA	113,300	110,000
Non-executive Vice Chair	30,900	30,000

A. Glenn Hutchins has been allocated EUR 700,000 (including annual

allowances and attendance fees) in minimum total annual pay set for

the required time and dedication to perform his roles.

64

Attendance fees

The directors receive fees for attending board and

committee meetings, excluding executive committee

meetings, where no attendace fees are received.

In line with the adjustment to the annual allotments, the

board of directors approved a 3% increase for 2025 in

attendance fees compared with 2024.

Accordingly, attendance fees for meetings of the board

and its committees (with the exception of the Executive

Committee, for which no attendance fees are payable)

amounted, for the last two years, to the totals set out in

the table below:

Attendance fees per director per meeting in euros
	2025	2024
Board of directors	2,785	2,704
Audit committee and risk supervision, regulation and compliance committee	1,821	1,768
Other committees (excluding executive committee)	1,606	1,560

ii. Salaries

The executive directors receive salaries. In accordance

with the policy approved by the annual general meeting,

salaries are composed of a fixed annual remuneration

and a variable one, which consists in a unique incentive,

which is a deferred variable remuneration plan linked to

multi-year objectives, which establishes the following

payment scheme:

• 40% of the variable remuneration amount,

determined at year-end on the basis of the

achievement of the established objectives, is paid

immediately.

• The remaining 60% is deferred over five years

provided that the conditions of permanence in the

Group and non-concurrence of the malus clauses are

met, and subject to long term metrics, taking into

account the following accrual scheme:

– The accrual of the first and second portion (20%

of total variable compensation, paid in 2027 and

2028) will be conditional on none of the malus

clauses being triggered.

– The accrual of the third, fourth and fifth portion

(40% of total variable compensation and paid in

2029 , 2030 and 2031), is linked to objectives

related to the period 2025 —2027 and the

metrics and scales associated with these

objectives. The fulfilment of the objectives

determines the percentage to be paid of the

deferred amount in these three annuities, and

these targets can reduce these amounts and the

number of deferred instruments, or increase

them up to a maximum achievement ratio of

125% , so executives have the incentive to exceed

their targets.

In accordance with current remuneration policies, the

amounts already paid will be subject to a possible

recovery (clawback) by the Bank during the period set

out in the policy in force at each moment.

Payment of the approved incentive is paid 40% in cash

and the remaining 60% in instruments, consisting of

Banco Santander  shares and restricted stock units

(RSUs) of PagoNxt, split as:

• the amount of PagoNxt RSUs set for each year; and

• the rest, all in shares of Banco Santander.

Comparative of executive remuneration (Chair and

CEO)

The target bonus of the Executive Chair and the CEO for

2025 remains unchanged compared to 2024.

Variable contributions to pensions were not modified in

2025, so the amounts are the 22% of the 30% of the

last three assigned bonus' average.

In assessing individual performance, the Board

considered the Grupo Santander’s strong results for

2025, reflecting continued delivery of our strategic plan.

Attributable profit reached EUR 14,101 million in 2025,

up 12% year-on-year (or + 16% in constant euros), with

a TSR during the year of 132% (+60% in relative terms

vs. our peer group).

The Board also evaluated the leadership of the Executive

Chair and the Chief Executive Officer in delivering these

results and advancing the Group’s strategic priorities.

Taking these factors into account, it determined that

both executives achieved an 'Exceptional' level of

performance and approved the corresponding variable

remuneration.

Moreover, the ratio of executive directors’ total

remuneration to underlying attributable profit fell to

0.17% from 0.18% in 2024.

65

iii. Detail by director

The detail, by bank director, of the short-term (immediate) and deferred (not

subject to long-term goals) remuneration for 2025 and 2024 is provided below:

EUR thousand
	2025																			2024
	Bylaw-stipulated emoluments															Pension contribution	Other remuneration1	Total		Total
	Annual emolument									Short-term and deferred (not subject to long-term goals) salaries of executive directors
																			BoardF		Executive committee	Audit committee	Appointments committee	Remuneration commitee1	Risk supervision, regulation and compliance oversight committee2	Responsible banking, sustainability and culture committee	Innovation and technology committee	Attendance fees and commissions	Fixed	Variable- immediate payment		Deferred variable		Total
	In cash	In instru ments	In cash	In instru ments
	Ana Botín	101	175	—	—	—	—	—	29	44	3,435	2,003	2,003	1,001	1,002				9,444		1,341	843	11,977		12,127
Héctor GrisiA	101	175	—	—	—	—	—	29	44	3,150	1,384	1,384	692	692	7,302	1,120	718	9,489		9,137
José Antonio Álvarez	132	175	—	—	—	44	—	29	67	—	—	—	—	—	—	—	2,440	2,887		3,698
Glenn Hutchins	412	—	—	29	80	—	—	101	78	—	—	—	—	—	—	—	—	700		700
Homaira Akbari	101	—	44	—	—	—	29	29	81	—	—	—	—	—	—	—	—	284		285
Javier Botín A	101	—	—	—	—	—	—	—	36	—	—	—	—	—	—	—	—	137		144
Sol Daurella	101	—	—	29	29	—	80	—	75	—	—	—	—	—	—	—	—	314		292
Henrique de Castro	101	—	44	—	29	—	—	29	80	—	—	—	—	—	—	—	—	283		300
Gina Díez	101	—	—	29	—	—	29	—	63	—	—	—	—	—	—	—	—	222		225
Luis Isasi	101	175	—	—	29	44	—	—	74	—	—	—	—	—	—	—	1,000	1,423		1,440
Belén Romana	101	175	44	80	—	44	—	29	107	—	—	—	—	—	—	—	—	581		599
Pamela Walkden	101	—	44	—	—	116	29	—	93	—	—	—	—	—	—	—	—	383		381
Germán de la Fuente	101	—	116	—	—	44	—	—	83	—	—	—	—	—	—	—	—	344		338
Carlos Barrabés B	101	—	—	29	—	—	29	29	71	—	—	—	—	—	—	—	—	259		128
Antonio Weiss C	101	—	—	—	29	—	—	—	50	—	—	—	—	—	—	—	—	180		72
Bruce Carnegie-Brown D	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—		78
Ramiro Mato E	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—		271
Total 2025	1,857	875	292	196	196	292	196	304	1,047	6,585	3,387	3,387	1,693	1,694	16,746	2,461	5,001	29,462		—
Total 2024	1,791	933	306	183	168	263	190	280	1,240	6,585	3,130	3,130	1,877	1,879	16,601	2,444	5,815	—		30,214

A. All amounts received were reimbursed to Fundación Botín.

B. Director and member of the nomination committee, responsible banking, sustainability and culture

committee and innovation and technology committee since 27 June 2024.

C. Director since 27 June 2024.

D. Stepped down as director on 22 March 2024.

E. Stepped down as director on 27 June 2024.

F. Also includes emoluments for other roles in the board.

Other remuneration includes EUR 1,000 thousand for the role as non-executive Chair of the Santander

España business unit and for attending its board and committee meetings for Luis Isasi. For José Antonio

Álvarez, this amount includes remuneration as strategic advisor of Grupo Santander, life and health

insurance contributions (EUR 678 thousand ) and part of the former supplement for having waived the

death and disability policy (EUR 12 thousand).

Changes in the chairship or membership of the committees:

1. Antonio Weiss was appointed member of the remuneration committee on 1 January 2025.

2. José Antonio Álvarez was appointed member of the risk supervision, regulation and compliance

oversight committee on 1 January 2025.

66

Following is the detail by executive director of the

salaries linked to multi-year objectives at their fair Value,

which will only be received if the conditions of

permanence in the Group, non-applicability of malus

clauses and achievement of the established objectives

are met (or, as the case may be, of the minimum

thresholds thereof, with the consequent reduction of

amount agreed-upon at the end of the year) in the terms

described in note 42.

EUR thousand
	2025				2024
	Variable subject to Long-term objectives1
	In cash	In shares	In RSUs	Total	Total
Ana Botín	701	1,893	210	2,804	2,332
Héctor Grisi	484	1,277	176	1,938	1,611
Total	1,185	3,170	386	4,742	3,943

1. Corresponds with the fair value of the maximum amount they are

entitled to in a total of 3 years : 2029, 2030 and 2031 subject to

conditions of continued service, with the exceptions provided, and to

the non-applicability of malus clauses and achievement of the

objectives established The face value of the three aforementioned

deferred amounts is EUR 6,774 thousand for 2025 (EUR 4,006

thousand for Ana Botín and EUR 2,768 thousand for Héctor Grisi)

The fair value has been determined at the grant date

based on the valuation report of an independent expert,

Willis Towers Watson. Based on the design of the plan

for 2025 and the levels of achievement of similar plans

in comparable entities, the fair value considered is 70%

of the variable remuneration subject to long-term

objectives (see note 42).

Note 5.e below includes disclosures on the shares

delivered from the deferred remuneration schemes in

place in previous years and for which delivery conditions

were met, as well as on the maximum number of shares

that may be received in future years in connection with

the aforementioned 2025 and 2024 variable

remuneration plans.

b) Remuneration of the board members as

representatives of the Bank

By resolution of the executive committee, all the

remuneration received by the Bank’s directors who

represent the Bank on the boards of directors of listed

companies in which the Bank has a stake, paid by those

companies and relating to appointments made on or

after 18 March 2002, accrues to the Group. In 2025 and

2024 the Bank’s directors did not receive any

remuneration in respect of these representative duties.

On the other hand, in their personal capacity, in 2025

Homaira Akbari was paid USD 100 thousand (EUR

85 thousand ) as member of the board of Santander

Consumer USA Holdings, Inc. and EUR 200 thousand as

member of the board of PagoNxt S.L., and José Antonio

Álvarez and Henrique de Castro were each paid the same

EUR 200 thousand as members of the board of PagoNxt

S.L. (Henrique de Castro also received EUR 15 thousand

as member of the nomination committee of PagoNxt,

S.L.). Likewise, Pamela Walkden was paid GBP

100 thousand (EUR 115 thousand) as member of

Santander UK plc and Santander UK Group Holdings; and

Belén Romana EUR 157 thousand as member of the

Board of Santander Insurance, S.L.

Likewise, Luis Isasi was paid EUR 1,000 thousand as non-

executive Chair of the Santander España business unit

and for attending its board and committee meetings

(amounts paid by Banco Santander, S.A.).

And finally, José Antonio Álvarez, as strategic adviser of

Grupo Santander, received fixed remuneration of EUR

1,750 thousand. In addition, he received the life and

health insurance contributions and the part of the former

supplement for having waived the death and disability

policy.

c) Post-employment and other long-term benefits

In 2012, the contracts of Ana Botín and other members

of the Bank's senior management with defined benefit

pension commitments were modified to transform these

commitments into a defined contribution system, which

covers the contingencies of retirement, disability and

death. From that moment on, the Bank makes annual

contributions to their pension system for their benefit.

This system gives them the right to receive benefits upon

retirement, regardless of whether or not they are active

at the Bank at such time, based on contributions to the

system, and replaced their previous right to receive a

pension supplement in the event of retirement.

The initial balance for Ana Botín in the new defined

benefits system corresponded to the market value of the

assets from which the provisions corresponding to the

respective accrued obligations had materialised on the

date on which the old pension commitments were

transferred into the new benefits system.

Since 2013 , the Bank has made annual contributions to

the benefits system for executive directors and other

members of executive team, in proportion to their

respective pensionable bases, until they leave Grupo

Santander or until their retirement within the Group,

death, or disability.

The benefit plan system is outsourced to Santander

Seguros y Reaseguros, Compañía Aseguradora, S.A., and

the economic rights of the foregoing directors under this

plan belong to them regardless of whether or not they

are active at the Bank at the time of their retirement,

death or disability.

67

In accordance with the provisions of the remuneration

regulations, contributions made calculated on variable

remuneration are subject to the discretionary pension

benefits regime. Under this regime, contributions are

subject to malus clauses and clawback according to the

policy in force at any given time and during the same

period in which the variable remuneration is deferred.

Furthermore, they must be invested in bank shares for a

period of five years from the date when the executive

director leaves the Group, regardless of whether or not

they leave to retire. Once that period has elapsed, the

amount invested in shares will be reinvested, along with

the remainder of the cumulative balance corresponding

to the executive director, or it will be paid to the

executive director or to their beneficiaries in the event of

a contingency covered by the benefits system.

As per the director´s remuneration policy approved at the

23 March 2018 general shareholder´s meeting, the

system was changed with a focus on:

• Aligning the annual contributions with practices of

comparable institutions.

• Reducing future liabilities by eliminating the

supplementary benefits scheme in the event of death

(death of spouse or parent) and permanent disability

of serving directors.

• Not increasing total costs for the Bank.

The changes to the system were the following:

• Fixed and variable pension contributions were

reduced to 22% of the respective pensionable bases.

The gross annual salaries and the benchmark

variable remuneration were increased in the

corresponding amount with no increase in total costs

for the Bank. The pensionable base for the purposes

of the annual contributions for the executive

directors is the sum of fixed remuneration plus 30%

of the average of their last three variable

remuneration amounts. This means complying with

Circular 2/2016 of the Bank of Spain, standard 41, on

pension benefits, by which a part of not less than

15% of the total contribution must be based on

variable components.

• The death and disability supplementary benefits

were eliminated since 1 April 2018. A fixed

remuneration supplement (included in other

remuneration in section a.iii in this note) was

implemented the same date. During 2025, this fixed

remuneration supplement has expired both for Ana

Botín and José Antonio Álvarez, in line with the age

of 65 initially set at the time this remuneration

component was approved.

• The total amount insured for life and accident

insurance was increased.

The provisions recognised in 2025 and 2024 for

retirement pensions were as follows:

EUR thousand
	2025	2024
Ana Botín	1,341	1,339
Héctor Grisi	1,120	1,105
Total	2,461	2,445

Following is a detail of the balances relating to each of

the directors under the welfare system as of  31

December 2025 and 2024 :

EUR thousand
	2025	2024
Ana Botín	65,027	54,731
Héctor Grisi	2,033	1,299
José Antonio Álvarez	23,178	20,326
Total	90,238	76,356

d) Insurance

The Group pays for life insurance policies for the Bank’s

directors, who will be entitled to receive benefits if they

are declared disabled. In the event of death, the benefits

will be payable to their heirs. The premiums paid by the

Group are included in the 'Other remuneration' column

of the table shown in Note 5.a.iii above. Also, the

following table provides information on the sums

insured for the Bank’s directors:

Insured capital
EUR thousand
	2025	2024
Ana Botín	20,659	21,525
Héctor Grisi	12,600	12,600
José Antonio Álvarez	10,500	11,215
Total	43,759	45,340

The insured capital has been modified in 2018 for Ana

Botín  as part of the pension systems transformation set

out in note 5.c) above, which has encompassed the

elimination of the supplementary benefits systems

(death of spouse and death of parent) and the increase

of the life and accident insurance annuities.

68

During 2025 and 2024, the Group has disbursed a total

amount of EUR 8.3 million and EUR 13.5 million ,

respectively, for the payment of civil-liability insurance

premiums. These premiums correspond to several civil-

liability insurance policies that hedge, among others,

directors, senior management and other managers and

employees of the Group and the Bank itself, as well as

its subsidiaries, in light of certain types of potential

claims of third parties. For this reason, it is not possible

to disaggregate or individualize the amount that

correspond to the directors and executives.

As of 31 December 2025 and 2024, no life insurance

commitments exist for the Group in respect of any other

directors .

e) Deferred variable remuneration systems

The following information relates to the maximum

number of shares to which the executive directors are

entitled at the beginning and end of 2025 and 2024 due

to their participation in the deferred variable

remuneration systems, which instrumented a portion of

their variable remuneration relating to 2025 and prior

years, as well as on the deliveries, in shares or in cash,

made to them in 2025 and 2024 once the conditions for

the receipt thereof had been met (see note 42):

i. Deferred variable compensation plan linked to

multiannual objectives

In the annual shareholders meeting of 18 March 2016,

with the aim of simplifying the remuneration structure,

improving the ex-ante risk adjustment and increasing

the incidence of long-term objectives, the bonus plan

(deferred and conditioned variable compensation plan)

and ILP were replaced by one single plan.

The variable remuneration of executive directors and

certain executives (including senior management)

corresponding to 2025 has been approved by the board

of directors and implemented through the tenth cycle of

the deferred variable remuneration plan linked to multi-

year objectives. The application of the plan was

authorised by the annual general meeting of

shareholders, as it entails the delivery of shares to the

beneficiaries.

As indicated in section a.ii of this note, 60% of the

variable remuneration amount is deferred over five years

for executive directors , to be paid, where appropriate,

provided that the conditions of permanence in the

Group, according to the following accrual scheme:

• The accrual of the first and second parts (instalments

in 2027 and 2028 ) is conditional on none of the

malus clauses being triggered.

• The accrual of the third, fourth and fifth parts

(instalments in 2029 , 2030 and 2031) is linked to

non-concurrence of malus clauses and the fulfilment

of certain objectives related to the 2024 ‑ 2027

period. These objectives and their respective weights

are:

– Banco Santander’s consolidated Return on

tangible equity (RoTE) target in 2027 (weight of

30% ).

– Relative performance of Banco Santander's total

shareholder return (TSR) in 2025 -2027 in respect

of the weighted TSR of a peer group comprising 9

credit institutions, with the appropriate TSR ratio

based on the group’s TSR among its peers

(weight of 50%).

– Four sustainability metrics which have different

weighting (with a total weight of 20%).

The degree of compliance with the above objectives

determines the percentage to be applied to the deferred

amount in these three annuities, with a maximum

achievement ratio of 125%, so executives have the

incentive to exceed their targets.

Both the immediate payment and the two first deferrals

(short-term part) are paid 50% in cash and the remaining

50% in instruments. The last three deferrals

(conditioned to long-term metrics) are paid 25% in cash

and 75% in instruments.

The accrual of deferred amounts (whether or not subject

to performance measures) is conditioned, in addition to

the permanence of the beneficiary in the Group, to non-

occurrence, during the period prior to each of the

deliveries, of any the circumstances giving rise to the

application of malus as set out in the Group’s

remuneration policy in its chapter related to malus and

clawback. Likewise, the amounts already paid of the

incentive will be subject to clawback by the Bank in the

cases and during the term foreseen in said policy,  and in

accordance with the terms and conditions foreseen in it.

Malus and clawback clauses are triggered by poor

financial performance of Banco Santander, a division or

area, or exposures from staff as a result of an

executive(s)’s management of, at least, one of these

factors:

i. Significant failures in risk management committed by

the entity, or by a business unit or risk control.

ii. The increase suffered by the entity or by a business unit

of its capital needs, not foreseen at the time of

generation of the exposures.

iii. Regulatory sanctions or judicial sentences from events

that could be attributable to the unit or the personnel

responsible for those. Also, the breach of internal codes

of conduct of the entity.

iv. Irregular conduct, whether individual or collective. In this

regard, the negative effects derived from the marketing

of inappropriate products and the responsibilities of the

people or bodies that made those decisions will be

specially considered.

69

In addition to the existing policy on malus and clawback

clauses of our remuneration policy, the addendum to our

remuneration policy entitled 'Financial Statement

Restatement Compensation' regulates the recoupment

of compensation received by the executive directors of

Banco Santander, S.A., and senior management, in the

event of a financial restatement (according to the

regulation) resulting from material noncompliance with

financial reporting requirements under US federal

securities laws.

The maximum amount of shares to be delivered under

the plan is within the maximum amount of the award to

be delivered in shares (EUR 11.5 million) approved at

the 2025 AGM for executive directors. At its meeting on

25 November 2025 and pursuant to the powers granted

by shareholders at the 2025 AGM, the board agreed to

amend the calculation period used to determine the

number of shares to be delivered from 50 to 30 trading

sessions (under no circumstances may the number of

shares exceed the maximum approved at the AGM), as

the board considered that this better reflects market

practice and enables us to offset share price volatility.

Thus, the number of shares to be delivered under the

2025 policy has been calculated with the weighted

average daily volume of weighted average listing prices

of Banco Santander shares in the 30 trading sessions

prior to the Friday (not inclusive) before 4 February 2025

(the date on which the board approved the 2025 bonus

for executive directors), which was EUR 10.261 per

share. According to an independent experts' valuation,

the price per PagoNxt, S.L. RSU equals EUR 61.07.

ii. Shares assigned by deferred variable

remuneration plans

The following table shows the number of Santander

shares assigned to each director already in service and

pending delivery as of 1 January 2024, 31 December

2024 and 31 December 2025, as well as the gross shares

that were delivered to them in 2024 and 2025, either in

the form of an immediate payment or a deferred

payment. In this case after having been appraised by the

board, at the proposal of the remuneration committee,

that the corresponding one-fifth of each plan had

accrued. They come from the deferred conditional and

linked to multi-year objectives in 2019, 2020, 2021,

2022, 2023, 2024 and 2025 were formalized.

70

Share-based variable remuneration
	Maximum number of shares to be delivered at January 1,2024	Shares delivered in 2024 (immediate payment 2023 variable remuneration)	Shares delivered in 2024 (deferred payment 2022 variable remuneration)	Shares delivered in 2024 (deferred payment 2021 variable remuneration)	Shares delivered in 2024 (deferred payment 2020 variable remuneration)	Shares delivered in 2024 (deferred payment 2019 variable remuneration)	Variable remuneration 2024 (Maximum number of shares to be delivered)
2019 variable remuneration
Ana Botín	70,905	—	—	—	—	(35,452)	—
José Antonio Álvarez	47,386	—	—	—	—	(23,693)	—
	118,290	—	—	—	—	(59,145)	—
2020 variable remuneration
Ana Botín	93,146	—	—	—	(31,049)	—	—
José Antonio Álvarez	50,594	—	—	—	(16,865)	—	—
	143,740	—	—	—	(47,914)	—	—
2021 variable remuneration
Ana Botín	710,698	—	—	(177,675)	—	—	—
José Antonio Álvarez	479,644	—	—	(119,911)	—	—	—
	1,190,342	—	—	(297,586)	—	—	—
2022 variable remuneration
Ana Botín	358,419	—	(62,334)	—	—	—	—
José Antonio Álvarez	241,954	—	(42,079)	—	—	—	—
	600,374	—	(104,413)	—	—	—	—
2023 variable remuneration
Ana Botín	1,127,209	(469,286)	—	—	—	—	—
Héctor Grisi	749,143	(321,645)	—	—	—	—	—
	1,876,352	(790,931)	—	—	—	—	—
2024 variable remuneration
Ana Botín	—	—	—	—	—	—	976,463
Héctor Grisi	—	—	—	—	—	—	656,033
	—	—	—	—	—	—	1,632,496
2025 variable remuneration 1
Ana Botín	—	—	—	—	—	—	—
Héctor Grisi	—	—	—	—	—	—	—
	—	—	—	—	—	—	—

1. For each director, 40% of the shares indicated correspond to the short-term variable (or immediate payment). The remaining 60% is deferred for delivery,

where appropriate, in the next five years, the last three being subject to the fulfilment of multiannual objectives. Maximum opportunity subject to regulatory

ratio compliance.

71

Share-based variable remuneration
Maximum number of shares to be delivered at December 31, 2024	Instruments matured but not consolidated at January 1, 2025 2	Shares delivered in 2025 (immediate payment 2024 variable remuneration)	Shares delivered in 2025 (deferred payment 2023 variable remuneration)	Shares delivered in 2025 (deferred payment 2022 variable remuneration)	Shares delivered in 2025 (deferred payment 2021 variable remuneration)	Shares delivered in 2025 (deferred payment 2020 variable remuneration)	Shares delivered in 2025 (deferred payment 2019 variable remuneration)	Variable remuneration 2025 (Maximum number of shares to be delivered)	Maximum number of shares to be delivered at December 31, 2025
35,452	—	—	—	—	—	—	(35,452)	—	—
23,693	—	—	—	—	—	—	(23,693)	—	—
59,145	—	—	—	—	—	—	(59,145)	—	—
62,097	—	—	—	—	—	(31,049)	—	—	31,048
33,729	—	—	—	—	—	(16,865)	—	—	16,864
95,826	—	—	—	—	—	(47,914)	—	—	47,912
533,023	(44,774)	—	—	—	(162,750)	—	—	—	325,499
359,733	(30,218)	—	—	—	(109,838)	—	—	—	219,677
892,756	(74,992)	—	—	—	(272,588)	—	—	—	545,176
296,085	—	—	—	(62,334)	—	—	—	—	233,751
199,875	—	—	—	(42,079)	—	—	—	—	157,796
495,961	—	—	—	(104,413)	—	—	—	—	391,548
657,923	—	—	(114,421)	—	—	—	—	—	543,502
427,498	—	—	(74,347)	—	—	—	—	—	353,151
1,085,421	—	—	(188,768)	—	—	—	—	—	896,653
976,463	—	(404,447)	—	—	—	—	—	—	572,016
656,033	—	(279,480)	—	—	—	—	—	—	376,553
1,632,496	—	(683,927)	—	—	—	—	—	—	948,569
—	—	—	—	—	—	—	—	602,746	602,746
—	—	—	—	—	—	—	—	408,159	408,159
—	—	—	—	—	—	—	—	1,010,904	1,010,904

2.The levels of achievement of the multi-year metrics of the long-term variable remuneration plans:

1) Seventh cycle of the deferred multi-year objectives variable remuneration plan (2022): 115.2% of achievement for the period 2022-2024.

a. RoTE metric for 2024 year-end period at 150%. Weight of 40.0%.

b. Relative TSR metric in 2022-2024 period at 83% of achievement. Weight of 40.0%.

c. Sustainability metrics at 25% of achievement. Weight of 20.0%.

2) Sixth cycle of the deferred multi-year objectives variable remuneration plan (2021): 91.6% of achievement for the period 2021-2023.

a. CET1 metric at 100% of achievement for 2023 year-end period (target 12.00%). Weight of 33.3%.

b. Underlying BPA growth at 150% of achievement (target growth of 100%). Weight of 33.3%.

c. TSR metric at 25% of achievement (target of 33 to 66 percentile). Weight of 33.3%.

3) Fifth cycle of the deferred multi-year objectives variable remuneration plan (2020): 83.0% of achievement for the period 2020-2022.

a. CET1 metric at 100% of achievement for 2022 year-end period (target 12.00%). Weight of 33.3%.

b. Underlying BPA growth at 150% of achievement (target growth of 10%). Weight of 33.3%.

c. TSR metric at 0% of achievement (minimum target of 33% not reached). Weight of 33.3%.

72

Furthermore, the maximum number of RSUs of PagoNxt,

S.L. to be delivered under the current plan (and subject

to regulatory ratio compliance) is 9,415 and 7,909 units

for Ana Botín and Héctor Grisi, respectively.

In addition, the table below shows the cash delivered in

2025 and 2024, by way of either immediate payment or

deferred payment, in the latter case once the Board had

determined, at the proposal of the remuneration

committee, that one deferral relating to each plan had

accrued:

EUR thousand
	2025		2024
	Cash paid (immediate payment 2024 variable remuneration)	Cash paid (deferred payments from 2023, 2022, 2021 and 2020 variable remuneration)	Cash paid (immediate payment 2023 variable remuneration)	Cash paid (deferred payments from 2022, 2021, 2020 and 2019 variable remuneration)
Ana Botín	1,851	1,759	1,780	1,419
Héctor Grisi	1,279	366	1,220	863
José Antonio Álvarez	—	815	—	945
Total	3,130	2,940	3,000	3,228

iii. Information on former members of the board of

directors

The chart below includes  information on the maximum

number of shares to which former members of the board

of directors, are entitled for their participation in the

various deferred variable remuneration systems, which

instrumented a portion of their variable remuneration

relating to the years in which they were executive

directors. Also set forth below is information on the

deliveries, whether in shares or in cash, made in 2025

and 2024 to former board members, upon achievement

of the conditions for the receipt thereof (see note 42):

Maximum number of shares to be delivered
	2025	2024
Deferred conditional variable remuneration plan and linked to objectives (2019)	—	24,490
Deferred conditional variable remuneration plan and linked to objectives (2020)	35,511	71,024
Deferred conditional variable remuneration plan and linked to objectives (2021)	137,400	206,100
Deferred conditional variable remuneration plan and linked to objectives (2022)	—	—
Deferred conditional variable remuneration plan and linked to objectives (2023)	—	—
Deferred conditional variable remuneration plan and linked to objectives (2024)	—	—

73

Number of shares delivered
	2025	2024
Deferred conditional variable remuneration plan and linked to objectives (2018)	—	29,860
Deferred conditional variable remuneration plan and linked to objectives (2019)	24,490	24,490
Deferred conditional variable remuneration plan and linked to objectives (2020)	35,512	35,512
Deferred conditional variable remuneration plan and linked to objectives (2021)	68,700	12,911
Deferred conditional variable remuneration plan and linked to objectives (2022)	—	—
Deferred conditional variable remuneration plan and linked to objectives (2023)	—	—
Deferred conditional variable remuneration plan and linked to objectives (2024)	—	—

In addition, EUR 724 thousand and EUR 650 thousand

relating to the deferred portion payable in cash of the

aforementioned plans were paid each in 2025 and 2024.

f) Loans

Grupo Santander’s direct risk exposure to the bank’s

directors and the guarantees provided for them are

detailed below. These transactions were made on terms

equivalent to those that prevail in arm’s-length

transactions or the related compensation in kind was

recognized :

EUR thousand
	2025				2024
	Loans and credits	Guarantees	Total		Loans and credits	Guarantees	Total
Ana Botín	3	—	3		—	—	—
Héctor Grisi	—	—	—		—	—	—
José Antonio Álvarez	—	—	—		—	—	—
Glenn Hutchins	—	—	—		—	—	—
Antonio Francesco Weiss B	—	—	—		—	—	—
Belén Romana	—	—	—		—	—	—
Bruce Carnegie-Brown A	—	—	—		—	—	—
Germán de la Fuente	—	—	—		—	—	—
Gina Díez Barroso	—	—	—		5	—	5
Henrique de Castro	—	—	—		—	—	—
Homaira Akbari	—	—	—		—	—	—
Javier Botín	—	—	—		—	—	—
Juan Carlos Barrabés  C	137	—	137		138	—	138
Luis Isasi	—	—	—		—	—	—
Pamela Walkden	—	—	—		—	—	—
Ramiro Mato D	—	—	—		—	—	—
Sol Daurella	—	—	—		—	—	—
	140	—	140		143	—	143

A. Ceased as director of Banco Santander, S.A. on 22 March 2024.

B. Director since 27 June 2024.

C. Director since 27 June 2024.

D. Ceased as director of Banco Santander, S.A. on 27 June 2024.

74

g) Senior management

The table below includes the amounts relating to the

short-term remuneration of the members of senior

management at 31 December 2025 and those at 31

December 2024, excluding the remuneration of the

executive directors, which is detailed above.

EUR thousand
		Short-term salaries and deferred remuneration
			Variable remuneration (bonus) - Immediate payment			Deferred variable remuneration
Year	Number of persons	Fixed	In cash	In instruments 2		In cash	In instruments 3	Pensions	Other remuneration1	Total
2025	15	19,255	9,179	9,180		4,306	4,306	4,910	6,456	57,592
2024	14	16,466	7,376	7,377		3,319	3,320	4,520	7,153	49,531

1.Includes other remuneration items such as life and medical insurance premiums and localization aids and lastly RSUs from PagoNxt S.L., for the work of one

director in said entity.

2.The amount of immediate payment for 2024 is 894,587 shares( 1,611,965 Santander shares   in 2024).

3.The deferred amount in instruments not linked to long-term objectives for 2024 is 416,410 shares ( 725,399 Santander shares in 2024).

In addition to the amounts reflected in the table, salary

remunerations amounting to EUR 4,118 thousand were

granted in the form of buyouts and sign-on awards,

related to the recruitment of new members who joined

this employee group during the year.

In 2025 , the ratio of variable to fixed pay components

was 134% of the total for senior managers, well within

the maximum limit of 200% set by 2024 AGM.

Also, the detail of the breakdown of the remuneration

linked to long-term objectives of the members of senior

management at 31 December 2025 and 31 December

2024 is provided below. These remuneration payments

shall be received, as the case may be, in the

corresponding deferral periods, upon achievement of the

conditions stipulated for each payment (see note 42):

.

EUR thousand
		Variable remuneration subject to long-term objectives 1
Year	Number of  people	Cash  payment	Instrument payment	Total
2025	15	4,521	4,522	9,043
2024	14	3,485	3,486	6,971

1. Relates to the fair value of the maximum annual amounts for years

2029, 2030 and 2031 of the tenth cycle of the deferred conditional

variable remuneration plan (2028, 2029 and 2030 for the ninth cycle

of the deferred variable compensation plan linked to annual

objectives for the year 2024). The face value of the three

aforementioned deferred amounts is EUR 12,919 thousand for 2025

Additionally, members of senior management who

stepped down from their roles in 2025 consolidated

salary remuneration and other remuneration for a total

amount of EUR 2,905 thousand (EUR 12,303 thousand in

2024). In 2025 rights regarding variable pay subject to

long-term objectives amounted to EUR 342 (thousand

(EUR 633 thousand were generated in 2024 for this

collective.

75

The maximum number of Santander shares that the

members of senior management at each plan grant date

(excluding executive directors) were entitled to receive

as of 31 December 2025 and 31 December 2024 relating

to the deferred portion under the various plans then in

force is the following (see note 42):

Maximum number of shares to be delivered
	2025	2024
Deferred conditional variable remuneration plan and linked to objectives (2019)	—	71,294
Deferred conditional variable remuneration plan and linked to objectives (2020)	145,704	370,522
Deferred conditional variable remuneration plan and linked to objectives (2021)	486,863	966,680
Deferred conditional variable remuneration plan and linked to objectives (2022)	891,305	1,430,464
Deferred conditional variable remuneration plan and linked to objectives (2023)	934,609	1,395,815
Deferred conditional variable remuneration plan and linked to objectives (2024)	1,601,213	—

Since the conditions established in the corresponding

deferred share-based remuneration schemes for prior

years had been met, the following number of Santander

shares was delivered in 2025 and 2024 to the senior

management, in addition to the payment of the related

cash amounts:

Number of shares delivered
	2025	2024
Deferred conditional variable remuneration plan and linked to objectives (2018)	—	57,730
Deferred conditional variable remuneration plan and linked to objectives (2019)	54,249	71,294
Deferred conditional variable remuneration plan and linked to objectives (2020)	145,704	185,261
Deferred conditional variable remuneration plan and linked to objectives (2021)	243,433	351,777
Deferred conditional variable remuneration plan and linked to objectives (2022)	266,390	357,615
Deferred conditional variable remuneration plan and linked to objectives (2023)	233,652	1,212,984
Deferred conditional variable remuneration plan and linked to objectives (2024)	1,399,679	—

As indicated in note 5.c above, senior management

participate in the benefit system created in 2012, which

covers the contingencies of retirement, disability and

death. Banco Santander makes annual contributions to

the benefit plans of its senior managers. In 2012, the

contracts of the senior managers with benefit pension

commitments were amended to transform them into a

contribution system. The system, which is outsourced to

Santander Seguros y Reaseguros, Compañía

Aseguradora, S.A., gives senior managers the right to

receive benefits upon retirement, regardless of whether

or not they are active at Banco Santander at such time,

based on contributions to the system. This new system

replaced their previous right to receive a pension

supplement in the event of retirement. In the event of

pre-retirement, and up to the retirement date, senior

managers appointed prior to September 2015 are

entitled to receive an annual allowance.

In addition, further to applicable remuneration

regulations, from 2016 (inclusive), a discretionary

pension benefit component of at least 15% of total

remuneration  in contributions to the pension system has

been included. Under the regime corresponding to these

discretionary benefits, the contributions that are

calculated on variable remunerations are subject to

malus and clawback clauses, subject to policies

applicable at each time, and during the same period in

which the variable remuneration is deferred.

Likewise, the annual contributions calculated on variable

remunerations must be invested in Bank shares for a

period of five years from the date that the senior

manager leaves the Group, regardless of whether or not

they leave to retire. Once that period has elapsed, the

amount invested in shares will be reinvested, along with

the remainder of the cumulative balance corresponding

to the senior manager, or it will be paid to the senior

manager or to their beneficiaries in the event of a

contingency covered by the benefits system.

The contracts of some members of senior management

were modified at the beginning of 2018 with the same

objective and changes indicated in section c of this note

for Ana Botín. The modifications, which are aimed at

aligning the annual contributions with the practices of

comparable institutions and reducing the risk of future

obligations by eliminating the supplementary scheme

for death (widowhood and orphanhood) and permanent

disability in service without increasing the costs to the

bank, are as follows:

76

• Contributions to the pensionable bases were

reduced. Gross annual salaries were increased in the

corresponding amount.

• The death and disability supplementary benefits

were eliminated since 1 January 2018 for some

members of senior management and since 1 April

2018 for executive directors. A fixed remuneration

supplement reflected in other remuneration in the

table above was implemented on the same date.

• The amounts insured for life and accident insurance

were increased.

All of the above was done without an increase in total

cost for the Bank.

The balance as of 31 December 2025 in the pension

system for those who were part of senior management

at year end amounted to EUR 51 million (EUR 51 million

at 31 December 2024).

The net charge to income corresponding to pension

amounted to EUR 4.9 million  in 2025 (EUR 4.5 million in

31 December 2024).

In 2025 and 2024 there have been no payments in the

form of a single payment of the annual voluntary pre-

retirement allowance.

Additionally, the capital insured by life and accident

insurance at 31 December 2025 of this group amounts

to EUR 78 million (EUR 83 million at 31 December 2024).

h) Post-employment benefits to former Directors  

and former senior executive vice presidents

The post-employment benefits and settlements paid in

2025 to former directors of the Bank, other than those

detailed in note 5.c amounted to EUR 5.6 million and

EUR 5.6 million in 2024, respectively. Also, the post-

employment benefits and settlements paid in 2025 to

former executive vice presidents amounted to EUR

16 million and EUR 12.7 million   in 2024, respectively.

Contributions to insurance policies that hedge pensions

to previous members of the Bank’s board of directors,

amounted to EUR 0.17 million in 2025 (EUR 0.17 million

in 2024). Likewise, contributions to insurance policies

that hedge pensions for previous senior managers

amounted to EUR 1.3 million in 2025 (EUR 2.3 million in

2024).

No releases or charges were recorded in the

consolidated income statement for pension

commitments and similar obligations held by the Group

with previous former members of the bank's board of

directors or former members of senior management in

2025 and 2024.

In addition, 'Provisions - Pension Fund and similar

obligations' in the consolidated balance sheet as at 31

December 2025 included EUR 43 million in respect of the

post-employment benefit obligations to former

Directors of the Bank (EUR 46 million at 31 December

2024) and EUR 108 million corresponding to former

members of senior management (EUR 96 million at 31

December 2024).

i) Pre-retirement and retirement

The board of directors approved an amendment to the

contracts of executive directors whereby they ceased to

have the right to pre-retire in case of termination of his

contract.

j) Contract termination

The executive directors and members of senior

management have indefinite-term employment

contracts. Executive directors or senior managers whose

contracts are terminated voluntarily or due to breach of

duties are not entitled to receive any economic

compensation. If Banco Santander terminates the

contract for any other reason, they will be entitled to the

corresponding legally-stipulated termination benefit,

without prejudice to any compensation that may  for

non-competition obligations, as detailed in the directors'

remuneration policy.

If Banco Santander were to terminate her contract, Ana

Botín would have to remain at Banco Santander’s

disposal for a period of 4 months in order to ensure an

adequate transition, and would receive her fixed salary

during that period.

k) Information on investments held by the directors

in other companies and conflicts of interest

None of the members of the board of directors have

declared that they or persons related to them may have

a direct or indirect conflict of interest with the interests

of Banco Santander, S.A., as set forth in article 229 of the

Corporate Enterprises Act.

77

6. Loans and advances to central

banks and credit institutions

The detail by classification, type and currency, of loans

and advances to central banks and credit institutions in

the balance sheet is as follows:

EUR million
	2025	2024
CENTRAL BANKS
Classification
Financial assets held for trading	657	1,239
Financial assets at amortised cost	223	218
	880	1,457
Type
Reverse repurchase agreements	657	1,239
Other term loans	153	177
Advances different from loans	70	41
Of which, impaired assets	—	—
Of which, valuation adjustments for impairment	—	—
	880	1,457
Currency
Euro	412	1,385
US Dollars	468	72
	880	1,457
CREDIT INSTITUTIONS
Classification
Financial assets held for trading	26,349	23,428
Financial assets designated at fair value through profit or loss	557	580
Financial assets designated at fair value through other comprehensive income	839	32
Financial assets at amortized cost	40,882	34,711
	68,627	58,751
Type
Reverse repurchase agreements	43,210	39,238
Other term loans	15,711	9,509
Non-loans advances	9,706	10,004
Of which, impaired assets	—	—
Of which, valuation adjustments for impairment	(2)	(1)
	68,627	58,751
Currency
Euro	47,146	41,951
Pound sterling	1,768	1,618
US dollar	17,580	14,480
Chilean pesos	—	7
Mexican pesos	1,127	—
Swiss francs	505	—
Other currencies	501	695
	68,627	58,751
TOTAL	69,507	60,208

78

The loans and advances classified in the “Financial assets

held for trading” portfolio correspond, mainly, to

temporary acquisitions of assets from Spanish and

foreign institutions.

Deposits in credit institutions classified as "Financial

assets at amortized cost" are mainly term accounts and

guarantees given in cash to credit institutions.

In addition, at 31 December 2025, there were

outstanding balances with central banks and credit

institutions of EUR 72,163 million and EUR 1,345 million,

respectively (EUR 94,612 million and EUR 1,526 million

at 31 December 2024). These balances are included

under 'Cash, cash balances at central banks and other

deposits on demand'.

Note 49 shows the details of the maturity terms of

"Financial assets at amortized cost" and "Cash, cash  

balances at central banks and other deposits on

demand".

The breakdown at 31 December 2025 of the exposure

and the provision fund for financial assets subject to

impaired is EUR 41,946 million and EUR 2 million,

respectively, all in Phase 1 (EUR 34,963 million and EUR

1 million, also Phase 1, in 2024).

7. Debt securities 

The detail, by classification, sector and currency, of ‘Debt

instruments’ in the accompanying balance sheets is as

follows:

EUR millon
	2025	2024
Classification
Financial assets held for trading	55,736	43,315
Non-trading financial assets mandatorily at fair value through profit or loss	42	204
Financial assets designated at fair value through other comprehensive income	5,349	8,873
Financial assets at amortized cost	83,585	65,917
	144,712	118,309
Sector
Central banks	3,037	2,500
Public sector	103,733	77,927
Credit institutions	17,465	18,781
Other financial institutions	17,886	17,073
Non-financial institutions	2,591	2,028
Of which, impaired assets	—	164
Of which, value adjustments for impairment	(29)	(129)
	144,712	118,309
Currency
Euro	113,002	94,190
US dollar	15,546	10,944
Pound sterling	7,791	8,905
Brazilian real	3,886	1,584
Other currencies	4,487	2,686
	144,712	118,309

The increase in the year of the debt securities portfolio

under the heading  'Financial assets at fair value with

changes in other comprehensive income' is mainly due

to the increase in exposure to sovereign debt, as a result

of greater activity in the markets business, both its own

and for distribution to clients.

At 31 December 2025, the nominal amount of the debt

securities subject to own obligations, mostly as

collateral for financing lines received by the Bank,

amounts to EUR 61,963 million (EUR 35,603 million at

31 December 2024), of which EUR 15,001 million

correspond to Spanish Public Debt (EUR 5,893 million at

31 December, 2024).

79

The breakdown at 31 December 2025 of the exposure,

by stage of impairment, of assets subject to impairment

is EUR 88,657 million in Stage 1, EUR 306 million in

Stage 2 and there is no exposue in Stage 3. In 2024, it

was EUR 74,704 million in Stage 1, EUR 51 million in

Stage 2 and EUR 164 million in Stage 3.

The breakdown at 31 December 2025 of the provision

fund by stage of impairment of assets subject to

impairment is EUR 26 million in Stage 1, EUR 3 million in

Stage 2 and there is no exposure or provision fund in

Stage 3. In 2024 it was EUR 9 million in Stage 1, EUR 2

million in Stage 2 and EUR 118 million in Stage 3.

Note 25.e) shows the details of ‘Other comprehensive

income‘ recognized in Equity for the  ‘Financial Assets

designated at fair value through other comprehensive

income‘.

Note 49 contains details of the maturity periods of 'Debt

securities' classified in the 'financial assets at fair value

through other comprehensive income' and 'financial

assets at amortized cost' portfolios.

8. Equity instruments

a) Breakdown

The detail, by classification and type, of Equity

instruments in the accompanying balance sheets is as

follows:

EUR million
	2025	2024
Classification
Financial assets held for trading	21,196	16,225
Non-trading financial assets mandatorily at fair value through profit or loss	958	991
Financial assets designated at fair value through other comprehensive income	1,283	1,245
	23,437	18,461
Type
Shares of Spanish companies	4,623	3,682
Shares of foreign companies	18,022	14,280
Shares of investments funds	792	499
	23,437	18,461

Note 25.c) contains a detail of the ‘Other comprehensive

income’, recognized in equity, on ‘Financial assets

designated at fair value through other comprehensive

income’.

b) Changes

The changes in ‘Non-trading financial assets mandatorily

at fair value through profit or loss’ and ‘Financial assets

at fair value through other comprehensive income’

duri ng 2025 and 2024 were as follows:

EUR million
	2025	2024
Balance at beginning of the year	1,245	983
Purchases and capital increases	15	3
Disposals and capital reductions	(3)	(2)
Other comprehensive income and other conceptsA	26	261
Balance at end of the year	1,283	1,245

A. In 2024 there were significant changes in value due, among others, to

the increase in the prices of listed companies included in this heading.

The main changes in fair value recognised in Other

Comprehensive Income relate to the change in value of

Bank of Shanghai Co. Ltd. (increase of EUR 19 million and

EUR 414 million in 2025 and 2024 respectively) and the

decrease in the fair value of the stake in Project Quasar

Investments 2017, S.L. in 2024, by EUR 155 million.

c) Notifications of acquisitions of investments

The notifications of the acquisitions and disposals of

holdings in investees made by the Bank in 2025 , in

compliance with Article 155 of the Spanish Limited

Liability Companies Law and Article 105 of Spanish

Securities Market Law 24/1998, are listed in appendix IV.

9. Trading Derivatives (assets

and liabilities) and short

positions

a) Trading derivatives

The detail, by type of inherent risk, of the fair value of

the trading derivatives arranged by Banco Santander at

31 December 2025 and 2024 is as follows:

EUR million
	2025		2024
	Debit balance	Credit balance	Debit balance	Credit balance
Interest rate	28,296	20,294	30,265	23,347
Equity instruments	1,699	2,021	1,473	1,482
Currency and gold	15,203	14,382	19,476	19,647
Credit	1,378	4,701	1,124	1,447
Commodities	—	—	98	97
Others	7	126	26	101
Total	46,583	41,524	52,462	46,121

80

b) Short positions

The following is a breakdown of short positions

(liabilities):

EUR million
	2025	2024
Borrowed Securities
Equity instruments	429	358
Representative values of debt	1,555	1,347
Short sales
Debt instruments	28,710	23,813
Total	30,694	25,518

10. Loans and advances to

customers

a) Detail

The detail, by classification, of ‘Loans and advances to

customers’ on the balance sheets is as follows:

EUR million
	2025	2024
Financial assets held for trading	31,423	23,756
Non-trading financial assets mandatorily at fair value through profit or loss	923	932
Financial assets designated at fair value through profit or loss	4,341	4,246
Financial assets at fair value through other comprehensive income	8,249	5,162
Financial assets at amortized cost	309,739	291,597
Loans and advances to customers (carrying amount)	354,675	325,693
Of which
Impairment losses	(3,188)	(3,959)
Cumulative negative changes in fair value due to credit risk from doubtful exposures	(5)	(24)
Loans and advances to customers (gross amount)	357,868	329,676

‘Note 49 shows the details of the maturity periods of

financial assets at amortized cost.’

At 31 December 2025 and 2024, there were no loans

and advances to customers for material amounts

without fixed maturity dates.

b) Breakdown

The following is a breakdown of the loans and advances

granted to Banco Santander´s customers, which, reflect

the bank´s exposure to credit task in it´s main activity

without considering the balance of impairment losses

taking into account the type and situation of the

transactions, the geographical area of their residence

and type of interest rate on the transactions:

81

EUR million
	2025	2024
Loan type and status
On demand and with a short prior period	157	188
Credit cards receivables	1,796	1,492
Commercial credit	31,502	32,105
Finance leases	2,934	2,918
Reverse repurchase agreements	52,789	40,348
Other term loans	252,466	238,299
Non loans advances	13,031	10,343
Of which
Impaired assets	5,228	7,052
Impairment losses	(3,188)	(3,959)
Cumulative negative changes in fair value due to credit risk from doubtful exposures	(5)	(24)
Book value	354,675	325,693
Gross book value	357,868	329,676
Geographical area
Spain	183,923	185,135
Europe	57,478	54,934
of which United Kingdom	17,339	17,108
America	99,133	74,184
of which United States of America	61,886	47,896
of which Brazil	1,206	1,506
Rest of the world	17,334	15,423
	357,868	329,676
Interest rate:
Fixed rate	183,958	161,092
Floating rate	173,910	168,584
	357,868	329,676

At 31 December 2025 and 2024 the Bank had EUR

17,387 million and EUR 15,837 million, respectively, of

loans and advances granted to Spanish public

administrations whose rating at 31 December 2025 is A

(rating at 31 December 2024 was A) and with  EUR 6,715

million and EUR 4,719 million, respectively, granted to

the Public Sector of other countries (at 31 December

2025 this amount was composed, based on the rating of

the issuer as follows: 7% AAA, 38% AA, 7% A, 23% BBB

and 25% lower than BBB).

The above-mentioned ratings were obtained by

converting the internal ratings awarded to customers by

Banco Santander (see note 50) into the external ratings

classification established by Standard & Poor's, in order

to make them more readily comparable.

Without considering Public Administrations, the amount

of loans and advances at 31 December 2025 amounts to

EUR 333,766 million, of which EUR 328,538 million are

in a non-doubtful situation (at 31 December 2024, they

amounted to EUR 309,120 million and EUR 302,068

million respectively).

82

The following is a detail, by activity, of the loans to customers at 31 December 2025, net of impairment losses:

EUR million
	Total A	Without collateral	Secured loans
			Net exposure		Loan-to-value ratioC
			Of which, property collateral	Of which, other collateral	Less than or equal to 40%	More than 40% and less than or equal to 60%	More than 60% and less than or equal to 80%	More than 80% and less than or equal to 100%	More than 100%
Public sector	20,981	20,780	147	54	81	50	12	58	—
Other financial institutions and individual traders (business financial activity)	107,891	50,658	1,283	55,950	579	752	326	55,324	252
Non-financial companies and individual entrepreneurs (non-financial business activity) (broken down by purpose)	134,352	95,703	17,083	21,566	6,312	6,411	4,117	19,247	2,562
Of which
Construction and property development(including land)	2,849	5	2,844	—	432	703	615	567	527
Civil engineering construction	1,645	1,173	18	454	6	8	4	450	4
Large companies	96,612	75,568	4,321	16,723	1,357	1,943	1,322	14,991	1,431
SMEs and individual traders	33,246	18,957	9,900	4,389	4,517	3,757	2,176	3,239	600
Other households (broken down by purpose)	78,421	13,506	63,559	1,356	19,133	21,902	19,827	3,311	742
Of which
Residential	60,863	812	59,938	113	17,612	20,424	18,726	2,780	509
Consumer loans	10,794	10,185	223	386	129	107	263	94	16
Other purposes	6,764	2,509	3,398	857	1,392	1,371	838	437	217
Total A	341,645	180,647	82,072	78,926	26,105	29,115	24,282	77,940	3,556
Memorandum item
Refinanced and restructured transactionsB	3,460	1,696	1,265	499	540	379	208	504	133

A.Not including advances that are not loans.

B.Includes the net balance of value adjustments associated with impaired assets.

C.The ratio is the carrying amount of the transactions at 31 December 2025 calculated using  the latest available appraisal value of the collateral.

83

Note 50 contains information relating to the forborne

loan portfolio.

Below is a breakdown of the movement in gross

exposure by impairment stage of loans and advances

from customers recorded under the headings ‘Financial

assets at amortized cost’ and ‘Financial assets at fair

value through other comprehensive income’ under Bank

of Spain Circular 4/2017 to 31 December 2025 and

2024:

2025
EUR million
	Stage 1	Stage 2	Stage 3A	Total
Balance at beginning of the year	276,440	17,226	7,052	300,718
Movements
Transfers
Transfer to Stage 2 from Stage 1	(5,410)	5,410		—
Transfer to Stage 3 from Stage 1	(1,216)		1,216	—
Transfer to Stage 3 from Stage 2		(731)	731	—
Transfer to Stage 1 from Stage 2	2,576	(2,576)		—
Transfer to Stage 2 from Stage 3		246	(246)	—
Transfer to Stage 1 from Stage 3	108		(108)	—
Net changes on financial assets	26,484	(2,609)	(971)	22,904
Write-offs	—	—	(2,446)	(2,446)
Differences in change and other movements	—	—	—	—
Balance at end of the year	298,982	16,966	5,228	321,176

A. The movement of Stage 3 includes portfolio sales for EUR 555

million.

2024
EUR million
	Stage 1	Stage 2	Stage 3A	Total
Balance at the beginning of year	272,599	15,703	7,597	295,899
Movements
Transfers
To stage 2 from stage 1	(7,994)	7,994		—
To stage 3 from stage 1	(848)		848	—
To stage 3 from stage 2		(1,616)	1,616	—
To stage 1 from stage 2	3,928	(3,928)		—
To stage 2 from stage 3		471	(471)	—
To stage 1 from stage 3	10		(10)	—
Net changes on financial assets	8,745	(1,398)	(1,143)	6,204
Write-offs	—	—	(1,385)	(1,385)
Differences in change and other movements	—	—	—	—
Balance at end of the year	276,440	17,226	7,052	300,718

A. The movement of Phase 3 includes portfolio sales for EUR 952

million.

At 31 December 2025, the total net exposure of loans

and advances to the Bank's customers is EUR 317,988

million, of which EUR 298,561 million correspond to

phase 1, EUR 16,381 million to phase 2 and EUR 3,046

million to phase 3 (EUR 296,760 million, EUR 276,057

million, EUR 16,635 million and EUR 4,067 million

respectively at 31 December, 2024).

This exposure includes EUR 15 million (EUR 31 million at

31 December 2024) in impaired assets purchased with

impairment, classified in phase 3, which correspond

mainly to the business combination carried out by the

Bank.

84

c) Impairment losses on loans and advances to

customers at amortized cost and at fair value

through other comprehensive income

The changes in the impairment losses on the assets

making up the balances of financial assets at amortized

cost and at fair value through other comprehensive

income ‘Loans and advances to customers ’:

EUR million
	2025	2024
Balance at beginning of the year	3,959	3,982
Net impairment losses charged to income for the year	1,435	1,445
Of which
Impairment losses charged to profit or loss	2,622	2,764
Impairment losses reversed with a credit to profit or loss	(1,187)	(1,319)
Write-off of impaired balances against recorded impairment allowance	(2,446)	(1,385)
Exchange differences and other changes	240	(83)
Balance at end of the year	3,188	3,959
Of which
By status of the asset
Impaired assets	2,182	2,985
Of which, due to country risk	—	8
Other assets	1,006	966
Balance at end of the year	3,188	3,959
Of which
Individually calculated	705	783
Collective calculated	2,483	3,176

The net provision that has an impact on the results for

the year includes provisions for renegotiation or

contractual modification of EUR 14 million (EUR 21

million at 31 December 2024).

Taking into account the assets in suspense recovered,

which amount to EUR 174 million at 31 December, 2025

(EUR 95 million at 31 December, 2024) and adding to the

net provision of the previous table, the impairment of

'Credit Entities  and Debt Securities' (see notes 6 and 7),

the amount recorded under the heading 'Impairment or

reversal of impairment of financial assets not measured

at fair value through profit or loss and net gains or

losses' , due to changes in 'Financial assets at fair value

with changes in other comprehensive income' and

'Financial assets at amortized cost', amounts to EUR

1,162 million at 31 December, 2025 (EUR 1,334 million

at 31 December, 2024).

The following is the movement of impairment losses 

broken down by impairment stage of loans and advances

to customers, during 2025 and 2024:

2025
EUR million
	Stage 1	Stage 2	Stage 3	Total
Balance at beginning of the year	383	591	2,985	3,959
Transfers
Transfer to Stage 2 from Stage 1	(105)	265		160
Transfer to Stage 3 from Stage 1	(7)		262	255
Transfer to Stage 3 from Stage 2		(54)	191	137
Transfer to Stage 1 from Stage 2	7	(83)		(76)
Transfer to Stage 2 from Stage 3		31	(80)	(49)
Transfer to Stage 1 from Stage 3	—		(10)	(10)
Net changes of the exposure and modifications in the credit risk	142	(165)	1,041	1,018
Changes due to update in the methodology of estimates of the entity
Write-offs	—	—	(2,446)	(2,446)
FX and other movements	1	—	239	240
Gross carrying amount at end of the year	421	585	2,182	3,188

85

2024
EUR million
	Stage 1	Stage 2	Stage 3	Total
Balance at beginning of the year	397	625	2,960	3,982
Transfers
Transfer to Stage 2 from Stage 1	(124)	191		67
Transfer to Stage 3 from Stage 1	(8)		318	310
Transfer to Stage 3 from Stage 2		(161)	485	324
Transfer to Stage 1 from Stage 2	15	(102)		(87)
Transfer to Stage 2 from Stage 3		59	(134)	(75)
Transfer to Stage 1 from Stage 3	2		(9)	(7)
Net changes of the exposure and modifications in the credit risk	109	(21)	825	913
Changes due to update in the methodology of estimates of the entity
Write-offs	—	—	(1,385)	(1,385)
FX and other movements	(8)	—	(75)	(83)
Gross carrying amount at end of the year	383	591	2,985	3,959

d) Impaired assets

The detail of the movement in the balance of financial

assets classified as ‘ Loans and advances to customers ’

and considered to be impaired by reason of their credit

risk during 2025 and 2024 is:

EUR million
	2025	2024
Balance at beginning of the year	7,052	7,597
Net additions	622	840
Written-off assets	(2,446)	(1,385)
Other changes	—	—
Balance at end of the year	5,228	7,052

This amount, once the corresponding provisions have

been deducted, is Banco Santander´s best estimate of

the discounted value of the  cashflows that are expected

to be recovered from impaired assets.

At 31 December 2025, the balance of the assets written-

off amounted to EUR 6,333 million (6,043 millon EUR at

31 of december 2024).

The following are the credit impaired financial assets

and related guarantees maintained to mitigate potential

losses as of 31 December, 2025:

EUR million
	Gross amount	Allowance recognized	Estimated collateral value A
Without associated real collateral	2,775	1,198	—
With associated real collateral	1,723	727	962
With other collateral	730	257	282
Total	5,228	2,182	1,244

A. Collects the maximum value of the collateral associated with each loan,

limited to the net carrying amount. Consequently, it does not include any

other cash flow that could be obtained, such as those from the personal

guarantees of the accredited.

When classifying assets in the previous table, the main

factors considered by Banco Santander to determine

whether an asset has become impaired are the existence

of amounts past due -assets impaired due to arrears- or

other circumstances may be arise which will not result in

all contractual cash flow being recovered, such as a

deterioration of the borrower's financial situation, the

worsening of its capacity to generate funds or difficulties

experienced by it in accessing credit.

e) Transferred credits

The heading “Loans and advances to customers”

includes, among other items, loans transferred to third

parties through traditional securitisation for which the

Group retains, in whole or in part, the associated risks

and rewards. Consequently, and in accordance with the

applicable accounting standards, these loans cannot be

derecognised from the balance sheet. They mainly

comprise mortgage loans, corporate loans and consumer

loans. The breakdown of securitised loans recognised on

the balance sheet, by type of underlying financial

instrument, is set out below:

EUR million
	2025	2024
Retained on the balance sheet A	11,579	12,250
Of which, mortgage assets are securitized through:
Mortgage transfer certificates	5,765	7,277
Total A	11,579	12,250

A. Note 19 reports the liabilities associated with securitization operations,

discounting the bonds of the securitization funds repurchased by the

Bank.

86

The evolution of this activity responds to its use as a

regulatory capital management tool and as a resource

for the diversification of Banco Santander's liquidity

sources. During 2025 and 2024 the Bank didn't

derecognized any of the securitizations carried out in

years mentioned before, and the balance derecognized

at those dates corresponds to securitizations carried out

in previous years and portfolio sales.

On the other hand, at 31 December 2025, Banco

Santander has credits derecognized from the balance

sheet and on which the administration maintains for an

amount of EUR 4,742 million. (EUR 4,000 millon at 31

December 2024). Within the total loans written off the

balance sheet, at 31  December 2025, there are EUR 427

million (EUR 497 million in 2024) of securitized assets.

11. Trading derivatives

The detail of the notional and/or contractual amounts

and the market values of the trading derivatives held by

the Bank in 2025 and 2024 is as follows:

EUR million
	2025		2024
	Notional value	Market value	Notional value	Market value
Held for trading:
Interest rate	8,680,921	8,002	8,170,664	6,918
Options	200,197	(233)	201,120	(361)
Other	8,480,724	8,235	7,969,544	7,279
Equity instruments	73,309	(322)	61,185	(9)
Options	49,001	(871)	44,286	(805)
Other	24,308	549	16,899	796
Currency and gold	1,216,133	821	1,093,647	(171)
Options	102,284	75	115,216	337
Other	1,113,849	746	978,431	(508)
Credit	74,407	(3,323)	46,923	(323)
Hedging default derivative and total through out	74,407	(3,323)	46,923	(323)
Securities and commodities derivatives and other	4,916	(119)	5,288	(74)
Total	10,049,686	5,059	9,377,707	6,341

87

12. Non-current assets and

liabilities held for sale

The detail of non-current assets held for sale in the

balance sheets is as follows:

EUR million
	2025	2024
Foreclosed assets	146	237
Other assets leased out under an operating lease	127	29
Investments - Subsidiaries, Joint venture and Associated entities A	4,222	—
Total	4,495	266

A. Transfer to non-current assets held for sale from the stake in

Santander Bank Polska following the agreement for its sale

(see note 3).

At 31 December 2025, reducing the balance of this

heading (excluding investments in subsidiaries, joint

venture and associated entities), there were EUR 358

million corresponding to value adjustments due to

impairment of those assets, which entails a coverage of

57% of them (EUR 365 million, with a coverage of 58%,

in the 2024 financial year) of which EUR 38 million have

been recorded during the 2025 financial year (EUR 61

million in the 2024 financial year) under the heading

'Gains or losses from non-current assets and groups

disposal of items classified as held for sale not eligible

as discontinued operations' (see note 46).

At 31 December 2025 there are no liabilities associated

in disposable groups of items that have been classified

as held for sale associated with other 'non-current

assets and alienable groups of items that have been

classified as held for sale'.

13. Investments

a) Subsidiaries

‘Investments - Subsidiaries’ includes the equity

instruments owned by Banco Santander and issued by

subsidiaries belonging to Grupo Santander.

Relevant information on these companies is provided in

Appendix I.

i. Breakdown

The detail, by currency and listing status, of ‘Investments

- Subsidiaries’ on the balance sheets at 31 December

2025 and 2024 is as follows:

EUR million
	2025	2024
Currency:
Euro	54,596	53,197
Pound Sterling	15,708	14,338
Other currencies	25,763	30,139
	96,067	97,674
Listing status:
ListedA	6	4,275
Unlisted	96,061	93,399
	96,067	97,674

A. Transfer to non-current assets held for sale from the stake in Santander

Bank Polska following the agreement for its sale (see note 3).

ii. Changes

The changes in 2025 and 2024 in ‘Investments -

Subsidiaries’, disregarding impairment losses, were as

follows:

88

EUR million
	2025	2024
Balance at beginning of the year	109,911	109,567
Acquisitions, contributions, capital increase payments and mergers	9,218	4,554
Of which
Banco Santander Totta, S.A.	4,949	—
Contingent convertible debt (AT1)	1,073	782
Santander Insurance Services UK Limited	780	—
Tresmares Santander Direct Lending, SICC, S.A.	678	174
Deva Capital Holding Company, S.L. Unipersonal	391	254
Andromeda Principal Investment, S.L.U.	250	—
Santander Global Technology and Operations, S.L. Unipersonal	230	—
Santander Consumer Bank, S.A.	166	—
Santander Asset Finance Opportunities Sub-Fund	104	20
PagoNxt, S.L.	97	170
Santander Group Properties, S.L. Unipersonal	52	1,062
Banco Santander International SA	—	517
Blue Ocean SBT, S.L. Unipersonal (anteriormente Santander Bank & Trust, LTD)	—	389
Moon GC&P Investments, S.L.U.	—	300
Cántabro Catalana de Inversiones, S.A.	—	263
Grupo Financiero Santander México, S.A. de C.V.	—	110
Disposals, capital reductions and mergers	(7,698)	(3,880)
Of which
Santander Totta, SGPS, S.A.	4,949	—
Contingent convertible debt (AT1)	603	—
Tresmares Santander Direct Lending, SICC, S.A.	469	—
Investment Holdings 1857, S.L.	333	—
Santander Insurance, S.L.	247	443
SAM Investment Holdings, S.L.	233	—
Blecno Investment, S.L. Unipersonal	209	—
Uro Property Holdings, S.A.	179	—
Andromeda Principal Investment, S.L.U.	178	—
Parasant SA	—	1,012
Santander Global Services, S.L.	—	570
Santander Facility Management España, S.L.U.	—	393
Santander Bank Polska S.A.	—	357
Cántabra de Inversiones, S.A. Unipersonal	—	263
Consulteam Consultores de Gestão, Unipessoal, Lda.	—	209
Moon GC&P Investments, S.L.U.	—	209
Santander UK Investments	—	119
Transfers	(4,235)	—
FX and other movements	(756)	(330)
Balance at end of the year	106,440	109,911

89

In February 2025, a corporate reorganisation was carried

out in Portugal aimed at simplifying the Group’s

structure, through the reverse merger by absorption of

Santander Totta, SGPS, S.A. by Banco Santander Totta,

S.A. The cost of the investment in Banco Santander

amounted to EUR 4,949 million.

In February 2025, the purchase and sale of the company

Santander Consumer Bank, S.A. (formerly called

Crediscotia Financiera, S.A.) was completed for an

amount in Peruvian soles equivalent to EUR 166 million.

In August 2025, a participating loan was granted to

Santander Insurance Services UK Limited for GBP 677

million (EUR 776 million). In September, the loan,

together with accrued interest, was capitalised for GBP

680 million (EUR 780 million).

During financial year 2025, contributions were made to

Tresmares Santander Direct Lending, SICC, S.A. for a

total amount of EUR 678 million, corresponding to the

various capital calls made throughout the year. The

company also made distributions amounting to EUR 469

million. In addition, during the year, contributions were

made to Andromeda Principal Investment, S.L.U. for a

total amount of EUR 250 million, corresponding to the

various capital calls made throughout the year. The

company also made distributions amounting to EUR 178

million.

On January 28, 2026, the deed of merger by absorption

of Blecno Investment, S.L. Unipersonal, Uro Property

Holdings, S.A., Elevate Tech Platforms, S.L. Unipersonal

and Emisora Santander España, S.A. Unipersonal

(acquired companies) by Banco Santander, S.A.

(acquiring company) was executed as a public deed. The

net amount derecognised under this heading as a result

of the transaction was EUR 394 million, with a reserve

payment of EUR 196 million (see Note 1.i).

Throughout financial year 2025, Banco Santander

subscribed capital increases and made partner

contributions in other companies, the most significant

being: EUR 391 million in Deva Capital Holding

Company, S.L. Unipersonal, EUR 230 million in Santander

Global Technology and Operations, S.L. Unipersonal, EUR

104 million in Santander Asset Finance Opportunities,

Sub-Fund, EUR 97 million in PagoNxt, S.L., and EUR 52

million in Santander Group Properties, S.L. Unipersonal.

Additionally, the most significant premium refunds

being: EUR 333 million of Investment Holdings 1857,

S.L., EUR 247 million of Santander Insurance, S.L. and

EUR 233 million of SAM Investment Holdings, S.L.

In December 2025, Banco Santander, S.A. sold 3.5% of

its stake in Santander Bank Polska S.A. for an amount of

EUR 407 million. This resulted in a reduction in the cost

of the investment of EUR 241 million and a net gain of

EUR 166 million, recognised under the heading “Profit or

(-) loss after tax from discontinued operations”.

The “Transfers” item in the above breakdown includes

EUR 4,440 million corresponding to the stakes in

Santander Bank Polska S.A. and Santander Towarzystwo

Funduszy Inwestycyjnych, S.A., which were reclassified

under the heading “Non-current assets and disposal

groups classified as held for sale” (see Note 12), and EUR

205 million corresponding to stakes in the venture

capital companies Tresmares Growth Fund, which were

reclassified from the heading “Non-trading financial

assets mandatorily measured at fair value through profit

or loss”.

In February 2024, members of the company MOON

GC&P Investments, S.L.U were bought and contributed

for an amount of EUR 300 million, with the aim of

acquiring an indirect majority stake in Adprotel Strand

(hotel investment). Throughout the year, the company

has made a premium refund of EUR 209 million.

In March 2024, as part of the reorganization process of

several companies of the Santander Group, the holding

company called Santander Group Properties, S.L.U. Was

established, which will act as the head entity of the real

estate companies that own the Group’s corporate

buildings. In addition, 26 March 2024 the Bank made a

capital increase in the company from non-cash

contributions consisting of the participation of the

company Santander Facility Management España, S.L.U,

amounting to EUR 413 million. The reduction of the

participation was made for the amount of EUR 393

million and there has been a payment in reserves for the

amount of EUR 19 million (see note 29). With the same

date, a capital increase of the same characteristics was

made, consisting of the contribution of its participation in

Santander Global Services, S.L. Unipersonal, amounting

to EUR 373 million. The reduction of the participation

was made for EUR 550 million (since previously the

company made a refund of EUR 20 million) and there has

been a use of the impairment fund of EUR 178 million

(see note 13.a.iii).

On July 16, 2024 the Bank made another capital increase

in this company of the same characteristics, consisting of

the contribution of the participation in Santander UK

Investments amounting to EUR 114 million. The

reduction of the participation has been made by the

value in euros at the date of the contribution of GBP 100

million. On October 22,  2024 a contribution of partners

was made, in kind, consisting of the participation of

Santander Global Sport, S.A, amounting to EUR 15

million. The reduction of the portfolio has been made in

the amount of EUR 42 million, which has meant a

release of the impairment fund of EUR 27 million (see

note 13.a.iii). In addition, the Bank has also made a

monetary contribution to this company amounting to

EUR 147 million.

90

The 11 July 2024 signed the merger by absorption of

Cántabro Catalana de Inversiones, S.A. (acquiring

company) and Cántabra de Inversiones, S.A. Unipersonal

(acquired company), with the dissolution without

liquidation of the company acquired and the transfer of

its assets in block to the acquiring company, As part of

the process of streamlining the corporate structure

within the Group, with the aim of simplifying its

management, facilitating the efficient allocation of

resources and reducing administrative costs.

In September 2024, Banco Santander, S.A sold 5.21% of

its stake in Santander Bank Polska S.A for an amount of

EUR 575 million. This has resulted in a reduction in the

cost of participation of EUR 357 million and a net profit

of EUR 209 million (see note 45).

On December 4, 2024 raised to the public the deed of

merger by cross-border non-European absorption of the

companies SIB Besaya, S.L.U. and Parasant SA

(companies acquired) by Banco Santander, S.A.

(Acquiring company), including among other assets, the

companies Banco Santander International SA, Santander

Bank & Trust Ltd, Santander Investments Chile Limitada

and Santander Inversiones, S.A., the net amount

registered under this heading for this operation was EUR

1,065 million, with a reserve payment of EUR 166

million (see note 1).

In December 2024, carried out the liquidation of the

company Consulteam Consultores de Gestão,

Unipessoal, Lda. for an amount of EUR 209 million,

which has meant a use of the fund endowed with the

same amount (see Note 13.a.iii).

Throughout 2024, Banco Santander subscribed capital

increases and made contributions from partners in other

companies, the most relevant being: EUR 254 million in

Deva Capital Holding Company, S.L. Unipersonal, EUR

110 million in Grupo Financiero Santander México, S.A.

de C.V., 174 million in Tresmares Santander Direct

Lending, SICC, S.A. and EUR 170 million in PagoNxt, S.L

(of which EUR 48 million is contribution in kind).

Additionally, the company Santander Insurance, S.L.

made premium refunds of EUR 443 million.

iii. Impairment losses

The changes in the balance of this item were as follows:

EUR million
	2025	2024
Balance at beginning of the year	12,237	12,423
Net impairment losses (reversals) (note 44)	(1,548)	171
Other changes	(316)	(357)
Balance at end of the year	10,373	12,237

The Management carries out an analysis of the potential

loss of value of the investments in subsidiaries, joint

ventures and associates that it has registered with

respect to their book value. Said analysis is carried out

using different parameters, such as equity value, listed

value and recoverable value, which is obtained from

estimates of expected cash flows or net worth corrected

by tacit capital gains existing on the date of the

valuation.

In line with the above, Banco Santander carried out an

assessment of its investees in December 2025. The

impairment reversals recognised by the Bank during

financial year 2025 include EUR 1,335 million in relation

to Santander UK Group Holdings Plc. and EUR 537

million in relation to PagoNxt, S.L. The “Other

movements” balance in the above breakdown includes

EUR 161 million corresponding to Santander

Towarzystwo Funduszy Inwestycyjnych S.A., reclassified

under the heading “Non-current assets and disposal

groups classified as held for sale” (see Note 12); EUR 37

million corresponding to Munduspar Participações,

reclassified under the heading “Associates” (see Note

13.c); and EUR 116 million corresponding to the

companies merged with the Bank (see Note 1.i).

Following the same criteria, Banco Santander carried out

in December 2024 the evaluation of its investees. The

impairment charges made by the Bank in 2024 included

EUR 94 million from Altamira Santander Real Estate, S.A

and EUR 70 million from Uro Properties Holdings, S.A.

b) Joint venture entities

The cost of the investees recorded under this Caption at

December 31, 2025 amounted to EUR 651 million, while

the impairment recorded at that date was EUR 368

million (EUR 640 million and EUR 318 million,

respectively, in 2024).

In October 2024, UCI, S.A. approved a capital increase

through the contribution of perpetual subordinated

obligations contingently convertible into shares,

corresponding to Banco Santander EUR 41 million.

91

During 2025, Banco Santander has provided impairment

for a net amount of EUR 49 million (EUR 55 million in

2024) for the entities recorded under this caption,

mainly for UCI, S.A.

c) Associated entities

‘Investments - Associated’ in the accompanying balance

sheets includes Banco Santander`s ownership interests

in associates (see note 2.b).

Appendix II contains a detail of these companies,

indicating the percentages of direct or indirect ownership

and other relevant information.

At 31 December 2025 , there were no capital increases in

progress at any associated company.

i. Breakdown

The detail of the balance of this heading of the attached

balances, based on the contracting currency and the

admission or non-listing of the securities, is as follows:

EUR million
	2025	2024
Currency:
Euro	1,950	2,049
Foreign Currency	16	—
	1,966	2,049
Listing status:
Listed	1,905	1,988
Unlisted	61	61
	1,966	2,049

ii. Changes

The changes in 2025 and 2024 in ‘Investments -

Associates’’, disregarding impairment losses, were as

follows, (see note 13.c.iii):

EUR million
	2025	2024
Balance at the beginning of the year	2,333	2,134
Purchases, capital increases and mergers	75	246
Of which
Waycarbon Soluções Ambientais e Projetos de Carbono, S.A.	75	—
Merlín Properties, SOCIMI, S.A.	—	231
Disposals, reductions and mergers:	(167)	(47)
Of which
Metrovacesa, S.A.	(104)	(47)
Waycarbon Soluções Ambientais e Projetos de Carbono, S.A.	(40)	—
Merlín Properties, SOCIMI, S.A.	(23)	—
Transfers	—	—
Other changes (net)	—	—
Balance at end of the year	2,241	2,333

In May 2025, the reverse merger of Munduspar

Participações, S.A. (subsidiary) into Waycarbon Soluções

Ambientais e Projetos de Carbono, S.A. was completed.

The cost of the investment held by the Bank amounted

to EUR 75 million. As a result of this merger and a

subsequent capital reduction by the company with

reimbursement to the Bank for an amount of EUR 40

million, the Bank ceased to exercise control over the

company, which was reclassified as an associate.

In April and December 2025, Metrovacesa, S.A. made

two dividend distributions charged against the freely

distributable reserve (share premium), with Banco

Santander receiving two payments of EUR 22 million and

EUR 54 million, respectively. These transactions resulted

in a reduction in the cost of the investment of EUR 104

million and the recognition of an impairment charge of

EUR 28 million (see Note 13.c.iii).

In July 2024, the Board of Directors of Merlin Properties,

SOCIMI, S.A. approved a share capital increase through

cash contributions, as part of an accelerated

bookbuilding process. Banco Santander subscribed

shares for an amount of EUR 226 million.

In April and December 2024, Metrovacesa, S.A. made

two dividend distributions charged against the freely

distributable reserve (share premium), with Banco

Santander receiving two payments of EUR 17 million and

EUR 16 million, respectively. These transactions resulted

in a reduction in the cost of the investment of EUR 47

million and the recognition of an impairment charge of

EUR 13 million (see Note 13.c.iii).

iii. Impairment losses

The changes in the balance of this item were as follows:

EUR million
	2025	2024
Balance at the beginning of the year	284	286
Net impairment losses (reversals) (note 44)	1	11
Other changes	(10)	(13)
Balance at end of the year	275	284

92

14. Insurance contracts linked to

pensions

The detail of Insurance contracts linked to pensions in

the balance sheets are as follows:

EUR million
	2025	2024
Assets relating to insurance contracts covering post-employment benefit plan obligations (notes 17 and 23)	240	267
Total	240	267

15. Tangible assets

a) Changes

The changes in 2025 and 2024 in ‘Tangible assets’ in the

balance sheet were as follows:

EUR million
	Tangible assets				Of which: For leasing
	For own use	Leased out under an operating lease	Investment property	Total	For own use	Leased out under an operating lease	Investment property	Total
Cost
Opening balance at 1 January 2024	7,097	1,208	343	8,648	3,196	—	—	3,196
Additions/disposals (net)	(2)	3	—	1	(147)	—	—	(147)
Transfers and other	(201)	—	(45)	(246)	83	—	—	83
Balance at 31 December 2024	6,894	1,211	298	8,403	3,132	—	—	3,132
Additions/disposals (net)	(1,948)	(11)	—	(1,959)	(2,053)	—	—	(2,053)
Transfers and others	1,418	—	258	1,676	58	—	—	58
Balance at 31 December 2025	6,364	1,200	556	8,120	1,137	—	—	1,137
Accumulated depreciation
Opening balance at 1 January 2024	(1,778)	(302)	(38)	(2,118)	(950)	—	—	(950)
Charge for the year	(362)	(138)	(2)	(502)	(209)	—	—	(209)
Disposals	194	131	—	325	193	—	—	193
Transfers and others	260	—	2	262	—	—	—	—
Balance at 31 December 2024	(1,686)	(309)	(38)	(2,033)	(966)	—	—	(966)
Charge for the year	(276)	(139)	(2)	(417)	(112)	—	—	(112)
Disposals	366	141	—	507	363	—	—	363
Transfers and others	(199)	—	(45)	(244)	—	—	—	—
Balance at 31 December 2025	(1,795)	(307)	(85)	(2,187)	(715)	—	—	(715)
Impairment losses
Opening balance at 1 January 2024	(66)	—	(96)	(162)	—	—	—	—
Charge for the year	(3)	—	—	(3)	2	—	—	2
Disposals	—	—	—	—	—	—	—	—
Transfers and others	5	—	9	14	(2)	—	—	(2)
Balance at 31 December 2024	(64)	—	(87)	(151)	—	—	—	—
Charge for the year	3	—	—	3	1	—	—	1
Disposals	—	—	—	—	—	—	—	—
Transfers and others	29	—	11	40	(1)	—	—	(1)
Balance at 31 December 2025	(32)	—	(76)	(108)	—	—	—	—
Tangible assets, net
Balance at 31 December 2024	5,144	902	173	6,219	2,166	—	—	2,166
Balance at 31 December 2025	4,537	893	395	5,825	422	—	—	422

93

b) Property, plant and equipment - for own use

The detail, by class of asset, of ‘Property, plant and

equipment - For own use’ on the balance sheets in 2025

and 2024   is as follows:

EUR million
	Cost	Accumulated depreciation	Impairment losses	Carrying amount	Of which, right-of-use for operating lease
Land and buildings	5,610	(1,290)	(64)	4,256	2,166
Furniture, fixtures and vehicles	968	(241)	—	727	—
Computer hardware	249	(155)	—	94	—
Other	67	—	—	67	—
Balance at 31 December 2024	6,894	(1,686)	(64)	5,144	2,166
Land and buildings	5,060	(1,368)	(32)	3,660	422
Furniture, fixtures and vehicles	945	(253)	—	692	—
Computer hardware	270	(174)	—	96	—
Other	89	—	—	89	—
Balance at 31 December 2025	6,364	(1,795)	(32)	4,537	422

The carrying amount at 31 December 2025 in the table

above includes the following approximate amounts:

• EUR 6 million (EUR 5 million at 31 december 2024)

relating to property, plant and equipment owned by

Banco Santander's branches located abroad.

• EUR 181 million (EUR 217 million at 31 December

2024) relating to property, plant and equipment held

under finance leases by Banco Santander, of which

EUR 170 million related to leases in effect as of 31

December 2025 (EUR 205 million at 31 December

2024).

c) Tangible assets - Leased out under an operating

lease

Banco Santander has assets assigned under operating

lease where the company is the lessor and they do not

meet the accounting requirements to be classified as

financial leases. The net cost of these leases is recorded

as an asset and is depreciated on a straight-line basis

over the contractual term of the lease up to the expected

residual value.

The expected residual value and, consequently, the

monthly depreciation expense may change during the

term of the lease. The Bank estimates expected residual

values using independent data sources and internal

statistical models. Likewise, it evaluates the estimate of

the residual value of said leases and adjusts the

depreciation rate based on the change in the expected

value of the asset at the end of the lease.

Banco Santander periodically evaluates its investment in

operating leases and whenever there are indications of

impairment, such as a systemic and material decrease in

the values of the assigned assets. If assets leased under

operating leases are considered to be impaired,

impairment is measured as the amount by which the

assets' carrying amount exceeds fair value as estimated

by discounted cash flows. During the years 2025 and

2024, the Bank has not recorded any material

impairment for this concept.

During the years 2025 and 2024, no significant variable

payments have been made not included in the valuation

of lease assets.

d) Tangible assets - Investment property

The fair value of the investment property at 31

December  2025 and 2024 amounts to EUR 492 million

and EUR 259 million, respectively. A comparison of the

fair value of investment property at 31 December  2025

and 2024 with the net book value results in gross

unrealised gains of EUR 97 million and EUR 86 million

for each of these years, respectively, attributed to the

Bank in full.

Rental income from investment properties and direct

expenses related to both investment properties that

generated income during 2025 and 2024 and those

investment properties that did not generate income

during 2025 and 2024 are not material in the context of

the entity's annual accounts.

94

16. Intangible assets

a) Goodwill

The detail of the 'Goodwill', on the balance sheets is as

follows:

EUR million
	2025	2024
Santander España	623	623
Amortization charge	(476)	(414)
Balance at end of year	147	209

The movement during the years 2025 and 2024 has

been as follows:

EUR million
	2025	2024
Balance at beginning of the year	209	271
Additions (note 3)		—
Amortization charge	(62)	(62)
Impairment losses	—	—
Disposals or changes in scope	—	—
Balance at end of year	147	209

Neither in 2025, nor in 2024 has goodwill been

generated.

All of the goodwill recorded at the end of the 2025 and

2024 financial years comes from the following corporate

operations that were carried out in the 2018 financial

year:

• Merger by absorption of Banco Popular Español,

S.A.U. On June 7, 2017, Banco Santander acquired

100% of the share capital of Banco Popular Español,

S.A.U. Subsequently, on September 28, 2018, the

deed of merger by absorption of Banco Popular

Español, S.A.U. was registered in the Mercantile

Registry of Cantabria by Banco Santander, S.A. with

accounting effects January 1, 2018, transferring to

the books of Banco Santander a gross goodwill of

EUR 248 million.

• Repurchase of the credit and debit card business

marketed by Grupo Banco Popular in Spain and

Portugal generating the business combination a

goodwill of EUR 375 million.

In accordance with Bank of Spain Circular 4/2017, the

goodwill is amortized within a period of ten years. In

addition, the Bank periodically reviews the term and

method of amortization and, if deemed inappropriate,

the impact will be treated as a change in accounting

estimates.

As of 31 December 2025 and 2024 the amount of

goodwill recorded by Banco Santander, net of

accumulated depreciation, amounted to EUR 147 million

and EUR 209 million, respectively.

Banco Santander, at least annually and whenever there

are signs of impairment, conducts an analysis of the

potential loss of value of the trade funds it has recorded

in respect of their recoverable value.

The first step in carrying out this analysis requires the

identification of the cash-generating units, which are the

smallest identifiable groups of assets in Banco

Santander  that generate cash inflows and are largely

independent of the cash flows of other assets or asset

groups.

For the purposes of those mentioned in the preceding

paragraph, the Bank's administrators have identified the

commercialbanking business in Spain as the cash-

generating unit to which to allocate goodwill arising

both by the acquisition and subsequent merger by

absorption of Banco Popular Español, S.A.U. and by the

repurchase of the credit and debit cards from Grupo

Banco Popular.

Its carrying value is determined taking into account the

book value of all the assets and liabilities that make up

the commercial banking business in Spain, together with

the corresponding goodwill. Said book value is compared

with its recoverable amount in order to determine if

there is impairment.

The recoverable amount of Santander España cash-

generating unit has been determined as the fair value of

such cash-generating unit obtained using quotes, market

references (multiples) or internal estimates. At the end

of the fiscal year said value exceeded the book value.

Based on previous data, and in accordance with the

estimates of the Bank's administrators, during the years

2025 and 2024 the Bank has not recorded any amount

under the heading 'Impairment in value or reversal of

impairment in value of non-financial assets - intangible

assets' in concept of impairment of goodwill.

b) Other intangible assets

i. Breakdown

The detail of Intangible assets  ‘Other intangible assets’

on the balance sheets is as follows:

EUR million
	2024	2023
With finite useful life
IT Developments	1,580	1,480
Accumulated amortization	(978)	(859)
Balance at end of year	602	621

95

ii. Changes

The changes in Intangible assets ‘Other intangible

assets’ on the balance sheets were as follows:

EUR million
	2025	2024
Balance at 31 of december of prior year	621	571
Additions	196	222
Disposals	(80)	(178)
Amortization charge	(195)	(172)
Amortization charge disposals	76	178
Impairments losses	-16.00	—
Balance at end of year	602	621

17. Other assets and Other

liabilities

The detail of ‘Other assets and Other liabilities’ on the

accompanying balance sheets is as follows:

EUR million
	Assets		Liabilities
	2025	2024	2025	2024
Transactions in transit	—	—	17	5
Insurance contracts linked to pensions (note 14)	240	267	—	—
Inventory	—	—	—	—
Prepayments and accrued income	583	522	2,815	2,856
Other A	1,365	1,848	1,305	1,306
Total	2,188	2,637	4,137	4,167

A. Includes, mainly, unsettled transactions.

96

18. Deposits from central banks

and credit institutions

The detail by classification, type and currency of

‘Deposits from central banks’ and ‘Deposits from credit

institutions’ on the accompanying balance sheets is as

follows:

EUR million
	2025	2024
CENTRAL BANKS
Classification
Financial liabilities held for trading	5,465	9,123
Financial liabilities designated at fair value through profit or loss	3,086	1,774
Financial liabilities at amortized cost	7,522	5,117
	16,073	16,014
Type
Current accounts / Intraday deposits	857	404
Time deposits	9,752	4,960
Deposits available with prior notice	—	—
Repurchase agreements	5,464	10,650
	16,073	16,014
Currency
Euro	7,131	7,991
US dollar	7,078	5,432
Pound Sterling	1,768	2,513
Other currencies	96	78
	16,073	16,014
CREDIT INSTITUTIONS
Classification
Financial liabilities held for trading	30,602	24,884
Financial liabilities designated at fair value through profit or loss	1,521	2,107
Financial liabilities at amortized cost	34,678	38,691
	66,801	65,682
Nature
Current accounts / Intraday deposits	4,307	4,752
Time deposits	15,389	18,222
Deposits available with prior notice	—	—
Repurchase agreements	47,105	42,708
	66,801	65,682
Currency
Euro	41,207	38,693
US dollar	17,635	22,011
Pound Sterling	2,690	2,866
Other currencies	5,269	2,112
	66,801	65,682
Total	82,874	81,696

As of December 31, 2025 and 2024, the Bank has not

obtained long-term conditional financing from the

European Central Bank (TLTRO, targeted longer-term

refinancing operation).   

Therefore, as of December 31, 2025, there is no expense

recognized in the income statement for deposits related

to TLTRO III (as of December 31, 2024, this recognized

expense amounted to 53 million euros).

97

The deposits classified in the 'Liabilities held for trading'

portfolio correspond to temporary transfers of assets

from Spanish and foreign institutions.

Note 49 contains a detail of the residual maturity periods

of financial liabilities at amortized cost.

19. Customer deposits

The detail by classification, type, sector and geographical

area, of ‘Customer deposits’ is as follows:

EUR million
	2025	2024
Classification
Financial liabilities held for trading	28,599	13,503
Financial liabilities designated at fair value through profit or loss	32,516	28,307
Financial liabilities at amortized cost	376,542	348,912
	437,657	390,722
Type
Current accounts / Intraday deposits	269,758	256,576
Time deposits A	115,834	99,289
Deposits available with prior notice	—	—
Repurchase agreements	52,065	34,857
Of which, subordinated deposits	—	—
Of which, issued securities	4,855	3,609
	437,657	390,722
Sector
Public sector	60,107	41,299
Other financial companies	97,949	87,905
Non-financial companies	119,617	110,029
Households	159,984	151,489
	437,657	390,722
Geographical area
Spain	287,340	272,054
Europe	77,015	66,793
of which United Kingdom	17,538	14,608
America	43,968	40,976
of which United States of America	35,045	34,172
of wich Brazil	142	148
Rest of the world	29,334	10,899
	437,657	390,722

A. Of the total time deposits, EUR 22,265 million correspond to branches of the entity abroad (EUR 21,077 million in 2024).

The item issued securities in the table above include the

liabilities associated with securitisation transactions (see

note 10.e).

Note 49 contains a detail of the residual maturity periods

of financial liabilities at amortized cost.

98

20. Marketable debt securities

a) Breakdown

The detail by classification and type, of ‘Marketable debt

securities’ in the accompanying balance sheets is as

follows:

EUR million
	2025	2024
Classification:
Financial liabilities at amortized cost	137,997	125,969
Financial liabilities designated at fair value through profit or loss	1,587	1,069
	139,584	147,182
Type:
Certificates of deposit	16,043	9,633
Guaranteed bonds	55,872	50,774
Mortgage-backed bonds	45,004	39,903
Others mortgage-backed bonds and guaranteed bonds	10,868	10,871
Other issued securities (note 21)	100,288	114,982
Of which, subordinated liabilities	21,774	28,142
Treasury shares A	(33,810)	(29,539)
Valuation adjustments	1,191	1,332
	139,584	147,182

A. At 31 December 2025 y 2024, the registered balance corresponds mainly to guaranteed bonds.

Note 49 contains a detail of the residual maturity periods

of financial liabilities at amortized cost.

b) Certificates of deposit

The detail of certificates of deposits by currency of

issuance is as follows:

	EUR million		2025
	2025	2024	Outstanding issue amount in foreign currency (million)	Annual interest rate A
Currency of issuance
US dollar	13,096	6,005	15,396	4.43%
Pound Sterling	2,236	2,947	1,952	4.10%
Hong Kong dollar	495	605	4,528	3.36%
Chinese Yuan	216	76	1,774	2.14%
Balance at end of the year	16,043	9,633

A. Average interest rates for different issue based on their nominal values.

99

i. Changes

The changes in certificate of deposit on the balance

sheet for the years 2025 and 2024 are  as follows:

EUR million
	2025	2024
Balance at end of the prior year	9,633	10,820
Issues	26,447	17,184
Redemptions	(19,043)	(18,965)
Exchange differences and other changes	(994)	594
Balance at end of the year	16,043	9,633

At 31 December 2025, the Bank issued certificates of

deposit amounting to EUR 26,447 million (EUR 17,184

million as at 31 December 2024), with an average

maturity of 6 months (7 months during the 2024

financial year), of which EUR 19,043 million have been

amortized (EUR 18,965 million at December 2024).

c) Marketable Mortgage- backed securities 

The detail by currency of issuance, of ‘Marketable

mortgage-backed securities’ is as follows:

	EUR million		2025
	2025	2024	Annual interest rate A
Currency of issuance
Euros	45,004	39,903	1.69%
Balance at end of the year	45,004	39,903

A. Average interest rate of the various issues based on their nominal

values.

The issuing entity may repay the mortgage bonds early,

if this has been expressly established in the final

conditions of the issue in question and in the conditions

established there.

None of the mortgage bonds issued by Banco Santander

have replacement assets involved.

During 2023, the Bank of Spain has published Circular

1/2023 of 4 February , which modifies Circular 4/2017,

repealing the breakdown in the annual accounts and the

information related to internal accounting development

and management control.

d) Other mortgage bonds and guaranteed bonds

The balance of ‘Other mortgage bonds and guaranteed

bonds’ relates to the rest of covered bonds and

certificates. The breakdown, by issue currency and

interest rate, is as follows:

	EUR million		2025
Currency of issuance	2025	2024	Annual interest rate A
				Euro	5,296	4,807	2.30%
US dollar	5,572	6,064	5.07%
Balance at end of the year	10,868	10,871

A. Average interest rate of the various securities at 31 December 2025

based on their nominal amounts.

e) Guarantee

The mortgage-backed bonds (‘ cédulas hipotecarias ’) are

secured by mortgage loans with average maturities of

more than ten years. In order to calculate the amount of

the qualifying assets in accordance with Royal Decree-

Law 24/2021 transposing the European Union directive

on covered bonds, the following transactions are

excluded from the total base of the unsecuritized

mortgage portfolio:

– Transactions classified as at pre-action stage and

procedural stage.

– Transactions without appraisal by a specialist

valuer.

– Transactions exceeding 80% of the appraized

value in residential financing and 60% in the case

of other assets.

– Second mortgages or mortgages with insufficient

collateral.

– Transactions without insurance or with

insufficient insurance.

The asset-backed securities, including asset-backed

securities and notes issued by special-purpose vehicles

(SPVs), are secured by:

– Mortgage loans to individuals to finance the

acquisition and refurbishment of homes with an

average maturity of more than ten years.

– Personal consumer finance loans with no specific

guarantee and unsecured loans with an average

maturity of five years.

100

– Loans to SMEs (non-financial small and medium-

sized enterprises) secured by State guarantees,

and loans to companies (SMEs -self-employed,

microbusinesses, small and medium-sized

enterprises- and large companies) secured by

property mortgages, the borrower's personal

guarantee, guarantees and other collateral other

than property mortgages, with an average

maturity of 7 years.

– Mortgage and non-mortgage loans to finance

municipalities, autonomous communities and

subsidiaries with an average maturity of more

than 10 years.

– Commercial credit of Banco Santander (ordinary

and occasional invoice discounting and advances

to customers on legitimate receivables) with an

average maturity of 45 days.

Additionally, Banco Santander, issues

internationalization certificates, which are securities

whose capital and interest are guaranteed by loans and

credits that are linked to the financing of export

contracts or the internationalization of companies. These

internationalization bonds have been repurchased in

their entirety by Banco Santander.

The fair value of the guarantees received by Banco

Santander (financial and non-financial assets) which the

Group is authorised to sell or pledge even if the owner of

the guarantee has not defaulted is scantly material

taking into account the Bank's financial statements as a

whole.

21. Other issuances

a) Breakdown

The following is a breakdown of the balance under this

heading on the attached balance sheets, taking into

account their nature and currency of the transactions:

EUR million A
	2025	2024
Type
Other issuances	100,288	114,982
Of which, subordinated liabilities	21,774	28,142
	100,288	114,982
Currency
Euro	52,112	59,999
US dollar	36,359	43,616
Pound Sterling	5,076	5,360
Other currencies B	6,741	6,007
	100,228	114,982

A. This amount includes the principal, in other currencies.

B. At 31 December 2025, the most significant currencies are: Swiss franc

(EUR 2,845 million), Australian dollar (EUR 2,156 million) and Norwegian

krone (EUR 469 million). At 31 December 2024, the most significant

currencies were: Swiss franc (EUR 2,476 million), Australian dollar (EUR

1,895 million) and Norwegian krone (EUR 401 million).

b) Changes

The changes in ‘Other issuances ’ in the foregoing table

for the years 2025 and 2024 are as follows:

EUR million
	2025	2024
Balance at the end of prior year	114,982	105,185
Issues	24,537	40,824
Redemptions	(34,020)	(33,871)
Exchange differences	(5,211)	2,844
Balance at end of the year	100,288	114,982

Within the sub-heading ’Other issuances’ there are

commercial paper issues as well as other issuances

made by Banco Santander.

• Commercial paper

On March 14, 2025, Banco Santander approved the

annueal renewal of the "European Comercial Paper

Issuance Program" for an overall maximum nominal

amount up to EUR 20,000 million. On November 14,

2025, the "American Commercial Paper Issuance

Program" was renewed for an aggregate nominal

amount of up to USD 25,000 million.

As at 31 December 2025, the average nominal interest

rate for European Commercial Paper stood at 2.73% per

annum, while that for American Commercial Paper was

4.26% per annum. At year-end 2024, the average

nominal interest rate was 4.47% per annum.

As regards renewals in 2024, on March 14, 2024, Banco

Santander approved the annueal renewal of the

"European Comercial Paper Issuance Program" for an

overall maximum nominal amount up to EUR 20,000

million. On November 15, 2024, the "American

Commercial Paper Issuance Program" was renewed for

an aggregate nominal amount of up to USD 25,000

million.

• Remaining emissions

During financial year 2025, Banco Santander, S.A. carried

out 48 issuances of "Other non-convertible securities"

for a nominal amount of EUR 9,569 million (no perpetual

issuances were carried out in 2025, see Note 21.c), of

which the Bank repurchased a nominal amount of EUR

34 million. The average yield on these issuances was

4.47% per annum.

During financial year 2024, Banco Santander, S.A. carried

out 76 issuances of “Other non-convertible securities”

for a nominal amount of EUR 20,253 million (no

perpetual issuances were carried out in 2024; see Note

21.c), of which the Bank repurchased a nominal amount

of EUR 370 million. The average yield on these issuances

was 4.53% per annum.

101

c)  Other disclosures

This caption includes contingent convertible or

redeemable preferred participations, as well as other

subordinated financial instruments issued , which do not

qualify as equity (preferred shares).

Preferred shares do not have voting rights and are non-

cumulative. They have been subscribed by third parties

outside the Group and are redeemable by decision of the

issuer, according to the terms of each issue.

Banco Santander's contingently convertible preferred

participations are subordinated debentures and rank

after common creditors and any other subordinated

credit that by law and/or by their terms, to the extent

permitted by Spanish law, ranks higher than the

contingently convertible preferred participations. Their

remuneration is conditioned to the obtainment of

sufficient distributable profits, and to the limitations

imposed by the regulations on shareholders' equity, and

they have no voting rights. The other issues of Banco

Santander, S.A. mentioned in this caption are also

subordinated debentures and, for credit ranking

purposes, they rank behind all the common creditors of

the issuing entities and ahead of any other subordinated

credit that ranks pari passu with the Bank's contingently

convertible preferred participations.

The main issuances of subordinated debt securities,

broken down by company, are detailed below:

Issuances by Banco Santander, S.A.

On 1 December 2025, Banco Santander, S.A. has

proceeded to redeem in advance all the issued

subordinated obligations: 'EUR 60,000,000, with original

maturity date on December 2026 and with ISIN code

XS1492669509.

On 19 November 2025, Banco Santander, S.A. carried out

an issuance for an amount of USD1,500 million with ISIN

code US05971KAA79.

On 24 September 2025, Banco Santander, S.A.

proceeded to redeem in advance all the issued

subordinated obligations: 'EUR 50,000,000 Fixed/

Floating', with original maturity date on March 2029 and

with ISIN code XS1585005314.

On 5 August 2025, Banco Santander, S.A. proceeded to

redeem in advance the subordinated debt issuances with

ISIN code XS1384064587, for a nominal amount of EUR

1,500 million, with a coupon of 3.250% and original

maturity date on April 2026 and with ISIN code

XS1548444816, for a nominal amount of EUR

1,000 million, with a coupon of 3.125% and original

maturity date on January 2027.

On 2 July 2025, Banco Santander, S.A. proceeded to

repurchase for their subsequent redeem in advance the

contingently convertible preferred shares with ISIN code

XS2102912966, for a total nominal amount of EUR

466.6 million and which are traded on the market of the

Irish Stock Exchange 'Global Exchange Market', leaving

the amount in circulation at  EUR 1,033.4 million.

On 2 July 2025, Banco Santander, S.A. carried out a

placement of preference shares contingently convertible

into newly issued ordinary shares of the Bank (PPCC), for

a nominal amount of EUR 1,500 million. The Issuance

has been made at par and the remuneration of the PPCC,

whose payment is subject to certain conditions and is

also discretionary, has been set at 6% quarterly for the

first six years, being reviewed every five years thereafter

by applying a margin of 381.9 basis points over the five-

year mid-swap rate.

On 18 March 2025, Banco Santander, S.A. carried out an

issuance for an amount of EUR 1,500 million with ISIN

code XS1201001572.

On 17 February 2025, Banco Santander, S.A. prepaid EUR

600.8 million out of a total of EUR 1,500 million of the

transaction with ISIN XS138406464587 following the

tender announcement launched on 6 February 2025.

On 17 February 2025, Banco Santander, S.A. prepaid EUR

563.6 million euros out of a total of EUR 1,000 million of

the transaction with ISIN XS1548444816 following the

tender announcement launched on 6 February 2025.

On 1 August 2024, Banco Santander, S.A. carried out a

placement of preference shares contingently convertible

into newly issued ordinary shares of the Bank (PPCC), for

a nominal amount of USD 1,500 million (valued at EUR

1,356 million). The issuance has been made at par and

the remuneration of the PPCC, whose payment is subject

to certain conditions and is also discretionary, has been

set at 8% annually for the first ten years, being reviewed

every five years thereafter by applying a margin of

391.1 basis points over the 5-year mid-swap rate.

On 20 May 2024, Banco Santander, S.A., proceeded to

partially redeem in advance the contingently convertible

preferred shares with ISIN code XS1793250041, for a

total nominal amount of EUR 1,312 million and which

are traded on the market of the Irish Stock Exchange

'Global Exchange Market' (the 'PPCC'), leaving the

amount in circulation at EUR 187.6 million .

On 20 May 2024, Banco Santander, S.A. carried out a

placement of preference shares contingently convertible

into newly issued ordinary shares of the Bank (PPCC), for

a nominal amount of EUR 1,500 million . The Issuance

has been made at par and the remuneration of the PPCC,

whose payment is subject to certain conditions and is

also discretionary, has been set at 7% annually for the

first six years , being reviewed every five years thereafter

by applying a margin of 443.2 basis points over the 5 -

year mid-swap rate.

102

On 14 March 2024, Banco Santander, S.A. issued

subordinated obligations for an amount of USD

1,250 million (valued at EUR 1,158 million ) for a term of

10 years. The issuance was made at par and the issue

coupon was set at 6.35% per year, payable bi-annually.

On 8 February 2024, Banco Santander, S.A., proceeded

to prepay all of the contingently convertible Tier 1

preferred shares with ISIN code XS1951093894, for a

total nominal amount of USD 1,200 million (valued at

EUR 1,110 million ) and that were traded on the Irish

Stock Exchange 'Global Exchange Market' (the 'PPCC').

On 22 January 2024, Banco Santander, S.A. issued

subordinated bonds for an amount of EUR 1,250 million

for a term of 10 years and 3 months. The issue was

carried out at 99.74% and the issue coupon was set at

5% per year for the first 5 years and 3 months, with an

amortization option in April 2029, reviewing the coupon,

in case of non-amortization, at a fixed rate equivalent to

a margin of 250 points plus the 5-year Euro swap rate.

On 29 December 2023,  Banco Santander, S.A.,

proceeded to prepay all the Tier 1 Contingently

Convertible Preferred Securities with ISIN code  

XS1692931121 for a total nominal amount of EUR

1,000 million and which were traded on the Irish Stock

Market 'Global Exchange Market' (the 'PPCC').

On 21 November 2023, Banco Santander, S.A., carried

out a placement of two series of contingently convertible

preferred shares into newly issued ordinary shares of the

Bank, for a total nominal amount of USD 1,150 million

(EUR 1054.000 million at the exchange rate on the day

of issue) and USD 1,350 million (EUR 1235.000 million at

the exchange rate on the day of issue), respectively.

The issue was carried out at par and the remuneration of

the PPCC, whose payment is subject to certain conditions

and is also discretionary, was set (i) for the first Series at

9.625% annually for the first five years and six months,

being reviewed every five years thereafter by applying a

margin of 530.6 basis points on the five-year UST rate

( 5-year UST), and (ii) for the second Series at 9.625%

annually for the first ten years , being reviewed

thereafter every five years , applying a margin of 529.8

basis points on the five-year UST rate.

On 8 August 2023, Banco Santander, S.A. carried out an

issuance of subordinated obligations for an amount of

2,000 million dollars (1,821 million euros at the

exchange rate on the day of issuance) . The issue was

carried out at par coupon was set at 6.921% per year,

payable semiannually during the 10-year life of the

operation.

On 23 May 2023, Banco Santander, S.A. issued

subordinated bonds for an amount of 1,500 million

euros for a term of 10 years and 3 months. The issue was

carried at 99.739% and the coupon of the issue was set

at 5.75% annually for the first 5 years and 3 months,

with the option of amortization in August 2028, revising

the coupon, in case of non-amortization, at a margin of

285 points plus the Euro Swap type 5 years .

On 25 April 2022, Banco Santander, S.A. proceeded to

prepay all the Tier 1 Contingently Convertible Preferred

Securities with ISIN code XS1602466424 and common

code 160246642 in circulation, for a total nominal

amount of EUR 750 million and which were traded on

the Irish Stock Market 'Global Exchange Market' (the

'PPCC').

On 22  November 2021, Banco Santander, S.A. issued

subordinated debentures for a term of eleven years, with

a redemption option on the tenth anniversary of the

issue date, in the amount of USD 1,000 million (EUR

1,007 million at the exchange rate on the day of issue).

The issue bears interest at an annual rate of 3.225%,

payable semi-annually, for the first ten years. This issue

has an early redemption option in the tenth year from

the issue date and if the redemption is not executed in

the tenth year, the coupon is repriced at a margin of160

points over the one-year US government bond.

On 4 October 2021, Banco Santander, S.A. issued

subordinated debentures for a term of eleven years, with

a redemption option on the sixth anniversary of the issue

date, amounting to GBP 850 million(EUR 887 millionat

the exchange rate on the day of issue). The issue bears

interest at an annual rate of2.25% payable annually for

the first six years (then repricing at a margin of 165)

points over the 5 -year UK government bond).

At 21 September 2021, Banco Santander, S.A. carried out

a placement of preferential shares contingently

convertible into newly issued ordinary shares of the

Bank ('PPCC') for a nominal amount of EUR1,000 million

(issue placed on the market EUR 997 million). The

issuance was carried out at par and the remuneration of

the PPCC, whose payment is subject to certain conditions

and is also discretionary, was set at 3.625% per year for

the first eight years , being reviewed every five years

applying a margin of 376 basis points over the 5-year

Mid-Swap Rate.

103

On 12 May 2021, Banco Santander, S.A. placed the issue

of preference shares contingently convertible into newly

issued ordinary shares of the Bank, previously

announced, for a total nominal amount of 

EUR1,578 million, issued in a Series in Dollars of  USD

1,000 million (EUR 828 million at the exchange rate on

the day of issue) and a Series in Euros for an amount of

EUR 750 million. The issuance was carried out at par and

the remuneration of the PPCC, whose payment is subject

to certain conditions and is also discretionary, was set (i)

for the Series in Dollars at 4.750% per annum for the

first six years , being revised every five years applying a

margin of 375.3 basis points over the 5 -year UST rate

and (ii) for the Series in Euros by 4.125% per annum for

the first seven years, being revised every five years

applying a margin of 431.1 basis points over the

applicable 5-year euro mid-swap.

On 3 December 2020, Banco Santander, S.A. issued

subordinated debentures with a ten -year term of USD

1,500 million (EUR 1,222 million at the date of issue).

The issue bears interest at an annual rate of 2.749%,

payable semiannually.

On 22 October 2020, it carried out a ten -year

subordinated debenture issue for an amount of EUR

1,000 million . The issue bears interest at an annual rate

of 1.625% , payable annually.

On 14 January 2020, it carried out a placement of

contingently convertible preferred participations into

newly issued ordinary shares of the Bank (the 'PPCCs'),

excluding the pre-emptive subscription rights of its

shareholders and for a nominal amount of  EUR

1,500 million (the 'Issuance' and the 'PPCCs'). The

Issuance was made at par and the remuneration of the

PPCCs, the payment of which is subject to certain

conditions and is also discretionary, was set at 4.375%

per annum for the first six years, revised every five years

thereafter by applying a margin of 453.4 basis points

over the 5-year mid-Swap Rate (5 -year mid-Swap Rate).

On 8 February 2018, a ten-year subordinated debenture

issuance of EUR 1,250 million was carried out. The issue

accrues annual interest of 2.125% payable annually.

22. Other financial liabilities

a) Breakdown

The following is a detail of ‘Other financial liabilities’ on

the accompanying balance sheets:

EUR million
	2025	2024
Trade payables	824	780
Payment obligations	1,188	2,693
Public agency revenue collection accounts	5,224	4,864
Unsettled financial transactions	878	3,199
Other accounts	1,941	1,711
Total	10,055	13,247

b) Average payment period to suppliers

Set forth below are the disclosures required by

Additional Provision Three of Law 15/2010, of 5 July

(amended by Final Provision Two of Law 31/2014, of 3

December), prepared in accordance with the Spanish

Accounting and Audit Institute (ICAC) Resolution of 29

January 2016 on the disclosures to be included in notes

to financial statements in relation to the average period

of payment to suppliers in commercial transactions.

	2025	2024
	Days
Average period of payment to suppliers	10	11
Ratio of transactions paid	10	11
Ratio of transactions pending payments	39	19
	EUR million
Total payments made	3,548	3,840
Total payments outstanding	1	10

Additionally, the data for Grupo Santander in Spain, in

the financial year 2025, are as follows:

	2025
	Days
Average period of payment to suppliers	11
Ratio of transactions paid	11
Ratio of transactions pending payments	65
	EUR million
Total payments made	8,081
Total payments outstanding	6

In accordance with the ICAC Resolution, the average

period of payment to suppliers was calculated by taking

into account commercial transactions relating to the

supply of goods or services for which payment has

accrued since the date of issuance of Law 31/2014, of

December, 3.

104

Additionally, in accordance with Law 18/2022 of

September 28, listed commercial companies must report

the average payment period to suppliers, the monetary

volume and number of invoices paid in a period less than

the maximum established in the delinquency

regulations. and the percentage that it represents over

the total number of invoices and over the total monetary

payments to its suppliers.

Payments to suppliers made sooner than maximum  period established by the regulations	2025	2024
Average payment period to suppliers (days)	10	9
Number of invoices paid	459,587	523,490
Invoices paid in a period sooner than the maximum established over the total number of invoices paid	99,94%	99,81%
Total payments made (EUR million)	3,545	3,755
Invoices paid in a period less than the maximum on the total amount of invoices paid	99,92%	97,79%

Additionally, the data for Grupo Santander in Spain, in

the financial year 2025, are as follows:

Payments to suppliers made sooner than maximum  period established by the regulations	2025
Average payment period to suppliers (days)	8
Number of invoices paid	630,135
Invoices paid in a period sooner than the maximum established over the total number of invoices paid	98,11%
Total payments made (EUR million)	7,691
Invoices paid in a period less than the maximum on the total amount of invoices paid	95,17%

For the sole purpose of the disclosures provided in the

Resolution, suppliers are considered to be commercial

creditors for debts with suppliers of good and services.

“Average period of payment to suppliers” is taken to be

the period that elapses from the delivery of the goods of

the provision of the services by the supplier to the

effective payment of the operation.

Note 49 contains a detail of the maturity periods of

‘Other financial liabilities’ at each year-end.

c) Lease liabilities

The cash outflow of leases in 2025 was EUR 142 million

(in 2024 it was EUR 293 million). The analysis of the

maturities corresponding to the lease liabilities at 31

December 2025 and 2024, is as follows:

EUR million
	2025	2024
Maturity Analysis – Discounted payments
Within 1 year	123	273
Between 1 and 3 years	185	472
Between 3 and 5 years	72	342
Later than 5 years A	78	1,255
Total Discounted payments at 31 December 2023	458	2,342

A. The change is due to the merger by absorption in 2025 of URO

Property Holdings, S.A. and Blecno Investments, S.L.U. (see

Note 1.i)

During 2025 and 2024, no significant variable payments

have been made not included in the valuation of lease

liabilities.

105

23. Provisions

a) Breakdown

The detail of ‘Provisions’ in the balance sheets at 31

December 2025 and 2024 is as follows:

EUR million
	2025	2024
Provision for pensions and similar obligations	1,322	1,346
Of which
Pensions and similar defined benefit obligations post-employment	578	647
Other long-term remunerations to employees	744	699
Restructuring	106	408
Provisions for taxes and other legal contingencies	815	762
Provisions for commitments and guarantees given	179	175
Other provisions	558	499
Total	2,980	3,190

b) Changes

The changes in ‘Provisions’ in 2025 and 2024 were as

follows:

EUR million
	2025					2024
	Post- employment	Long – Term	Contingent liabilities and commitments	Other provisions	Total	Post- employment	Long - Term	Contingent liabilities and commitments	Other provisions	Total
Balance at end of prior year	647	699	175	1,669	3,190	748	696	184	1,816	3,444
Changes in value recognized in equity	(30)	—	—	—	(30)	16	—	—	—	16
Additions charged to income	(2)	319	11	296	624	8	256	(13)	445	696
(Interest income)/ Interest expense (notes 34 and 35)	12	23	—	—	35	13	22	—	—	35
Staff costs (note 42)	1	1	—	—	2	1	1	—	—	2
Provisions or reversal of  provision	(15)	295	11	296	587	(6)	233	(13)	445	659
Payments to pensioners and pre-retirees	(61)	(274)	—	—	(335)	(79)	(253)	—	—	(332)
Employer contributions	7	—	—	—	7	(58)	—	—	—	(58)
Amounts used and other changes	17	—	(7)	(486)	(476)	12	—	4	(592)	(576)
Balances at end of year	578	744	179	1,479	2,980	647	699	175	1,669	3,190

106

c) Provision for pensions and similar obligations

The detail of ‘Provision for pensions and similar

obligations’ at 31 December 2025 and 2024 is as

follows:

EUR million
	2025	2024
Provisions for pensions and similar defined benefit plan obligations	1,322	1,346
Of which
Provisions for pensions	578	647
Provisions for similar obligations	744	699
Of which, pre-retirements	733	688
Provisions for pensions and similar defined contribution plan obligations	—	—
Total provisions for pensions and similar obligations	1,322	1,346

i. Defined contribution plans

At the end of 2012, Banco Santander reached an

agreement with workers' representatives to transform

the defined benefit commitments derived from the

collective agreement into defined contribution plans.

Similarly, the contracts for senior management staff

with pension commitments in the defined benefit

modality were amended to transform them into a

defined contribution provision system.

Almost all of the pension commitments with active

personnel correspond to defined contribution plans. The

total contributions made to these plans during 2025

amounted to EUR 111 million (EUR 108 million during

2024) (see note 42).

ii. Defined Benefit Plans

In addition to the previous defined contribution plans, at

31 December 2025, Banco Santander maintained

definite service commitments. Below is the present

value of the Bank`s commitments in post-employment

remuneration for defined benefit programs, as well as

the value of the reimbursement entitlements for

insurance contracts linked to those obligations at 31

December 2025 and preceding year:

EUR million
	2025	2024
Present value of the obligations
To current employees	22	26
To retired employees	1,594	1,840
Other	—	—
	1,616	1,866
Fair value of plan assets	(1,052)	(1,226)
Assets not recognized	3	3
Provisioned assets on the balance sheet	11	4
Provisions - Provisions for pensions	578	647
Of which
Internal provisions for pensions	338	380
Insurance contracts linked to pensions (note 14)	240	267
Of which
Group insurance entities	173	186
Other insurers	67	81

The amount of the defined benefit obligations was

determined on the basis of the work performed by

independent actuaries using the following actuarial

techniques:

1. Valuation method: projected unit credit method,

which sees each period of service as giving rise to an

additional unit of benefit entitlement and measures

each unit separately.

2. Actuarial assumptions used: unbiased and mutually

compatible. Specifically, the most significant

actuarial assumptions used in the calculations were

as follows:

EUR million
	2025	2024
Annual discount rate	3.75%	3.00%
Expected return on plan assets rate	3.75%	3.00%
Mortality tables	PE2020 M/F Col. Orden 1	PER2020 M/F Col. Orden 1
Cumulative annual CPI growth	2.00%	2.00%
Annual salary increase rate	1.25%	1.25%
Annual pension increase rate	2.00%	2.12%

3. The discount rate used for the flows was determined

referencing to high-quality corporate bonds.

107

4. The estimated retirement age of each employee is

the first at which the employee is entitled to retire or

the agreed-upon age, as appropriate.

5. The fair value of insurance contracts was determined

as the present value of the related payment

obligations, taking into account the following

assumptions:

EUR million
	2025	2024
Expected rate of return on plan assets	3.75%	3.00%
Expected rate of return on  reimbursement rights	3.75%	3.00%

The amounts recognized in the accompanying income

statements in relation to the aforementioned defined

benefit obligations are as follows:

EUR million
	2025	2024
Service cost:
Current service cost (note 42)	1	1
Past service cost (including reductions)	—	3
Pre-retirement cost	—	—
Reductions/liquidations	(15)	(9)
Net interest (note 35)	25	27
Expected return on insurance contracts linked to pensions (note 34)	(13)	(14)
Total	(2)	8

In addition, in 2025 'Other comprehensive income –

items not reclassified to profit or loss - Actuarial gains or

(-) losses on defined benefit pension plans', resulted in

an actuarial gain of EUR 30 million in relation to defined

benefit obligations (an actuarial loss of EUR 15 million in

2024).

The changes in 2025 and 2024 of the present value of

the accrued defined benefit obligations were as follows:

EUR million
	2025	2024
Present value of the obligations at beginning of the year	1,866	1,955
Current service cost (note 42)	1	1
Interest cost	65	69
Pre-retirement cost	—	—
Reductions/liquidations	(7)	(9)
Benefits paid for settlements	(29)	—
Other benefits paid	(174)	(200)
Past service cost	—	3
Actuarial (gains)/lossesA	(104)	42
Exchanges rate differences and others	(2)	5
Present value of the obligations at end of the year	1,616	1,866

A. In 2025, actuarial losses due to demographic assumptions and

experience totalled EUR 18 million, while actuarial gains due to

financial assumptions amounted to EUR 86 million (2024: actuarial

losses due to demographic assumptions of EUR 1 million and

actuarial losses due to financial assumptions of EUR 41 million).

The changes in 2025 and 2024 in the fair value of the

plan assets are as follows:

EUR million
	2025	2024
Fair value of plan assets at beginning of year	1,226	1,224
Expected return on plan assets	40	42
Benefits paid	(141)	(121)
Contributions payable by the employer	(7)	58
Settlements gains/(losses)	8	—
Exchange rate differences and others	(9)	(5)
Actuarial gains/(losses)	(65)	28
Fair value of plan assets at end of year	1,052	1,226

The changes in 2025 and 2024 in the fair value of the

insurance contracts linked to pensions are as follows:

EUR million
	2025	2024
Fair value of insurance contracts linked to pensions at beginning of the year	267	288
Expected return on insurance contracts (note 34)	13	14
Actuarial gains/(losses)	(9)	(1)
Premiums paid/(surrenders)	—	—
Benefits paid	(31)	(34)
Exchange rate differences and others	—	—
Fair value of insurance contracts linked to pensions at end of the year (note 14)	240	267

108

Plan assets and pension insurance contracts linked to

pensions are mainly based in insurance policies.

iii. Other long-term employee benefits

In various years, Banco Santander offered to some

certain of its employees, the possibility of leaving its

employ prior to their retirement. Therefore, provisions

are recognized to cover the obligations to pre-retirees -in

terms of salaries and other employee benefit costs- from

the date of their pre-retirement to the date of their

effective retirement.

The present value of the aforementioned obligations and

the fair value of the assets arising from insurance

contracts linked to these obligations at 31 December

2025 and for the previous  exercises are as follows:

EUR million
	2025	2024
Present value of the obligations:
Early retirement	736	693
Long-service bonuses and other benefits	11	11
	747	704
Fair value of plan assets	(3)	(5)
Provisions - Provisions for pensions	744	699
Insurance plans linked to pensions	—	—
Group insurers	—	—
Other insurance entities	—	—

In 2024, the provisions made to cover commitments to

603 employees under early retirements and voluntary

redundancy plans amounted to EUR 237 million.

In 2025, the provisions made to cover commitments to

962 employees under early retirements and voluntary

redundancy plans amounted to EUR 315 million.

The amount of the other long-term remuneration

commitments defined benefit has been determined on

the basis of work performed by independent actuaries,

applying the following criteria to quantify them:

1. Valuation method: projected unit credit method.

2. Actuarial assumptions used: unbiased and mutually

compatible. Specifically, the most significant

actuarial assumptions used in the calculations were

as follows:

EUR million
	2025	2024
Annual discount rate	3.75%	3.00%
Expected return on plan assets rate	3.75%	3.00%
Mortality tables	PE2020 M/F Col. Orden 1	PE2020 M/F Col. Orden 1
Cumulative annual CPI growth	2.00%	2.00%
Annual benefit increase rate	Between 0% and 1.5%	Between 0% and 1.5%

3. The discount rate used for the flows was determined

by reference to high-quality corporate bonds.

4. The estimated retirement age of each employee is

the first at which the employee is entitled to retire or

the agreed-upon age, as appropriate.

5. The amounts recognised in the income statement in

relation to the aforementioned defined benefit

obligations are as follows:

EUR million
	2025	2024
Service cost:
Current service cost (note 42)	1	1
Interest cost (note 35)	23	22
Extraordinary charges	—	—
Past service cost
Actuarial (gains)/losses recognized in the year	(19)	1
Pre-retirement cost	315	237
Other	(1)	(5)
Total	319	256

The changes in 2025 and 2024 in the present value of

the accrued obligations for other long-term benefits

were as follows:

EUR million
	2025	2024
Present value of the obligations at beginning of the year	704	703
Current service cost	1	1
Cost per interest (note 35)	23	22
Past service cost	—	—
Pre-retirement cost	315	237
Effect of curtailment/settlement	—	(4)
Benefits paid	(276)	(255)
Actuarial (gains)/losses	(19)	1
Other	(1)	(1)
Present value of the obligations at end of the year	747	704

109

The movement that has occurred, during the years 2025

and 2024, in the fair value of the assets of the plan, has

been as follows:

EUR million
	2025	2024
Fair value of plan assets at the beginning of the year	5	7
Expected return on plan assets	—	—
Benefits paid	(2)	(2)
Contributions by the employer	—	—
Contributions by the employee and others	—	—
Actuarial gains / (losses)	—	—
Present value of the obligations at end of the year	3	5

iv. Sensitivity analysis

Variations in the main assumptions may affect the

calculation of commitments. At 31 December 2025, in

the event that the discount interest rate had decreased

or increased by 50 basis points, there would have been

an increase or decrease in the current value of post-

employment obligations of 4.02% and -3.75%

respectively, and an increase or decrease in the current

value of long-term obligations of 1.15% and -1.15%.

These variations would be partially offset by increases or

decreases in the fair value of assets and insurance

contracts linked to pensions.

The following table shows the estimate of benefits to be

paid as of December 31, 2025 for the next ten years:

EUR Million
2026	405
2027	349
2028	297
2029	248
2030	205
2031 to 2035	646

d) Provisions for taxes and other legal contingencies

and Other provisions

'Provisions - Provisions for taxes and other legal

contingencies' and 'Provisions - Other provisions', which

include, inter alia, provisions for restructuring costs and

tax-related and non-tax-related proceedings, were

estimated using prudent calculation procedures in

keeping with the uncertainty inherent to the obligations

covered. The definitive date of the outflow of resources

embodying economic benefits for the Bank depends on

each obligation. In certain cases, these obligations have

no fixed settlement period and, in other cases, depend

on the legal proceedings in progress.

‘Provisions for taxes and other legal contingencies’

include proceedings and other legal proceedings such as

judicial, arbitral or administrative proceedings initiated

against Banco Santander. Qualitative information on the

main disputes is provided in note 23.e. For their part, the

provisions for restructuring include only costs arising

from restructuring processes incurred at Banco

Santander.

The Bank general policy is to record provisions for tax

and legal proceedings in which the Group assesses the

chances of loss to be probable and the Group does not

record provisions when the chances of loss are possible

or remote. Banco Santander determines the amounts to

be provided for as its best estimate of the expenditure

required to settle the corresponding claim based, among

other factors, on a case-by-case analysis of the facts and

the legal opinion of internal and external counsel or by

considering the historical average amount of the loss

incurred in claims of the same nature. The definitive date

of the outflow of resources embodying economic

benefits for the Bank depends on each obligation. In

certain cases, the obligations do not have a fixed

settlement term and, in others, they depend on legal

proceedings in progress.

As for the 'Other provisions' contains very atomized and

individually insignificant provisions, such as the

provisions corresponding to cover other operational risks

of the Bank.

110

e) Litigation and other matters

i. Tax-related litigation

At 31 December 2025 the main tax-related proceedings

concerning the Bank were as follows:

• Legal actions filed by Banco Santander (Brasil) S.A.

and other Group entities to avoid the application of

Law 9.718/98, which modifies the basis to calculate

Programa de Integraçao Social (PIS) and Contribuição

para Financiamento da Seguridade Social (COFINS),

extending it to all the entities income, and not only to

the income from the provision of services. In relation

of Banco Santander (Brasil) S.A. process, in 2015 the

Federal Supreme Court (FSC) admitted the

extraordinary appeal filed by the Federal Union

regarding PIS, and dismissed the extraordinary

appeal lodged by the Brazilian Public Prosecutor's

Office regarding COFINS contribution, confirming the

decision of Federal Regional Court favourable to

Banco Santander (Brasil) S.A. of August 2007. The

Federal Supreme Court also admitted the appeals

related to the other Group entities both for PIS and

COFINS. On June 13, 2023, the Federal Supreme

Court ruled unfavorably 2 cases through General

Repercussion (Theme 372), including Banco

Santander (Brasil) S.A. case. The Bank has filed a new

appeal, considering the possible loss as a contingent

liability. The cases of the other Group entities are no

longer susceptible of appeal and a provision has

been recognized for the amount of the estimated

loss.

• Banco Santander (Brasil) S.A. and other Group

companies in Brazil have appealed against the

assessments issued by the Brazilian tax authorities

questioning the deduction of loan losses in their

income tax returns (Imposto sobre a Renda das

Pessoas Jurídicas - IRPJ - and Contribuçao Social

sobre o Lucro Liquido -CSLL-) in relation to different

administrative processes of various years on the

ground that the requirements under the applicable

legislation were not met. The appeals, which

involves several cases, are pending decision in

different administrative and judicial instances. No

provision was recognised in connection with the

amount considered to be a contingent liability.

• Banco Santander (Brasil) S.A. and other Group

companies in Brazil are involved in administrative

and legal proceedings against several municipalities

that demand payment of the Service Tax on certain

items of income from transactions not classified as

provisions of services. There are several cases in

different judicial instances. A provision was

recognised in connection with the amount of the

estimated loss.

• Banco Santander (Brasil) S.A. and other Group

companies in Brazil are involved in administrative

and legal proceedings against the tax authorities in

connection with the taxation for social security

purposes of certain items which are not considered

to be employee remuneration. There are several

cases in different judicial instances. A provision was

recognised in connection with the amount of the

estimated loss.

• In May 2003 the Brazilian tax authorities issued

separate infringement notices against Santander

Distribuidora de Títulos e Valores Mobiliarios, Ltda.

(DTVM, actually Santander Brasil Tecnología S.A.)

and Banco Santander (Brasil) S.A. in relation to the

Provisional Tax on Financial Movements

(Contribuição Provisória sobre Movimentação

Financeira) of the years 2000 to 2002. The

administrative discussion ended unfavourably for

both companies, and on July 3, 2015, filed a lawsuit

requesting the cancellation of both tax assessments.

The lawsuit was judged unfavourably in first

instance. Therefore, both plaintiffs appealed to the

court of second instance. In December 2020, the

appeal was decided unfavourably and the judgement

was appealed before the higher courts. This case fell

within the scope of the Comprehensive Transaction

Programme (Programa de Transaçao Integral)

established by the Ministry of Finance, and in 2025 a

final settlement was reached. The amounts paid

under the terms of the Transaction were fully

provisioned.

• In December 2010 the Brazilian tax authorities

issued an infringement notice against Santander

Seguros S.A. (Brasil), (currently Zurich Santander

Brasil Seguros e Previdência S.A.), as the successor

by merger to ABN AMRO Brasil dois Participações

S.A., in relation to income tax (IRPJ and CSLL) for

2005, questioning the tax treatment applied to a sale

of shares of Real Seguros, S.A. The administrative

discussion ended unfavourably, and the CARF

decision has been appealed at the Federal Justice. As

the former parent of Santander Seguros S.A. (Brasil)

(currently Zurich Santander Brasil Seguros e

Previdência S.A.), Banco Santander (Brasil) S.A. is

liable in the event of any adverse outcome of this

proceeding. No provision was recognised in

connection with this proceeding as it is considered to

be a contingent liability.

111

• In November 2014 the Brazilian tax authorities

issued an infringement notice against Banco

Santander (Brasil) S.A. in relation to corporate

income tax (IRPJ and CSLL) for 2009 questioning the

tax-deductibility of the amortisation of the goodwill

of Banco ABN AMRO Real S.A. performed prior to the

absorption of this bank by Banco Santander (Brasil)

S.A., but accepting the amortisation performed after

the merger. The Bank appealed before the Higher

Chamber of CARF, and a final favourable decision

was obtained in April 2024. No provision was

recognised in connection with this proceeding as it

was considered to be a contingent liability.

• Banco Santander (Brasil) S.A. has also appealed

against infringement notices issued by the tax

authorities questioning the tax deductibility of the

amortisation of the goodwill arising on the

acquisition of Banco Comercial e de Investimento

Sudameris S.A from years 2007 to 2012. In May and

October 2024, the appeal related to period 2009 to

2012 was finally rejected by the CARF and the

resolution was appealed at the Federal Justice. No

provision was recognised in connection with this

matter as it was considered to be a contingent

liability.

• Banco Santander (Brasil) S.A. and other companies of

the Group in Brazil are undergoing administrative

and judicial procedures against Brazilian tax

authorities for not admitting tax compensation with

credits derived from other tax concepts, not having

registered a provision for the amount considered to

be a contingent liability.

• Banco Santander (Brasil) S.A. is involved in appeals in

relation to infringement notices initiated by tax

authorities regarding the offsetting of tax losses in

the CSLL of year 2009 and 2019. The appeals are

pending decision at the administrative level. No

provision was recognised in connection with this

matter as it is considered to be a contingent liability.

• Banco Santander (Brasil) S.A. filed a suspensive

judicial measure aiming to avoid the withholding

income tax (Imposto sobre a Renda Retido na Fonte -

IRRF), on payments derived from technology services

provided by Group foreign entities. A favorable

decision was handed down and an appeal was filed

by the tax authority at the Federal Regional Court,

where it awaits judgment. No provision was

recognized as it is considered to be a contingent

liability.

• Brazilian tax authorities have issued infringement

notices against Getnet Adquirência e Serviços para

Meios de Pagamento S.A and Banco Santander

(Brasil) S.A. as jointly liable in relation to corporate

income tax (IRPJ and CSLL) for 2014 to 2018

questioning the tax-deductibility of the amortization

of the goodwill from the acquisition of Getnet

Tecnologia  Proces S.A., considering that  the

company would not have complied with the legal

requirements for such amortization. The tax

assessment notices were appealed to the CARF. In

2024, the CARF issued a favourable partial decision

on both infraction notices. In December 2024, the tax

authorities issued a new infringement notice for

2019 and 2020. No provision was recognized as it is

considered to be a contingent liability.

The total amount for the aforementioned Brazil lawsuits

that are fully provisioned is EUR 553 million, and for

lawsuits that qualify as contingent liabilities is EUR

5,040 million .

At the date of approval of these annual accounts, there

are other less significant tax disputes.

ii. Non-tax-related proceedings

At 31 December 2025 the main non-tax-related

proceedings concerning the Group and the Bank were as

follows:

• Payment Protection Insurance (PPI): AXA France IARD

and AXA France Vie (former GE Capital Corporation

Group entities, known as Financial Insurance Company

Ltd (FICL) and Financial Assurance Company Ltd (FACL),

acquired by AXA SA in 2015) (together, AXA France)

brought a claim against (i) Santander Cards UK Limited

(formerly known as GE Capital Bank Limited (GECB),

which was acquired by Banco Santander, S.A. in 2008

and subsequently transferred to Santander UK plc);

and (ii) Santander Insurance Services UK Limited (a

Banco Santander, S.A. subsidiary) (SISUK and together

with GECB the Santander Entities). The claim relates to

the allocation of liability for compensation and

associated costs in respect of a large number of PPI

policies distributed by GECB pre-2005, which were

underwritten by FICL and FACL.

On 25 July 2025, the Commercial Court of England and

Wales handed down its judgment in relation to the

claim brought by AXA France (the Judgment). It found

against SISUK in relation to AXA France’s claim

pursuant to an indemnity in an agency agreement

entered into between GECB, FICL and FACL in 2000 and

novated by GECB to SISUK in 2010.  It also found GECB

negligent in the sale of PPI policies, but this element of

the claim was time barred to PPI policies sold in the

period between 2002 and 2005 and overlaps with the

indemnity claim. The Judgment required the Santander

Entities to pay GBP 515 millionplus interest of

GBP162 million.

112

In October 2025 the Santander Entities obtained

permission to appeal the findings in the Judgment

relating to the application of the indemnity arising

from PPI sales occurring before the indemnity had

been agreed in December 2000 (Santander Appeal).  In

January 2026, AXA France obtained permission to

cross-appeal the Commercial Court’s rejection of AXA

France’s contribution claim made under the Civil

Liability (Contribution) Act 1978 (the AXA France’s

cross appeal). A decision on the Santander Appeal and

AXA France’s cross appeal is expected in the second

half of 2026.

With respect to the Santander Appeal and AXA France’s

cross-appeal, there are points of legal interpretation to

be resolved and, in the case of the cross-appeal,

factual points to be determined. The significant

uncertainties make it difficult to predict the timing or

the final impact of the resolution of the appeals for the

Group.

No customers have suffered loss as a consequence of

the claim brought by AXA France or the Judgment, nor

does it impact upon past redress paid to customers for

PPI complaints.

• Motor Finance Broker Commissions: following the

Financial Conduct Authority’s (FCA) Motor Market

review in 2019 which resulted in a change in rules in

January 2021, Santander Consumer (UK) plc (SCUK)

has received several of county court claims and

complaints in respect of its historical use of

discretionary commission arrangements (DCAs) prior

to the 2021 rule changes. In January 2024, the FCA

commenced a review of the use of DCAs between

lenders and credit brokers (the FCA Review). Pending

the conclusion of its review, the FCA paused the

handling of motor finance commission related

complaints. The pause is currently in place until 31

May 2026, reflecting the extended timeline of the

FCA's Review and subsequent Consultation (see

below).

After the Court of Appeal's decision rendered on 25

October 2024 within the judicial proceedings followed

against DCAs of other financial entities, as of 31

December 2024, the Santander UK group Holdings

recognised a provision of GBP 293.0 million (EUR

353.3 million) This provision was determined based

upon the information then available. It included

estimates for operational and legal costs and potential

awards based on various scenarios and used a range of

assumptions, including the possible outcome of the

appeal to the Supreme Court in 2025 of the Court of

Appeal's decision. On 1 August 2025, the Supreme

Court handed down its judgment stating that motor

dealers acting as credit brokers do not owe fiduciary or

disinterested duties to their customers and, as a

consequence, commission payments by lenders to

motor dealers would not be unlawful on that basis. In

addition, the Supreme Court held that an unfair

relationship under s.140A of the Consumer Credit Act

1974 had arisen in one of the cases on its facts and

awarded the amount of the commission paid by the

lender plus interest at a commercial rate as the

remedy. It also confirmed that the test for unfairness

of the relationship with borrower was highly fact

sensitive and it outlined a series of non-exhaustive

factors to consider in assessing unfair relationships in

this context (indicating that no or partial disclosure

was not necessarily enough on its own to constitute an

unfair relationship).

Following the Supreme Court’s judgment, on 3 August

2025, the FCA announced that it aimed to publish a

consultation on an industry wide redress scheme in

early October (the Consultation). Further to the

publication of the FCA’s Consultation on 7 October

2025, the Santander UK group submitted its comments

on 12 December 2025 and continues to engage

constructively with the FCA. The FCA has stated that its

intention is to publish the industry wide redress

scheme no later than in March 2026.

113

In light of the proposed sectoral scheme and taking

into account the objections raised and the uncertainty

surrounding both the final decision to be adopted by

the FCA and the outcome of any potential legal

challenges, the Santander UK group has reviewed the

potential impact on SCUK in relation to the vehicle

finance market. The range of scenarios has been

updated, which has resulted in an additional estimated

charge of GBP 183 million (EUR 213.6 million). As of

31 December 2025, the total provision amounts to

GBP 461 million (EUR 528.1 million). This continues to

include estimates for operational and legal costs and

potential awards reflecting an increased likelihood of a

higher number of cases than had previously been

predicted as eligible for redress as well as an increased

possibility that a remedy is sought to be imposed

which extends beyond reversing any damaging

financial consequences caused by any unfair

relationships. The provision is based on various

scenarios using a range of assumptions, including

potential changes to the proposed scheme following

responses to the Consultation or publication of the

FCA’s final scheme rules.

There continue to be significant uncertainties as to the

nature, extent and timing of redress payments.

Therefore, while the ultimate financial impact of this

matter could materially differ from the amount of the

provision as of this date, such impact is not expected to

be material for the Group as of the date of these

financial statements.

• Delforca: dispute arising from equity swaps entered

into by Gaesco (now Delforca 2008, S.A. (Delforca)) on

shares of Inmobiliaria Colonial, S.A. Banco Santander,

S.A. is claiming to Delforca before the Court of

Barcelona in charge of the bankruptcy proceedings, a

total of EUR 66 million from the liquidation resulting

from the early termination of financial transactions

due to Delforca's non-payment of the equity swaps. In

the same bankruptcy proceedings, Delforca and

Mobiliaria Monesa, S.A., parent of Delforca (Monesa)

have in turn claimed the Bank to repay EUR 57 million,

which the Bank received for the enforcement of the

agreed guarantee, as a result of the aforementioned

liquidation. On 16 September 2021 the Commercial

Court Number 10 of Barcelona has ordered Delforca to

pay the Bank EUR 66 million plus EUR 11 million in

interest and has dismissed the claims filed by Delforca.

This decision was appealed by Delforca, Monesa and

the bankruptcy administrator. On 15 November 2023

the Provincial Court of Barcelona rendered a judgment

dismissing the appeals filed by Delforca, Monesa and

the bankruptcy administrator. Delforca and Monesa

(not the bankruptcy administrator) filed an appeal in

cassation, that was rejected in November 2025 by the

First Chamber of Supreme Court and, as a result, the

appeal and first instance judgments in favor of the

Bank have been confirmed.

Separately, Monesa, filed in 2009 a civil procedure

with the Courts of Santander against the Bank claiming

damages that have not been specified to date. The

procedure is suspended.

• Planos Económicos': like the rest of the banking

system in Brazil, Santander Brazil has been the target

of customer complaints and collective civil suits

stemming mainly from legislative changes and its

application to the retribution of bank deposits

(economic plans). At the end of 2017, an agreement

was reached between regulatory entities and the

Brazilian Federation of Banks (Febraban) with the

purpose of closing the lawsuits and was approved by

the Supremo Tribunal Federal (the STF and the

Collective Agreement). Discussions focused on

specifying the amount to be paid to each affected

client according to the balance in their notebook at the

time of the application of the plan. Finally, the total

value of the payments will depend on the number of

adhesions there may be and the number of savers who

have proved the existence of the account and its

balance on the date the indexes were changed. In

November 2018, the STF ordered the suspension of all

economic plan proceedings for two years from May

2018. On 29 May 2020,  STF approved the extension of

the Collective Agreement for 5 additional years

starting from 3 June 2020. Condition for this extension

was to include in the Collective Agreement actions

related to the 'Collor I Plan'. On May 2025, the STF

issued the judgment recognizing the constitutionality

of the Bresser, Verão, Collor I and II plans,

guaranteeing savers the receipt of the amounts

established in the Collective Agreement and setting a

deadline of 24 months for new adhesions. As of 31

December 2025, the provision recorded for the

economic plan proceedings amounts to EUR

155.3 million.

• Banco Popular´s acquisition: after the declaration of

the resolution of Banco Popular, some investors filed

claims against the EU’s Single Resolution Board

decision, and the FROB's resolution executed in

accordance with the aforementioned decision.

Likewise, numerous civil lawsuits were filed against

Banco Santander, S.A. alleging that the information

provided by Banco Popular was erroneous and

requesting from Banco Santander, S.A. the restitution

of the price paid for the acquisition of the investment

instruments or, where appropriate, the corresponding

compensation.

In relation to the direct appeals filed before the

General Court of the European Union (EGC) and the

Court of Justice of the European Union (CJEU), all

appeals were either dismissed or discontinued.

Currently there are no ongoing a ppeals. On 4 February

2026, the National Court issued its first rulings

dismissing the actions brought against the FROB’s

decision, in application of the judgments of the EGC

and the CJEU.

114

In the civil proceedings, several Spanish judges

referred to the CJEU a number of preliminary questions

that have already been resolved. In particular, in the

judgments of 5 May 2022 (C-410/20) and 5 September

2024 (C-775/22, C-779/22, C-794/22), the CJEU stated

that Directive 2014/59/EU on bank resolution prevents

shareholders, subordinated debt holders, and holders

of equity instruments converted into shares bringing

actions against a financial institution subject to a

resolution proceeding or against its successor after the

resolution, claiming liability for the information

contained in the prospectus, under Directive 2003/71/

EC, or actions seeking the nullity of the contract of

subscription of capital instruments, which, given its

retroactive effects, would result in the refund of the

value of such securities, plus the interest accrued as of

the date of execution of the contract. In its 11

September 2025 resolution (C-687/23), the CJEU

declared that the above referred TJUE resolutions do

not apply to actions pursued prior to the entity’s

resolution. There are currently no other preliminary

questions under consideration.

On 4 March 2024, in the context of preliminary

proceedings 42/2017, the Central Court of Instruction

No. 4 issued a ruling transforming the proceedings into

Summary Proceedings and terminating the

investigation phase. This ruling considers that the

circumstantial evidence resulting from the

investigation which could constitute a crime is

basically the following: (i) an alleged

misrepresentation in the prospectus of the 2016

capital increase of Banco Popular; (ii) an alleged

misrepresentation in the annual accounts of Banco

Popular for 2015, the interim financial statements for

2016 and the annual accounts for 2016; and (iii) the

offer to the market of a distorted amount of regulatory

capital, after the capital increase of 2016 (for allegedly

having been granted by Banco Popular financing to

clients for the subscription of shares in the

aforementioned capital increase, without discounting

it from the regulatory capital). According to the

aforementioned ruling, these facts could constitute the

crimes of fraud of investors (art. 282 of the Criminal

Code) and accounting falsehood (art. 290 of the

Criminal Code). All appeals filed against the ruling

have been dismissed.

The accusing parties, including the Public Prosecutor's

Office, filed their indictment briefs on 28 October 2024,

which included requests for compensation for civil

liability and the request that not only the defendants but

also several entities are held liable for such

compensation, including Banco Santander, S.A., the

auditing firm and several insurance companies.

Following the filing of the indictment briefs, on 22

November 2024, the Court (Investigating Judge) issued

an order for the opening of the oral trial against the

defendants and civil liability parties, including Banco

Santander, S.A. as a possible civil liable party. However,

in line with what was determined by the Spanish

National Court and confirmed by the Supreme Court

concerning the hypothetical succession of Banco Popular

by Banco Santander, S.A., the oral trial has not been

opened against the Bank as possible direct civil liable

party.

The order to open the oral trial states that the plaintiffs

have requested compensation for civil liability for a total

amount of EUR 2,277.65. Additionally, the order rejects

the imposition of the guarantee requested by several of

the accusing parties, considering that it is unnecessary to

secure the outcome of the trial. The defendants and

potential civil liable parties submitted their defense

writs on 4 February 2025. After that, the proceedings

will be forwarded to the Criminal Chamber of the

National Court for the oral trial.

Regarding civil liability, the Bank considers that it has no

subsidiary civil liability in light of the CJEU’s judgments

of 5 May 2022 (C-410/20), 5 September 2024

(C-775/22, C-779/22, C-794/22) and 11 September

2025 (C-687/23 and C-447/23). Notwithstanding the

foregoing, the Spanish National Court has stated that

this issue shall be resolved within the ongoing

proceedings.

The estimated cost of any compensation to shareholders

and bondholders of Banco Popular recognized in the

2017 accounts amounted to EUR 680 million, of which

EUR 535 million were applied to the commercial loyalty

program. On 15 December 2024, Banco Santander, S.A.,

proceeded to redeem in advance voluntarily all bonds in

circulation regarding such commercial action. The CJEU

judgements of 5 May 2022 (C-410/20), 5 September

2024 (C-775/22, C-779/22, C-794/22) and 11

September 2025 (C-687/23 and C-447/23) referred

above, represented a very significant reduction in the risk

associated with these claims.

115

• German shares investigation: the Cologne Public

Prosecution Office is conducting an investigation

against the Bank and other group entities based in the

UK - Santander UK plc, Santander Financial Services Plc

and Cater Allen International Limited -, in relation to a

particular type of tax dividend linked transactions

known as cum-ex transactions.

The Group is cooperating with the German authorities.

According to the state of the investigations, the result,

and the effects for the Group, which may potentially

include the imposition of material financial

consequences (penalties, and/or disgorgement of

proceeds) cannot be anticipated. For this reason, the

Bank has not recognized any provisions in relation to

the potential imposition of financial liabilities.

• Banco Santander, S.A. was sued in a legal proceeding

in which the plaintiff alleges that the Bank breached

his contract as CEO of the institution: in the lawsuit,

the claimant mainly requested a declaratory ruling

upholding the existence, validity and effectiveness of

such contract and its enforcement together with the

payment of certain amounts. For the case that the

main request is not granted, the claimant sought a

compensation for a total amount of approximately EUR

112 million or, an alternative relief for other minor

amounts. Banco Santander, S.A. answered to the legal

action stating that the conditions to which the

appointment of that position was subject to were not

met; that the executive services contract required by

law was not concluded; and that in any case, the

parties could terminate the contract without any

justified cause. On 17 May 2021, the plaintiff reduced

his claims for compensation to EUR 61.9 million.

On 9 December 2021, the Court upheld the claim and

ordered the Bank to compensate the claimant in the

amount of EUR 67.8 million. By court order of 13

January 2022, the Court corrected and supplemented

its judgment, reducing the total amount to be paid by

the Bank to EUR 51.4 million and clarifying that part of

this amount (buy out) was to be paid under the terms

of the offer letter, i.e., entirely in Banco Santander

shares, within the deferral period for this type of

remuneration at the plaintiff's former employer and

subject to the performance metrics or parameters of

the plan in force at the Bank, which was that of 2018.

As explained in note 5 of the report of the consolidated

annual accounts of the year 2022, the degree of

performance of these objectives was 33.3%.

The Bank filed an appeal against the judgment before

the Madrid Court of Appeal, which was opposed by the

plaintiff. At the same time, the plaintiff filed an

application for provisional enforcement of the

judgment in the First Instance Court. A court order was

issued ordering enforcement of the judgment, and the

Bank deposited in the court bank account the full

amount provisionally awarded to the claimant,

including interest, for an approximate sum of EUR

35.5 million, within the voluntary compliance period.

On 6 February 2023, Banco Santander was notified

with the judgment of 20 January 2023 by which the

Madrid Court of Appeal partially upheld the appeal

filed by the Bank. The judgment has reduced the

amount to be paid by EUR 8 million, which, to the

extent that this amount was already paid in the

provisional partial enforcement of the judgement of

First Instance Court, must be returned to the Bank

together with other amounts for interest, which the

appeal judgement also rejects. The plaintiff deposited

circa EUR 9.6 million. This amount was received by the

Bank on 11 July 2023.

On 11 April 2023, the Bank filed an extraordinary

appeal for procedural infringement and an appeal in

cassation against the Madrid Court of Appeal’s

judgment before Spanish Supreme Court. The

extraordinary and cassation appeals submitted by the

Bank were accepted on 26 March 2025 and are

pending to be resolved. Existing provisions cover the

estimated risk of loss.

• CHF Polish Mortgage Loans: In  October 2019, the CJEU

rendered its decision in relation to the effects of the

potential unfairness of certain contractual clauses in

CHF-Indexed loan agreements. The CJEU established

that it for the national courts to determine the

invalidity of a contract where it cannot be maintained

without the clause declared unfair and where no

supplementary provisions exist that would allow the

contract to be maintained.

In April 2024, the Civil Chamber of the Polish Supreme

Court issued a judgment confirming that clauses

relating to the mechanism for determining the

exchange rate declared abusive cannot be replaced by

alternative provisions and that, in the absence of a

binding exchange rate, the contract is not enforceable

for the parties. With regard to the effects of invalidity,

the Supreme Court confirmed the existence of

independent restitution claims for each party and ruled

out the possibility of claiming interest or other

amounts for the use of the funds. Nevertheless, certain

aspects of this judgment have been subject to internal

debate within the Supreme Court itself, reflecting the

complexity and evolving nature of the jurisprudential

framework

116

In this context, Santander Bank Polska S.A. and

Santander Consumer Bank S.A. estimate legal risk

using a model that considers different possible

outcomes and regularly review court rulings on this

matter in order to assess changes in case law,

including the impact of the aforementioned Supreme

Court judgment. Settlements are being reached both

with customers who have already initiated legal

proceedings and with customers who have not yet

filed a claim. The model used to calculate provisions

for legal risks considers the evolution and expected

development of such settlements.

As of 31 December 2025, the total amount adjusted

against the gross carrying amount of loans in

accordance with IFRS 9, together with the provisions

recognised under IAS 37, amounts to PLN

5,874.3 million (EUR 1,391.9 million)of which

PLN3,191.7 million (EUR 756.3 million) corresponds to

adjustments to the gross carrying amount under IFRS 9

and PLN 2,682.6 million (EUR 635.6 million) to

provisions recognised under IAS 37. The adjustment to

gross carrying amount in accordance with IFRS9 during

2025 amounted to PLN 99.7 million (EUR 23.6 million),

and the additional provisions recognised under IAS 37

amounted to PLN 1245.3 million (EUR 293.8 million).

Other costs related to the dispute amounted to PLN

730.5 million (EUR 172.4 million). IAS 37.

As of the same date, Santander Bank Polska S.A. held a

portfolio of mortgages denominated in or indexed to

CHF amounting to approximately PLN 2,642.0 million

(EUR 626.0 million) and recognised provisions of PLN

4,766.4 million (EUR 1,129.4 million) to cover the CHF

mortgage portfolio. Santander Consumer Bank S.A.

(Poland), in turn, held a portfolio of mortgages

denominated in or indexed to CHF amounting to

approximately PLN 735.9 million (EUR 174.4 million)

and recognised provisions of PLN 1,107.9 million (EUR

262.5 million) to cover this portfolio.

Notwithstanding the above, as detailed in Note 3 b), in

January 2026 the Group sold a 49% stake in Santander

Bank Polska S.A., which ceased to be consolidated

within the Group’s perimeter as of that date.

The Group continues to monitor the evolution of legal

proceedings and to periodically review the adequacy of

the provisions recognised, which represent the best

estimate of the risk existing as of the reporting date.

• Banco Santander Mexico: dispute regarding a

testamentary trust constituted in 1994 by Mr. Roberto

Garza Sada in Banca Serfin (currently Santander

Mexico) in favor of his four sons in which he affected

shares of Alfa, S.A.B. de C.V. (respectively, Alfa and the

Trust). During 1999, Mr. Roberto Garza Sada instructed

Santander México in its capacity as trustee to transfer

36,700,000 shares from the Trust's assets to his sons

and daughters and himself. These instructions were

ratified in 2004 by Mr. Roberto Garza Sada before a

Notary Public.

Mr. Roberto Garza Sada passed away on 14 August

2010 and subsequently, in 2012, his daughters filed a

complaint against Santander Mexico alleging it had

been negligent in its trustee role. The lawsuit was

dismissed at first instance in April 2017 and on appeal

in 2018. In May 2018, the plaintiffs filed an appeal

(recurso de amparo) before the First Collegiate Court

of the Fourth Circuit based in Nuevo León, which ruled

in favor of the plaintiffs on 7 May 2021, annulling the

2018 appeal judgment and condemning Santander

Mexico to the petitions claimed, consisting of the

recovery of the amount of 36,700,000 Alfa shares,

together with dividends, interest and damages.

Since 2021, Santander Mexico has filed before the

Supreme Court of Justice of the Nation a constitutional

review challenge (recurso de revisión constitucional)

against the referred decision which was initially

rejected by the Supreme Court; and several appeals

(recursos de reclamación) against such rejection. On 25

June 2025, one of the appeals filed by the Bank was

accepted, and this decision was extended to a

remaining one, which will now be resolved. In case

that these appeals are resolved favorably to the Bank,

the Supreme Court will decide on the merits of the

constitutional review against the judgment which

condemned the Bank.

In parallel to the foregoing, the Bank also filed an

amparo against the judgment favorable to the

plaintiffs rendered by the First District Court in the

State of Nuevo León before the Collegiate Courts if

such State, and in 2024, the Bank requested the

Supreme Court of Justice of the Nation to take up and

resolve the matter through the faculty of attraction,

what is pending.

The challenges and appeals filed by the Bank imply

that the judgment rendered in favour of the plaintiffs is

not final, and Santander México believes that the

actions taken should prevail and reverse the decision

against it. The impact of a potential unfavorable

resolution for Santander México will be determined in

a subsequent proceeding and will also depend on the

additional actions that Santander México may take in

its defense, so it is not possible to determine it at this

time. At the current stage of the proceedings, the

provisions recorded are considered sufficient to cover

the risks deriving from this claim.

117

• Mortgage Expenses: in December 2015 the Spanish

Supreme Court ruled that mortgage clauses relating to

the payment of fees associated to formalizing the

mortgage were abusive. On 27 November 2018, the

Supreme Court agreed that the taxpayer of the

documented legal acts stamp duty tax (IAJD) on the

mortgage loans should be the borrower. On 9

November 2018, RDL 17/2018 came into force and

modified the Law of the IAJD, establishing that the

taxpayer is the Bank. On 23 January 2019, the

Supreme Court ruled the distribution of the same must

be 50% between the Bank and the borrower in public

notary expenses and agency expenses.  The Supreme

Court also ruled that the Bank must pay 100% of the

Registry. On 26 October 2020, the Supreme Court

ruled that the Bank is fully responsible for the

management expenses; and on 27 January 2021, the

Supreme Court ruled that the Bank is also responsible

for the valuation expenses.

In relation to the statute of limitations, on 25 April

2024, two  judgments were rendered (cases C-561/21

and C-484/21) in which the Court of Justice of the

European Union (CJEU) stated that the commencement

of the statute of limitations for the reimbursement

action of the mortgage expenses derived from the

annulment of the clause, shall be fixed on the moment

when the consumer has an effective knowledge of the

abusive nature of the clause and its effects and that

this date must not be fixed (a) on the date of payment

of such expense nor of the execution of the agreement;

(b) when the Supreme Court has handed down

judgments stating the abusive nature of a clause

similar to the one included in the consumer contract;

nor (c) when the CJEU has handed down judgments

confirming that the statute of limitations for the

reimbursement action of the amounts derived from the

annulment of contractual provisions is valid subject to

its compliance with the principles of equivalence and

effectiveness.

The Supreme Court has confirmed this criterion in its

14 June 2024 judgment, establishing that the public

dissemination of case-law declaring the abusive nature

of a clause does not necessarily give rise to the

limitation period of the reimbursement action derived

from similar clauses. However, the 4 July 2024

judgment, rendered in the case C-450/22, the CJEU has

established that it cannot be excluded a priori that, as a

consequence of the occurrence of an objective event or

of a notorious event, such as the amendment of the

applicable legislation or a widely disseminated and

debated development of jurisprudence, the court

considers that the average consumer's overall

perception of the floor clause has changed during the

reference period and has enabled him to become

aware of the potentially significant economic

consequences arising from such clause. A further

preliminary question concerning the statute of

limitations of the reimbursement action derived from

the annulment of mortgage expenses has been raised

before the CJEU by the First Instance Court No 8 of La

Coruña.

In December in 2024, the Supreme Court handed down

two additional judgments regarding statute of

limitations, in which it determines that the date to be

considered for the purposes of the application of

Directive 93/1994 and, consequently, the statute of

limitations detailed in its previous judgments, is 31

December 1994 (i.e. the date when the deadline for its

transposition ended). This is based on the principle of

interpretation in accordance with directives not

transposed (applicable once their transposition period

has expired). The recorded provision includes the best

estimate of Group’s liability for this matter.

Banco Santander and the other Group companies are

subject to claims and, therefore, are party to certain

judicial and administrative proceedings incidental to

the normal course of their business including those in

connection with lending activities, relationships with

employees and other commercial or tax matters

additional to those referred to here.

With the information available to it, the Bank considers

that, at 31 December 2025, it had reliably estimated

the obligations associated with each proceeding and

had recognized, where necessary, sufficient provisions

to cover reasonably any liabilities that may arise as a

result of these tax and legal risks. Disputes in which

risk and/or provisions have been registered but are not

disclosed is justified on the basis that it would be

prejudicial to the proper defense of the Bank. Subject

to the qualifications made, it also believes that any

liability arising from such claims and proceedings will

not have, overall, a material adverse effect on the

Bank’s business, financial position, or results of

operations.

118

24. Tax matters

a ) Consolidated Tax Group

According to current Spanish regulation, the Tax

Consolidated Group includes Banco Santander, S.A. as

the parent company and, as subsidiaries, those Spanish

subsidiaries that meet the requirements established by

the regulations on the taxation of consolidated groups.

b) Years open for review by the tax authorities

In connection with the partial review of Corporate

Income Tax for the 2020 financial year and Value Added

Tax for the 2020 to 2022 financial years, initiated in April

2024, in December 2025 the Spanish tax authorities

issued an assessment for Corporate Income Tax, which

has been appealed before the Central

Economic‑Administrative Court, while at the year‑end

the statements relating to Value Added Tax remained

pending.

The main appeals filed against the assessments issued in

previous reviews remain pending before the Central

Economic‑Administrative Court (Corporate Income Tax

and Value Added Tax for the 2017 to 2019 financial

years) and before the National High Court (Corporate

Income Tax for the 2003 to 2015 financial years). Banco

Santander, S.A., as the parent company of the

Consolidated Tax Group, considers, based on the advice

of its external legal advisers, that the adjustments made

should not have a significant impact on these annual

accounts, and there are solid grounds for defence in the

appeals filed against these assessments. Consequently,

no provision has been recognised for these matters. In

addition, where considered appropriate, the mechanisms

provided for the avoidance of international double

taxation have been applied.

As at the date of authorisation of these annual accounts,

subsequent financial years up to and including 2025

remain subject to review.

Due to potential different interpretations that may be

given to tax legislation, the results of tax inspections by

the authorities for the remaining years under review may

give rise to contingent tax liabilities whose amount

cannot be objectively quantified. However, in the opinion

of the Bank's tax advisers, the likelihood of such tax

liabilities materialising is remote and, in any case, any

tax liability arising would not have a significant effect on

the Bank's annual accounts.

c) Reconciliation

The reconciliation between the Corporate Income Tax

expense calculated at the applicable tax rate (30%) and

the expense recognised for this tax is shown below

(amounts in millions of euros):

EUR million
	2025	2024
Profit before tax	12,186	11,192
From continuing operations	11,165	10,257
From discontinued operations	1,021	935
Income tax at tax rate applicable in Spain (30%)	3,656	3,358
Dividends and capital gains	(2,081)	(2,354)
Impairment losses	(494)	(8)
Global Minimum Tax Pillar Two	4	8
Remaining permanent differences and others	(12)	71
Tax expense or income from continuing operations	1,073	1,091

d) Tax recognized in equity

Independently of taxes on profit charged to the income

statement, the Bank has charged the following amounts

to equity for the items indicated below during 2025 and

2024 :

EUR million
	Amounts receivable/ (Amounts payable)
	2025	2024
Fair value changes of debt instruments measured at fair value with changes in other comprehensive income	12	(9)
Equity instruments valued at fair value with changes in other comprehensive income	(6)	2
Cash flow hedges	30	(123)
Other valuation adjustments (note 25)	(102)	(209)
Total	(66)	(339)

119

e) Deferred taxes

The balance of the Deferred tax assets caption in the

balance sheet includes debit balances with the Tax

Authorities corresponding to anticipated corporate tax.

Likewise, the balance of the Deferred tax liabilities

caption includes the liability corresponding to the

different deferred taxes of the Bank.

In accordance with Regulation (EU) No 575/2013 on

prudential requirements for credit institutions and

investment firms (CRR), as subsequently amended by

Regulation (EU) 2019/876 of the European Parliament

and of the Council, deferred tax assets the utilisation of

which does not depend on the generation of future

profits (hereinafter referred to as monetisable deferred

tax assets) that meet certain conditions shall not be

deducted from regulatory capital nor be risk‑weighted at

250% in accordance with the thresholds established in

Article 48 of that Regulation, but shall consume

risk‑weighted assets at 100% in accordance with Article

39.

The following is a breakdown of deferred tax assets and

liabilities as at 31 December 2025 and 2024:

EUR million
	2025	2024
Tax assets:	10,148	10,353
Current	4,392	4,332
Deferred	5,756	6,021
Of which
Relating to pensionsA	2,205	2,384
Relating to allowances for loan lossesA	2,007	2,007
Relating to deductions and negative tax bases	681	681
Tax liabilities:	2,672	2,168
Of which, deferred tax liabilities	2,039	1,978

A. These tax assets are considered realizable.In 2023, the Spanish

Economic Administrative Court ruled that in 2017 the requirements

for the conversion of part of the monetizable assets of Popular Group

into a credit against the Tax Administration were met, allowing the

conversion to EUR 995 million . Banco Santander was refunded

without impact on results. The favourable Economic Administrative

Court decision was declared harmful to the public interests and

challenged at the National Appellate Court by the Tax Administration.

The estimation of this appeal, which is pending at the National

Appellate Court,  would imply that Grupo Santander should repay the

amount refunded and would, once again, credit these monetizable

assets with no impact on results except for late payment interests.

However, it is considered that there are strong defense arguments in

relation to this appeal.

At the accounting close, deferred taxes, both assets and

liabilities, are reviewed in order to determine whether

any adjustments to them are necessary in accordance

with the results of such analyses.

These analyses take into account all positive and

negative evidence of the recoverability of such assets,

including, among others, (i) results generated in prior

years, (ii) projections of results, (iii) the estimated

reversal of the different temporary differences according

to their nature, and (iv) the period and limits established

in current legislation for the recovery of the different

deferred tax assets, thereby concluding on the Bank's

ability to recover its recognised deferred tax assets.

The result projections used in this analysis are based on

the financial planning approved both by the local

management of the corresponding units and by the

administrators of Banco Santander. The Group's

planning process is common to all units, including the

Bank. Group management prepares its financial budgets

based on the following key assumptions:

a. Microeconomic variables of the entities forming the

tax group in each location: the existing balance‑sheet

structure, the product mix offered and the

commercial strategy at any given time defined by

local management are taken into account in this

respect, based on the competitive, regulatory and

market environment.

b. Macroeconomic variables: the estimated growth

rates are supported by the expected evolution of the

economic environment, taking into account the

expected behaviour of GDP in each location and

forecasts for interest rates, inflation and exchange

rates. Such data are provided by the Group's

Economic Research Department.

In addition, the Group conducts backtesting of the

variables projected in the past. The differential behaviour

of those variables compared to the actual market data is

taken into consideration in the projections estimated for

each year. Thus, in relation to Spain, deviations identified

by Management in recent past years are due to a

combination of exogenous elements, mainly the

changing effect of the macroeconomic and competitive

environment, and management actions, such as the

acceleration of restructuring plans, investment in

digitalisation, and optimisation of capital and

shareholder returns. 

Finally, given the degree of uncertainty of these

assumptions regarding the aforementioned variables,

the Group performs a sensitivity analysis of the most

significant ones used in the recoverability assessment of

deferred tax assets, considering reasonable changes in

the key assumptions on which the profit projections of

each entity or tax group and the estimated reversal of

the different temporary differences are based.

120

In relation to Spain, the sensitivity analysis consisted of

applying reasonable changes to the key assumptions,

including adjusting growth (GDP) by 50 basis points and

inflation by 50 basis points. After this analysis, the

maximum recoverability period of the deferred tax

assets recognised at 31 December 2025 remains at 15

years.

In addition, the Tax Group in Spain, of which Banco

Santander, S.A. is the parent company, has not

recognised deferred tax assets of approximately EUR

11,030 million, of which EUR 6,280 million correspond

to tax loss carryforwards, EUR 3,370 million to tax

credits and EUR 1,380 million to other items.

f) Global Minimum Tax (Pillar II of the OECD

Inclusive Framework)

The model rules for the Global Minimum Tax, known as

Pillar Two and approved in 2021 by the OECD Inclusive

Framework, require multinational groups with revenue

exceeding EUR 750 million to pay a minimum rate of

15% on adjusted accounting profit, calculated on a

jurisdiction‑by‑jurisdiction basis. The OECD has

completed these rules by approving administrative

guidance and a document on transitional safe harbours

applicable during the first three years. In January 2026

the transitional safe harbours were extended for one

further year and new definitive safe harbours were

approved with the aim of simplifying the application of

the model rules and implementing the 'side‑by‑side'

coexistence agreement reached in June 2025 within the

G7, which will be applicable from 2026 to multinational

groups with a US parent entity.

In the European Union, in December 2022 the Council

approved Directive 2022/2523 on ensuring a global

minimum level of taxation for multinational enterprise

groups and large domestic groups in the Union,

establishing 1 January 2024 as the effective date for the

new minimum taxation. The Directive implements the

Pillar Two rules of the OECD Inclusive Framework within

the European Union, although its scope also extends to

large domestic groups.

In Spain, on 20 December 2024 Law 7/2024 was

approved, establishing a Complementary Tax to ensure a

global minimum level of taxation for multinational

groups and large domestic groups, with effect from 1

January 2024. This Law transposes Directive 2022/2523

and also establishes a national complementary tax

aligned with the Pillar Two rules. In April 2025, Royal

Decree 252/2025 was published approving the

implementing Regulation of the Law. Regarding other

jurisdictions, the rules of the new global minimum

taxation are already in force in most of the main

geographies in which the Group operates, with the

exception of Mexico, Chile and Argentina.

The Pillar Two rules require the calculation, in each

jurisdiction in which the Group operates, of the rate

resulting from relating tax expense to accounting profit,

both with certain adjustments. If that rate in a

jurisdiction is below 15%, Banco Santander, as ultimate

parent entity, must pay the difference as a top‑up tax to

the Spanish Tax Authorities, unless a qualified domestic

minimum top‑up tax has been enacted in that

jurisdiction, in which case the top‑up tax is paid to the

local Tax Authorities.

Both Banco Santander, S.A., as ultimate parent, and the

subsidiaries resident in jurisdictions that have enacted a

qualified domestic minimum top‑up tax, have estimated

the accrued top‑up taxes taking into account the

application of the transitional safe harbours for the 2024

and 2025 financial years. These safe harbours mean that

the top‑up tax, whether in the parent entity or in

jurisdictions that have enacted a qualified domestic

minimum top‑up tax, is not due provided that any of the

following circumstances apply: (i) the effective rate

calculated from the country‑by‑country report data

exceeds 15% in 2024, 16% in 2025 and 17% in 2026, (ii)

the Group's presence in a jurisdiction is not significant,

understood as revenue below €10 million and profit

before tax below €1 million, or (iii) profit before tax is

less than the sum of tangible assets and payroll costs

weighted by a percentage that varies annually.

The top‑up tax expense recognised by Banco Santander

has not been significant, since the effective tax rates

calculated under the Pillar Two rules in the majority of

the jurisdictions in which the Group operates are above

15%. Nevertheless, the new rules require the provision

of a large amount of information to the Tax Authorities in

the different jurisdictions in which the Group operates,

broken down by entity, which represents a significant

administrative burden.

g ) Regulatory changes

The following significant tax reforms have been

approved in 2025 and prior financial years:

In Spain, in 2022 Law 38/2022 was approved, which

established a temporary levy applicable to credit

institutions and financial credit establishments for the

2023 and 2024 financial years, the amount of which was

4.8% of the sum of net interest margin and net fees of

the previous year derived from activity carried out in

Spain. The obligation to pay arose on the first day of each

financial year. The charge recognised for this temporary

levy amounted to €189 million in 2023 and €290 million

in 2024, although the Tax Authorities have audited both

years and consider that an additional amount may be

payable as a result of discrepancies in the criteria applied

in determining the tax base, which are being discussed

by the Bank. In addition, that law established for 2023

the 50% limitation on the consolidation of negative

individual tax bases into the tax base of the Consolidated

Tax Group, setting a 10‑year period for the reversal of

this positive adjustment.

121

On 20 December 2024 Law 7/2024 was approved which,

among other tax measures, established a tax on the

margin of interest and fees of certain financial entities

obtained in Spanish territory with accrual on 1 January of

the 2025, 2026 and 2027 financial years. The tax base,

with some modifications compared with the temporary

levy, is now calculated at an individual level for each

financial entity and the rate is determined according to a

scale of rates between 1% and 7%, applying certain

deductions. On 24 December 2024 Royal Decree‑Law

9/2024 was published in the Official State Gazette,

which amended certain technical aspects of the tax,

postponing its accrual to 31 January of those years. This

Royal Decree‑Law was repealed on 22 January 2025, so

no charge was recognised for the new tax corresponding

to 2024 revenues in accordance with the legislation in

force at that time (during the year €390 million was

paid). In 2025, the expense corresponding to income

accrued during the year, recognised as income tax,

amounts to EUR 351 million and will be paid in 2026.

Banco Santander considers that both the temporary levy

and the tax on the margin of interest and fees are

contrary to constitutional principles and European Union

law and has challenged the corresponding

self‑assessments, requesting the refund of the amounts

paid.

In addition, Law 7/2024 again establishes for the 2024

and 2025 financial years the 50% limitation on the

consolidation of negative individual tax bases into the

tax base of the Consolidated Tax Group, setting a

10‑year period for the reversal of this positive

adjustment. Likewise, this Law reintroduces the limits

provided for in Royal Decree‑Law 3/2016 (which was

declared unconstitutional by judgment of the

Constitutional Court of 18 January 2024) for the

consolidation of monetisable deferred tax assets and the

offsetting of tax loss carryforwards (the limit is reduced

from 70% to 25%) and the application of deductions to

avoid double taxation (50%), as well as the obligation to

reverse impairments of investments that were

deductible in past years by third parties, irrespective of

the recovery of value of the investees.

h ) Other information

In compliance with the disclosure requirement set out in

the Listing Rules Instrument 2005 issued by the UK

Financial Conduct Authority, it is stated that

shareholders of the Bank who are resident in the United

Kingdom will have the right to claim a tax credit for

foreign tax paid in respect of the withholdings the Bank

is required to operate on dividends to be paid to such

shareholders if the total dividend income exceeds the

exempt amount of £500 for the 2025/2026 financial

year (£500 for the 2024/2025 financial year).

Shareholders of the Bank resident in the United Kingdom

who hold their interest in the Bank through Santander

Nominee Service will be provided directly with

information on the amount withheld, as well as any

other information they may need to complete their UK

tax returns. Other shareholders of the Bank resident in

the United Kingdom should contact their bank or

stockbroker.

Banco Santander, S.A. is a member of the Forum of Large

Companies and has adhered to the Code of Good Tax

Practices in Spain since 2010, actively participating in the

cooperative compliance programmes being developed

by the Tax Authorities in both cases.

25. Other comprehensive

income

The balances of 'Other comprehensive income' include

the amounts, net of the related tax effect, of the

adjustments to assets and liabilities recognised in equity

through the statement of recognised income and

expense.

Respect to items that may be reclassified to profit or

loss, the statement of recognised income and expense

includes changes in other comprehensive income as

follows:

• Revaluation gains (losses): includes the amount of

the income, net of the expenses incurred in the year,

recognised directly in equity. The amounts

recognised in equity in the year remain under this

item, even if in the same year they are transferred to

the income statement or to the initial carrying

amount of the assets or liabilities or are reclassified

to another line item.

122

• Amounts transferred to income statement: includes

the amount of the revaluation gains and losses

previously recognised in equity, even in the same

year, which are recognised in the income statement.

• Amounts transferred to initial carrying amount of

hedged items: includes the amount of the

revaluation gains and losses previously recognised in

equity, even in the same year, which are recognised

in the initial carrying amount of assets or liabilities as

a result of cash flow hedges.

• Other reclassifications: includes the amount of the

transfers made in the year between the different

'Other comprehensive income' items.

a) Breakdown of Other accumulated comprehensive

income - Items that will not be reclassified in results

and Items that can be classified in results

EUR million
	2025	2024
Other accumulated comprehensive income	(1,311)	(1,555)
Items that will not be reclassified in results	(1,325)	(1,669)
Actuarial gains and losses on defined benefit pension plans	(484)	(827)
Non-current assets held for sale	—	—
Changes in the fair value of equity instruments measured at fair value through other comprehensive income	(822)	(919)
Ineffectiveness  of fair value hedges of equity instruments measured at fair value with changes in other comprehensive income	—	—
Changes in the fair value of equity instruments measured at fair value through other comprehensive income (hedged item)	203	279
Changes in the fair value of equity instruments measured at fair value through other comprehensive income (hedging instrument)	(203)	(279)
Changes in the fair value of financial liabilities at fair value through profit or loss attributable to changes in credit risk	(19)	77
Items that can be classified in results	14	114
Hedges of net investments in foreign operations (effective portion)	283	—
Exchange differences	(299)	—
Cash flow hedges (effective portion)	35	104
Changes in the fair value of debt instruments measured at fair value through changes in other comprehensive income	(5)	10
Hedging instruments (items not designated)	—	—
Non-current assets held for sale	—	—

b) Other accumulated comprehensive income-

Items not reclassified to profit or loss – Actuarial

gains or losses on defined benefit pension plans

'Other comprehensive income  —Items not reclassified

to profit or loss—  Actuarial gains or losses on defined

benefit pension plans' include the actuarial gains and

losses and the return on plan assets, less the

administrative expenses and taxes inherent to the plan,

and any change in the effect of the asset ceiling,

excluding amounts included in net interest on the net

defined benefit liability (asset), attributed to the group

net of taxes.

Its variation is shown in the statement of recognised

income and expense.

123

c) Other accumulated comprehensive income -

Items that will not be reclassified in results -

Changes in the fair value of equity instruments

measured at fair value with changes in other

comprehensive income.

Includes the net amount of unrealized fair value changes

of equity instruments at fair value with changes in other

comprehensive income.

The following is a breakdown of the composition of the

balance as of 31 December 2025 and 2024 under ‘Other

accumulated comprehensive income - Items that will not

be reclassified to profit or loss - Changes in the fair value

of equity instruments measured at fair value with

changes in other global result‘ (see note 8):

EUR million
	2025				2024
	Capital gains by valuation	Capital losses by valuation	Net gains/ losses by valuation	Fair value	Capital gains by valuation	Capital losses by valuation	Net gains/ losses by valuation	Fair value
Equity instruments	475	(1,297)	(822)	1,283	382	(1,301)	(919)	1,245

Since the entry into force of Bank of Spain Circular

4/2017, no impairment analysis is performed on equity

instruments measured at fair value through other

comprehensive income. Bank of Spain Circular 4/2017

eliminates the need to estimate the impairment of this

type of equity instruments and the reclassification to

profit or loss of gains and losses on derecognition of

these assets, which are recognised at fair value through

equity.

d) Other accumulated comprehensive income -

Items that may be reclassified to profit or loss -

Hedging derivatives – Cash flow hedges (Effective

portion)

‘Other comprehensive income – Items that may be

reclassified to profit or loss - Cash flow hedges’ includes

the gains or losses attributable to hedging instruments

that qualify as effective hedges. These amounts will

remain under this heading until they are recognized in

the income statement in the periods in which the hedged

items affect it (see note 11).

124

e) Other accumulated comprehensive income -

Items that may be reclassified to profit or loss –

Changes in the fair value of debt instruments

measured at fair value with changes in other

comprehensive income

Includes the net amount of unrealized changes in the fair

value of assets classified as items than can be

reclassified in results ‘Changes in the fair value of debt

instruments measured at fair value with changes in

other comprehensive income‘ (see note 7).

Below is a breakdown of the balance composition as of

December 31, 2025 and 2024 of ‘Other accumulated

global income - Items that can be reclassified in results -

Changes in the fair value of the instruments of debt

valued at fair value with changes in other comprehensive

income’ depending on the type of instrument:

EUR million
	2025				2024
	Revaluation gains	Revaluation losses	Net revaluation gains/ (losses)	Fair value	Revaluation gains	Revaluation losses	Net revaluation gains/ (losses)	Fair value
Debt instruments	57	(62)	(5)	5,349	52	(42)	10	8,873

As of December 31, 2025 and 2024, the handicaps

recorded in the ‘Other cumulative comprehensive

income - Elements that can be reclassified into profit or

loss - Changes in the fair value of debt instruments

measured at fair value through other comprehensive

income’ are not significant.

26. Shareholders’ equity

The changes in ‘Shareholders' equity’ are presented in

the statement of changes in total equity. Significant

information on certain items of ‘Shareholders' equity’

and the changes therein in 2025 are set forth below.

27. Issued capital

a) Changes

At 31 December 2022, Banco Santander's share capital

consisted of EUR 8,397 million, represented by

16,794,401,584 shares of EUR 0.50 of nominal value

each and all of them of a unique class and series.

On 21 March 2023, there was a capital reduction

amounting EUR 170,203,286 through the redemption of

340,406,572 shares, corresponding to the share buyback

programme carried out in 2022 and ended in January

2023.

Likewise, on 30 June 2023, there was a capital reduction

of EUR 134,924,476.50 through the redemption of

269,848,953 shares, corresponding to the share buyback

programme during the first half of 2023.

Therefore, Banco Santander's share capital at 31

December 2023 consisted of EUR 8,092 million,

represented by 16,184,146,059 shares of EUR 0.50 of

nominal value each and all of them of a unique class and

series; including 286,842,316 shares corresponding to

the first buyback programme of 2023 (see note 1.g.).

On 5 February 2024, a capital reduction of EUR

179,283,743.50 took place through the redemption of

358,567,487 shares, corresponding to the share buyback

programme carried out in 2023 and ended in January

2024.

On 1 July 2024, a capital reduction of EUR 165,652,500

took place through the redemption of 331,305,000

shares, corresponding to he share buyback programme

carried out between February and June 2024.

On 20 December 2024, a capital reduction of EUR

170,890,625   took place through the redemption of

341,781,250 shares, corresponding to he share buyback

programme carried out during the second semester of

2024.

Therefore, Banco Santander's share capital at 31

December 2024 consisted of EUR 7,576 million,

represented by 15,152,492,322 shares of EUR 0.50 of

nominal value each and all of them of a unique class and

series.

On 3 June 2025, there was a capital reduction amounting

to EUR 133,583,475 through the redemption of

267,166,950 shares, corresponding to the share buyback

programme carried out between February and June

2025.

125

On 23 December 2025, a capital reduction of EUR

98,002,935 took place through the redemption of

196,005,870 shares, corresponding to the share buyback

programme carried out during the second semester of

2025.

Aforementioned operations have not entailed the return

of contributions to the shareholders as Banco Santander

was the owner of the redeemed shares.

Therefore, Banco Santander's share capital at 31

December 2025 consisted of EUR 7,345 million,

represented by 14,689,319,502 shares of EUR 0.50 of

nominal value each and all of them of a unique class and

series.

Banco Santander’s shares are listed on the Spanish Stock

Market Interconnection System and on the New York,

London, Mexico and Warsaw Stock Exchanges, and all of

them have the same features and rights. Santander

shares are listed on the London Stock Exchange under

Crest Depository Interest (CDI), each CDI representing

one Bank’s share. They are also listed on the New York

Stock Exchange under American Depositary Shares

(ADS), each ADS representing one share. Additionally,

Banco Santander's shares were listed on the traditional

listing of the Mexican Stock Exchange (BMV) and since

29 December 2023, they were listed only in the

International Quotation System of said stock exchange.

As of 31 December 2025, no Banco Santander

shareholder individually held more than 3% of its total

share capital (which is the threshold generally provided

for in Spanish regulations for mandatory notification of a

significant participation in a listed company). Even

though at 31 December 2025, certain custodians

appeared in our shareholder registry as holding more

than 3% of our share capital, we understand that those

shares were held in custody on behalf of other investors,

none of whom exceeded that threshold individually.

These custodians were State Street Bank 13.90%), 

Chase Nominees Limited7.50%), The Bank of New York

Mellon Corporation (7.18%),Citibank (6.40%), BNP

Paribas 3.74%), Caceis Bank 3.57%) y The Northern

Trust (3.06%).

At 31 December 2025, neither Banco Santander's

shareholder registry nor the CNMV's registry showed

any shareholder residing in a non-cooperative

jurisdiction with a shareholding equal to, or greater than,

1% of our share capital (which is the other threshold

applicable under Spanish regulations).

b) Other considerations 

Under Spanish law, only shareholders at the general

meeting have the authority to increase share capital.

However, they may delegate the authority to approve or

execute capital increases to the board of directors. Banco

Santander´s Bylaws are fully aligned with Spanish law

and do not establish any different conditions for share

capital increases.

At 31 December 2025 the shares of the following

companies were listed on official stock mark ets: Banco

Santander - Chile; Banco Santander (Brasil) S.A. and

Santander Bank Polska S.A.

At 31 Decemb er 2025 the number of Banco Santander

shares owned by third parties and managed by Group

management companies (mainly portfolio, collective

investment undertaking and pension fund managers) or

jointly managed was 33 million shares, which

represented 0.22% of Banco Santander’s share capital

( 40 million shares, representing 0.26% of the share

capital in 2024).In addition, the number of Banco

Santander shares owned by third parties and received as

security was 28 million shares (equal to 0.19% of the

Bank’s share capital).

28. Share premium

Share premium includes the amount paid up by the

Bank’s shareholders in capital issues in excess of the par

value.

The Corporate Enterprises Act expressly permits the use

of the share premium account balance to increase capital

at the entities at which it is recognised and does not

establish any specific restrictions as to its use.

The change in the balance of share premium

corresponds to the capital reductions detailed in (note

27.a).

The decrease produced in 2024 by an amount of EUR

3,778 million was the consequence of the difference

between the purchase value of the redeemed shares

(EUR 4,294 million ) and the par value of said shares (EUR

516 million) (see note 4.a and statements of changes in

total equity) as a consequence of the capital decreases

described in note 27.a.

The decrease produced in 2025 by an amount of EUR

3,055 million has been the consequence of the

difference between the purchase value of the redeemed

shares (EUR 3,287 million) and the par value of said

shares (EUR 231 million ) (see note 4.a and consolidated

statements of changes in total equity) as a consequence

of the capital decreases described in note 27.a.

Likewise, in accordance with the applicable legislation, a

reserve has been provided in 2024 for amortized capital

charged to the issue premium for an amount equal to the

nominal value of said amortized shares ascending to EUR

231 million (EUR 516 million   euros in 2024).

126

29. Accumulated retained

earnings

a) Definitions

The balance of 'Equity - Accumulated gains and Other

reserves' includes the net amount of the accumulated

results (profits or losses) recognised in previous years

through the income statement which in the profit

distribution were allocated in equity, the expenses of

own equity instrument issues, the differences between

the amount for which the treasury shares are sold and

their acquisition price, as well as the net amount of the

results accumulated in previous years, generated by the

result of non-current assets held for sale, recognised

through the income statement.

b) Breakdown

The detail of ‘Shareholders' equity - reserves’ at 31

December 2025 and 2024 is as follows:

EUR million
	2025	2024
Restricted reserves	3,328	3,084
Legal reserve A	1,469	1,515
Own shares	480	421
Revaluation reserve Royal Decree-Law 7/1996	43	43
Reserve for retired capital	1,336	1,105
Unrestricted reserves	26,357	20,362
Voluntary reserves	26,357	20,362
Total	29,685	23,446

A. The board of directors has proposed to the general shareholders'

meeting the reclassification of the excess that the amount of the

balance of the legal reserve account shows over the figure that is

equivalent to 20% of the resulting share capital after the executed

capital reductions, to be included in the voluntary reserves account.

i. Legal reserve

Under the Consolidated Spanish Corporate Enterprises

Act, 10% of net profit for each year must be transferred

to the legal reserve. These transfers must be made until

the balance of this reserve reaches 20% of the share

capital. The legal reserve can be used to increase capital

provided that the remaining reserve balance does not

fall below 10% of the increased share capital amount.

During 2024, Banco Santander reduced the legal reserve

by EUR 103 million.

During 2025, the legal reserve has been reduced by EUR

46 million to adjust that the amount of the legal reserve

is equivalent to 20% of the share capital, after the

executions of the capital reductions made in the year.

This amount has been incorporated into the voluntary

reserves account.

The amount of the legal reserve amounted to 20% of the

share capital figure on December 31, 2025.

ii. Reserve for equity shares

According to the Corporate Enterprises Act, an

unavailable reserve equivalent to the amount for which

Banco Santander's shares owned by subsidiaries are

recorded. This reservation shall be freely available when

the circumstances which have obliged its constitution

disappear. In addition, this reserve covers the

outstanding balance of loans granted by the Group with

Banco Santander's share guarantee and the amount

equivalent to the credits granted by the Group

companies to third parties for the acquisition of own

shares.

iii. Revaluation reserve Royal Decree Law 7/1996,

of 7 June

The balance of Revaluation reserve Royal Decree-Law

7/1996 can be used, free of tax, to increase share capital.

From 1 January 2007, the balance of this account can be

taken to unrestricted reserves, provided that the

monetary surplus has been realised. The surplus will be

deemed to have been realised in respect of the portion

on which depreciation has been taken for accounting

purposes or when the revalued assets have been

transferred or derecognised.

If the balance of this reserve were used in a manner

other than that provided for in Royal Decree law 7/1996,

of 7 June, it would be subject to taxation.

iv. Voluntary Reserve

During the financial year 2025 there was an increase in

voluntary reserves of EUR 5,995 million, which is

explained by the application of the result of the financial

year 2024, amounting to EUR 6,927 million; an increase

of EUR 46 million due to the reclassification of the excess

legal reserve; a decrease of EUR 622 million for the

interest of the PPCCs; an increase of EUR 196 million for

the merger reserve with URO Prperty Holdings, S.A.,

Blecno Investments, S.L.U., Emisora Santander España,

S.A.U. y Elevate Tech Platforms, S.L.U.; an decrease of

EUR 3 million in lost on sale of equity instruments

measured at fair value from other cumulative

comprehensive income and a decrease of EUR 549

million in transfers between equity items and other

items.

127

30. Other equity instruments

and own shares

a) Equity instruments issued not capital and other

equity instruments

Other equity instruments includes the equity component

of compound financial instruments, the increase in

equity due to personnel remuneration, and other items

not recognised in other 'Shareholders’ equity' items.

On 8 September 2017, Banco Santander, S.A. issued

contingent redeemable perpetual bonds (the fidelity

bonds) amounting to EUR 981 milliom nominal value

(EUR 686 million fair value).

On 15 December 2024, Banco Santander, S.A.,

proceeded to redeem in advance voluntarily all of said

bonds in circulation.

Additionally, at 31 December 2025 the Bank had other

equity instruments amounting to EUR 417 million.

b) Own shares

‘Shareholders' equity - Own shares’ includes the amount

of equity instruments held by Banco Santander.

Transactions involving own equity instruments, including

their issuance and cancellation, are recognised directly in

equity, and no profit or loss may be recognised on these

transactions. The costs of any transaction involving own

equity instruments are deducted directly from equity,

net of any related tax effect.

The Bank’s shares owned by the consolidated companies

accounted for 0.07% of issued share capital at 31

December 2025 (December 31, 2024 0.10%).

During financial year 2025, Banco Santander acquired

551,762,443 own shares at an average price of EUR 7.01

per share, of which 267,166,950 shares were acquired

under the eighth share buy-back programme launched

on 6 February 2025, and 196,005,870 shares under the

ninth buy-back programme launched on 31 July 2025. In

addition, 463,172,820 shares were cancelled and

88,589,623 shares were sold at an average price of EUR

6.53 per share.

31. Memorandum items

Memorandum items relate to balances representing

rights, obligations and other legal situations that in the

future may have an impact on net assets, as well as any

other balances needed to reflect all transactions even

though they may not impinge on its net assets.

a) Guarantees and contingent commitments

granted

Guarantees include transactions for which an entity

secures obligations of a third party arising from financial

guarantees granted by the entity or other types of

contracts. ‘Contingent liabilities’ include all transactions

under which an entity guarantees the obligations of a

third party and which result from financial guarantees

granted by the entity or from other types of contract. The

detail is as follows:

EUR million
	2025	2024
Loans commitment granted	149,881	141,976
Available in lines of credit	149,881	141,976
Deposits in the future	—	—
Financial guarantees granted	22,138	18,888
Financial guarantees	74	82
Credit derivatives sold	22,064	18,806
Other commitments granted	121,415	108,829
Irrevocable documentary credits	5,826	4,320
Other guarantees and guarantees granted	47,496	47,211
Other	68,093	57,298
Of which:
Subscribed securities pending disbursement	1	1
Conventional asset acquisition contracts	39,551	35,617
Other contingent commitments	28,541	21,680
Total Other guarantees and commitments	293,434	269,693

The breakdown at December 31, 2025 of off-balance

sheet exposures and allowance fund (see note 23) by

impairment phase under Bank of Spain Circular 4/2017

are EUR 284,838 million and EUR 78 million in Stage 1,

EUR 7,983 million and EUR 53 million in Stage 2 and EUR

613 million and EUR 48 million in Stage 3, respectively.

In addition, the breakdown at December 31, 2024 of

exposures and the allowance fund were EUR 261,861

million and EUR 61 million in Stage 1, EUR 7,232 million

and EUR 44 million in Stage 2 and EUR 600 million and

EUR 70 million in Stage 3, respectively.

128

A significant part of these amounts will mature without

any payment obligation material for the Bank; therefore,

the aggregate balance of these commitments cannot be

considered as a real future need for financing or liquidity

to be granted to third parties by Banco Santander.

Income from guarantee instruments is recognized under

‘Fee and commission income’ in the income statements

and is calculated by applying the rate established in the

related contract to the nominal amount of the

guarantee.

i. Loan commitments granted

Firm commitments to provide credit under pre-

established conditions and terms, except for those that

meet the definition of derivatives because they may be

settled in cash or through the delivery or issuance of

another financial instrument. They include those

available in lines of credit and forward deposits.

ii. Financial guarantees granted

Include financial guarantee contracts such as financial

guarantees, credit derivatives sold, derivative risks

contracted on behalf of third parties and others.

iii. Other commitments granted

Other contingent liabilities include all commitments that

could give rise to the recognition of financial assets not

included in the above items, such as technical

guarantees and guarantees for the import and export of

goods and services.

b) Other information

i. Assets advanced as collateral

In addition to collateral assets, there are assets owned

by Banco Santander which guarantee both transactions

carried out by the Bank or by third parties and various

contingent liabilities and liabilities over which the

assignee has the right, by contract or custom, to re-

transfer and pledge them.

The carrying value of Banco Santander's financial assets

delivered as collateral for such contingent and

assimilated liabilities or liabilities is the following:

EUR million
	2025	2024
Financial assets held for trading	55,600	27,581
Of which
Public debt Public Sector Agencies	7,215	4,236
Fix rent instruments	41,580	19,970
Equity instruments	6,805	3,375
Non-trading financial assets mandatorily at fair value through profit or loss	—	30
Financial assets at fair value through other comprehensive income	2,154	2,148
Financial assets at amortized cost	30,025	15,277
Total	87,779	45,036

32. Hedging derivatives

Banco Santander, within its financial risk management

strategy, and in order to reduce asymmetries in the

accounting treatment of its operations, enters into

hedging derivatives on interest, exchange rate, credit risk

or variation of stock prices, depending on the nature of

the risk covered.

Based on its objective, Banco Santander classifies its

hedges in the following categories:

• Cash flow hedges: cover the exposure to the variation

of the cash flows associated with an asset, liability or

a highly probable forecast transaction. This cover the

variable-rate issues in foreign currencies, fixed-rate

issues in non-local currency, variable-rate interbank

financing and variable-rate assets (bonds, commercial

loans, mortgages, etc.).

• Fair value hedges: cover the exposure to the variation

in the fair value of assets or liabilities, attributable to

an identified and hedged risk. This covers the interest

risk of assets or liabilities (bonds, loans, bills, issues,

deposits, etc.) with coupons or fixed interest rates,

interests in entities, issues in foreign currencies and

deposits or other fixed rate liabilities.

• Hedging of net investments abroad: cover the

exchange rate risk of the investments in subsidiaries

domiciled in a country with a different currency from

the functional one of the Bank.

The details of the coverage derivatives of Banco

Santander, S.A. according to the type of coverage, the

risk they cover and the product, can be found in the

following table:

129

EUR million
	31 December 2025
	Notional Value	Carrying amount		Changes in fair value used for calculating hedge ineffectiveness	Balance sheet items
		Assets	Liabilities
Fair Value Hedges	69,954	1,176	(1,739)	335
Interest rate risk	60,867	801	(1,166)	362	Hedging derivatives
Of which:
Interest Rate Swap	50,721	711	(1,111)	455
Forward	10,146	90	(55)	(94)
Cap&Floor	—	—	—	1
Exchange rate risk	1,277	2	(15)	—	Hedging derivatives
Of which:
Fx forward	1,277	2	(15)	—
Interest rate and exchange risk	7,310	373	(557)	(27)	Hedging derivatives
Of which:
Interest Rate Swap	851	5	(55)	(1)
Currency Swap	6,459	368	(501)	(26)
Credit Risk	—	—	—	—	Hedging derivatives
Of which:
CDS	—	—	—	—
Base risk	500	—	(1)	—	Hedging derivatives
Of which:
Interest Rate Swap	500	—	(1)	—
Cash flow Hedges	12,465	108	(83)	(100)
Interest rate risk	11,336	80	(7)	(94)	Hedging derivatives
Of which:
Interest Rate Swap	9,851	58	—	(11)
Forward	1,485	22	(7)	(83)
Exchange rate risk	18	—	—	1	Hedging derivatives
Of which:
FX swap	18	—	—	—
Interest rate and exchange risk	1,111	28	(76)	(7)	Hedging derivatives
Of which:
Interest Rate Swap	295	—	(10)	4
Currency Swap	817	28	(66)	(11)
Inflation rate risk	—	—	—	—	Hedging derivatives
Of which	—	—	—	—
Interest Rate Swap	—	—	—	—
Floor	—	—	—	—
Net Investments hedges abroad	17,177	75	(462)	283
Exchange rate risk	17,177	75	(462)	283	Hedging derivatives
Of which:
Fx forward	17,177	75	(462)	283
Total	99,596	1,359	(2,284)	518

130

EUR million
	31 December 2024
	Notional Value	Carrying amount		Changes in fair value used for calculating hedge ineffectiveness	Balance sheet line items
		Assets	Liabilities
Fair Value Hedges	71,778	1,140	(2,169)	267
Interest rate risk	62,071	736	(1,629)	202	Hedging derivatives
Of which:
Interest Rate Swap	59,187	688	(1,626)	162
Forward	2,500	43	—	43
Exchange rate risk	1,165	4	(24)	1	Hedging derivatives
Of which:
Fx forward	1,165	4	(24)	1
Interest rate and exchange risk	8,042	400	(516)	64	Hedging derivatives
Of which:
Interest Rate Swap	882	5	(65)	17
Currency Swap	7,160	394	(451)	48
Credit Risk	—	—	—	—	Hedging derivatives
Of which:
CDS	—	—	—	—
Base risk	500	—	—	—	Hedging derivatives
Of which:
Interest Rate Swap	500	—	—	—
Cash flow Hedges	13,381	121	(120)	405
Interest rate risk	12,020	72	(57)	410	Hedging derivatives
Of which:
Interest Rate Swap	5,820	66	(4)	328
Fx forward	6,200	6	(53)	82
Exchange rate risk	223	2	—	—	Hedging derivatives
Of which:
Fx forward	223	2	—	—
Interest rate and exchange risk	1,138	47	(63)	(5)	Hedging derivatives
Of which:
Interest Rate Swap	297	—	(13)	(8)
Currency exchange	841	47	(50)	3
Inflation rate risk	—	—	—	—	Hedging derivatives
Of which
Interest Rate Swap	—	—	—	—
Floor	—	—	—	—
Net Investments hedges abroad	21,131	656	(227)	453
Exchange rate risk	21,131	656	(227)	453	Hedging derivatives
Of which:
Fx forward	21,131	656	(227)	453
Total	106,290	1,917	(2,516)	1,125

131

Banco Santander covers the risks of its balance sheet in a

variety of ways. On the one hand, documented as fair

value hedges, it covers the interest rate and foreign

exchange risk of fixed-income portfolios at a fixed rate

(REPOs are included in this category). Resulting, in an

exposure to changes in their fair value due to variations

in market conditions based on the various risks hedged,

which has an impact on Banco Santander's income

statement.

To mitigate these risks, Banco Santander contracts

derivatives, mainly Interest Rate Swaps, Cross Currency

Swaps, Cap&floors and Forex Forward.

On the other hand, the interest and exchange rate risk of

loans granted to corporate clients at a fixed rate or

variable rate is covered. These hedges, are carried out

through interest rate swaps, cross currency swaps and

exchange rate derivatives (forex swaps and forex

forward).

In addition, Banco Santander, S.A. manages the interest

and exchange risk of debt issues in its various categories

(issuing covered bonds, perpetual, subordinated and

senior bond) and in different currencies, denominated at

fixed rates, and therefore subject to changes in their fair

value. These issues are covered through interest rate

swaps and cross currency swaps.

The methodology used by Banco Santander to measure

the effectiveness of fair value hedges is based on

comparing the market values of the hedged items (based

on the objective risk of the hedge) and of the hedging

instruments in order to analyse whether the changes in

the market value of the hedged items are offset by the

market value of the hedging instruments, thereby

mitigating the hedged risk and minimizing volatility in

the income statement.

Prospectively, the same analysis is performed,

measuring the theoretical market values in the event of

parallel variations in the market curves of a positive

basis point.

There is a macro hedge of structured loans in which the

interest rate risk of fixed-rate loans (mortgage, personal

or with other guarantees) granted to legal entities in

commercial or corporate banking and wealth clients in

the medium-long term is hedged. This hedge is

instrumented as a macro hedge of fair value, the main

hedging instruments being Interest Rate Swap and

Cap&floors. In case of total or partial cancellation or

early repayment, the customer is obliged to pay/receive

the cost/income of the cancellation of the interest rate

risk hedge managed by the Bank.

Regarding cash flow hedges, the objective is to hedge

the cash flow exposure to changes in interest rates and

exchange rates.

For retrospective purposes, the hypothetical derivative

methodology is used to measure effectiveness. By

means of this methodology, the hedged risk is modelled

as a derivative instrument -not real-, created exclusively

for the purpose of measuring the effectiveness of the

hedge, and which must comply with the fact that its

main characteristics coincide with the critical terms of

the hedged item throughout the period for which the

hedging relationship is designated. This hypothetical

derivative does not incorporate characteristics that are

exclusive to the hedging instrument. Additionally, it is

worth mentioning that any risk component not

associated with the hedged objective risk and effectively

documented at the beginning of the hedge is excluded

for the purpose of calculating the effectiveness. The

market value of the hypothetical derivative that

replicates the hedged item is compared with the market

value of the hedging instrument, verifying that the

hedged risk is effectively mitigated and that the impact

on the income statement due to potential

ineffectiveness is residual.

Prospectively, the variations in the market values of the

hedging instrument and the hedged item (represented

by the hypothetical derivative) are measured in the event

of parallel shifts of a positive basis point in the affected

market curves.

There is another macro-hedge, this time of cash flows,

the purpose of which is to actively manage the risk-free

interest rate risk (excluding credit risk) of a portion of the

floating rate assets of Banco Santander, S.A., through

the arrangement of interest rate derivatives whereby the

bank exchanges floating rate interest flows for others at

a fixed rate agreed at the time the transactions are

arranged. The items affected by the Macro-hedging have

been designated as those in which their cash flows are

exposed to interest rate risk, specifically the floating rate

mortgages of the Banco Santander, S.A. network

referenced to Euribor 12 Months or Euribor Mortgage,

with annual renewal of rates, classified as sound risk and

which do not have a contractual floor (or, if not, this floor

is not activated). The hedged position affecting the

Macro Cash Flow Hedge at the present time is near to

EUR 5,000 million .

132

Regarding net foreign investments hedges, basically,

they are allocated in Banco Santander, S.A. Grupo

Santander assumes as a priority risk management

objective to minimize -to the limit determined by the

Group's Financial Management- the impact on the

calculation of the capital ratio of its permanent

investments included within the Group's consolidation

perimeter, and whose shares or equity interests are

legally denominated in a currency other than that of the

Group's parent company.  For this purpose, financial

instruments (generally derivatives) are contracted to

hedge the impact on the capital ratio of changes in

forward exchange rates.  Grupo Santander mainly

hedges the risk for the following currencies: BRL, CLP,

MXN, CAD, COP, CNY, GBP, CHF, NOK, USD, PLN, UYU

and PEN. The instruments used to hedge the risk of

these investments are forex swaps, forex forward and

spot currency purchases/sales.

For this type of hedges, ineffectiveness scenarios are

considered to be of low probability, given that the

hedging instrument is designated considering the

position determined and the spot rate at which the

position is located.

Additionally, the profile information of maturities and

the price/average rate for Banco Santander is shown:

EUR million
	31 December 2025
	Up to one month	One to three months	Three months  to one year	One year to five years	More than five years	Total
Fair value hedges	1,121	3,139	8,502	38,581	18,611	69,954
Interest rate risk
Interest rate instruments
Nominal	746	2,790	6,849	34,331	17,003	61,719
Average fixed interest rate (%) GBP	—	2.155	1.500	5.725	5.371
Average fixed interest rate (%) EUR	3.303	2.809	2.101	3.139	3.303
Avarage  fixed interest rate (%)  CZK	—	1.650	2.350	—	—
Avarage  fixed interest rate (%) NOK	—	—	—	—	2.403
Avarage  fixed interest rate (%) AUD	—	—	—	—	3.824
Average fixed interest rate (%) CHF	—	—	—	0.403	—
Average fixed interest rate (%) RON	—	—	4.880	3.200	—
Average fixed interest rate (%) USD	5.075	4.422	1.983	3.653	4.991
Average fixed interest rate (%) HKD	—	—	—	1.960	—
Average fixed interest rate (%) NZD	—	—	—	—	3.252
Exchange rate risk
Exchange rate instruments
Nominal	329	250	697			1,276
CNY/EUR average exchange rate	–	8.2728	8.2837	–	–
MXN/EUR average exchange rate	21.7269	–	–	–	–
Interest rate and exchange risk
Instruments of exchange rate and interest
Nominal	46	99	956	3,750	1,608	6,459
Average fixed interest rate (%) AUD/EUR	—	—	—	5.710	6.101
Average fixed interest rate (%) CZK/EUR	—	—	—	4.264	—
Average fixed interest rate (%) RON/EUR	—	—	—	—	6.970
Average fixed interest rate (%) HKD/EUR	—	—	—	4.618	—
Average fixed interest rate (%) JPY/EUR	—	—	—	0.975	1.407
Average fixed interest rate (%) NOK/EUR	—	—	—	3.441	4.155
Average  fixed interest rate (%) CHF/EUR	—	—	—	2.021	1.919
Average fixed interest rate (%) USD/COP	11.669	11.703	9.869	9.356	—
Average  fixed interest rate (%) USD/MXN	—	—	8.800	—	—

133

EUR million
	31 December 2025
	Up to one month	One to three months	Three months  to one year	One year to five years	More than five years	Total
AUD/EUR average exchange rate	—	—	—	1.6174	1.5837
COP/USD average exchange rate	—	—	—	—	1.6660
CZK/EUR average exchange rate	—	26.1310	25.3650	24.8324	—
EUR/COP average exchange rate	—	—	0.0002	—	—
EUR/USD average exchange rate	—	—	0.9404	0.9475	—
HKD/EUR average exchange rate	—	—	—	8.4879	—
JPY/EUR average exchange rate	—	—	—	137.8023	129.2289
MXN/EUR average exchange rate	—	—	—	19.0828	—
NOK/EUR average exchange rate	—	—	—	9.5190	10.6512
RON/EUR average exchange rate	—	—	4.9485	4.9270	4.9800
CHF/EUR average exchange rate	—	—	—	1.0194	0.9347
USD/COP average exchange rate	0.0003	0.0002	0.0003	0.0003	0.0003
USD/MXN average exchange rate	—	—	0.0545	—	—
Basis Risk
Basis risk instruments
Nominal	—	—	—	500	—	500
Others riks
Exchange instruments
Nominal	—	—	—	—	—	—
Cash flow hedges	245	—	2,417	9,216	587	12,465
Interest rate and exchange rate risk
Interest rate and exchange instruments
Nominal	236	—	288	213	80	817
Average fixed interest rate (%) AUD/EUR	—	—	—	5.678	—
Average fixed interest rate (%) CHF/EUR	2.258	—	—	—	—
AUD / EUR average exchange rate	—	—	1.590	1.577	1.562
RON / EUR average exchange rate	—	—	4.940	—	—
CHF / EUR average exchange rate	1.002	—	—	—	—
Interest rate risk
Interest Rate Swaps
Nominal	—	—	2,120	9,003	507	11,630
Average fixed interest rate (%) EUR	—	—	2.964	2.695	3.016
Average fixed interest rate (%) AUD	—	—	1.65	—	—
Exchange rate risk
FX Swap
Nominal	9	—	9	—	—	18
GBP/EUR average exchange rate	1.129	—	1.119	—	—
Others risks
Exchange instruments
Nominal	—	—	—	—	—	—
Net investment hedges abroad	2,574	4,530	9,866	207.00	—	17,177
Exchange rate risk
Exchange rate instruments
Nominal	2,574	4,530	9,866	207.00	—	17,177
BRL / EUR average exchange rate	6.892	6.979	6.652	—	—
CLP / EUR average exchange rate	1,054.241	1,018.994	1,108.027	1,099.571	—
COP / EUR average exchange rate	—	4,565.931	—	—	—

134

EUR million
	31 December 2025
	Up to one month	One to three months	Three months  to one year	One year to five years	More than five years	Total
GBP / EUR average exchange rate	0.860	0.867	0.884	—	—
MXN / EUR average exchange rate	22.187	23.465	22.823	—	—
USD / EUR average exchange rate	—	1.078	1.175	—	—
PLN / EUR average exchange rate	4.321	4.307	4.309	—	—
CAD / EUR average exchange rate	1.611	—	—	—	—
UYU / EUR average exchange rate	48.093	48.729	49.916	53.350	—
Total	3,940	7,669	20,785	48,004	19,198	99,596

135

EUR million
	31 December 2024
	Up to one month	One to three months	Three months to one year	One year to five years	More than five years	Total
Fair value hedges	1,916	4,999	8,520	38,683	17,660	71,778
Interest rate risk
Interest rate instruments
Nominal	1,431	4,446	6,878	33,324	15,991	62,070
Average fixed interest rate (%) GBP	—	0.020	3.120	2.640	5.370
Average fixed interest rate (%) EUR	1.340	0.010	2.000	3.460	3.170
Avarage  fixed interest rate (%)  CZK	—	—	—	2.000	—
Avarage  fixed interest rate (%) NOK	—	—	—	—	2.400
Avarage  fixed interest rate (%) AUD	—	—	—	—	3.820
Average fixed interest rate (%) RON	—	3.610	—	4.200	—
Average fixed interest rate (%) USD	0.010	3.500	2.740	4.460	4.720
Average fixed interest rate (%) HKD	—	—	—	1.960	—
Average fixed interest rate (%) NZD	—	—	—	—	3.250
Exchange rate risk
Exchange rate instruments
Nominal	473	405	287	—	—	1,165
CNY/EUR average exchange rate	7.7100	7.7100	7.7100	—	—
MXN/EUR average exchange rate	21.7800	—	—	—	—
Interest rate and exchange risk
Instruments of exchange rate and interest
Nominal	12	148	1,355	4,859	1,669	8,043
Average fixed interest rate (%) AUD/EUR				5.690	6.100
Average fixed interest rate (%) CZK/EUR	—	—	—	4.190	—
Average fixed interest rate (%) RON/EUR	—	—	—	—	6.970
Average fixed interest rate (%) HKD/EUR	—	—	—	4.620	—
Average fixed interest rate (%) JPY/EUR	—	—	—	1.300	1.410
Average fixed interest rate (%) NOK/EUR	—	—	—	3.440	4.500
Average  fixed interest rate (%) CHF/EUR	—	—	—	2.030	2.250
Average fixed interest rate (%) USD/COP	—	12.750	10.580	10.540	7.760
Average  fixed interest rate (%) EUR/GBP	6.690	—	—	—	—
Average  fixed interest rate (%) USD/MXN	—	—	11.300	—	—
AUD/EUR average exchange rate	—	—	—	1.5992	1.5837
NZD/EUR average exchange rate	—	—	—	—	1.6660
CZK/EUR average exchange rate	—	—	26.0300	25.6338	—
EUR/GBP average exchange rate	1.1885	—	—	—	—
EUR/USD average exchange rate	—	—	0.9818	0.9433	—
HKD/EUR average exchange rate	—	—	—	8.4879	—
JPY/EUR average exchange rate	—	—	—	134.1510	129.2289
MXN/EUR average exchange rate	—	—	—	19.0828	—
NOK/EUR average exchange rate	—	—	—	9.5190	10.4288
RON/EUR average exchange rate	—	4.8100	—	4.9398	4.9800
CHF/EUR average exchange rate	—	—	—	1.0194	0.9315
USD/COP average exchange rate	—	0.0003	0.0002	0.0002	0.0003
USD/MXN average exchange rate	—	—	0.0517	—	—
Basis Risk
Basis risk instruments
Nominal	—	—	—	500	—	500

136

EUR million
	31 December 2024
	Up to one month	One to three months	Three months to one year	One year to five years	More than five years	Total
Others riks
Exchange instruments
Nominal	—	—	—	—	—	—
Cash flow hedges:	14	83	6,325	6,875	84	13,381
Interest rate and exchange rate risk
Interest rate and exchange instruments
Nominal	—	—	—	1,055	84	1,139
Average fixed interest rate (%) AUD/EUR	—	—	—	3.520	—
Average fixed interest rate (%) CHF/EUR	—	—	—	3.110	—
AUD / EUR average exchange rate	—	—	—	1.5800	1.5600
RON / EUR average exchange rate	—	—	—	4.9400	—
CHF / EUR average exchange rate	—	—	—	1.0000	—
Interest rate risk
Interest Rate Swaps
Nominal	—	—	6,200	5,820	—	12,020
Average fixed interest rate (%) EUR	—	—	—	2.910	—
Exchange rate risk
FX Swap
Nominal	14	83	125	—	0	222
GBP/EUR average exchange rate	1.2000	1.1700	1.1900	—	—
Others risks
Exchange instruments
Nominal	—	—	—	—	0	0
Net investment hedges abroad	3,240	5,070	12,821	—	—	21,131
Exchange rate risk
Exchange rate instruments
Nominal	3,240	5,070	12,821	0	0	21,131
BRL / EUR average exchange rate	5.9900	6.1200	6.2700	—	—
CLP / EUR average exchange rate	1,052.7800	1,066.5800	1,045.0900	—	—
COP / EUR average exchange rate	—	4,703.0000	—	—	—
GBP / EUR average exchange rate	0.8600	0.8500	0.8500	—	—
MXN / EUR average exchange rate	20.2800	19.8300	21.9700	—	—
USD / EUR average exchange rate	1.0900	1.0800	1.0900	—	—
PLN / EUR average exchange rate	4.3700	4.4100	4.4100	—	—
CAD / EUR average exchange rate	—	1.5000	—	—	—
CHF / EUR average exchange rate	—	0.9400	—	—	—
UYU / EUR average exchange rate	45.8200	45.1600	48.2900	—	—
Total	5,170	10,152	27,666	45,558	17,744	106,290

137

Regarding the hedged items, in the following table we

have the detail of the type of coverage, the risk that is

covered and what products are being covered as of

December 31, 2025 and 2024, mainly they are loaned

deposits, financial and corporate bonds and corporate

repos:

EUR million
	31 December 2025
	Amount in books of the item covered		Cumulative amount of fair value adjustments on the covered line		Change in the fair value of the item covered for inefficiency assessment	Cash flow hedge reserve / foreign currency conversion
	Assets	Liabilities	Assets	Liabilities		Coverage continues	Discontinuous coverage
Fair value hedges	10,612	54,984	(42)	401	(351)	—	—
Interest rate risk	8,039	48,839	(23)	337	(363)	—	—
Exchange rate risk	1,278	—	1	—	—	—	—
Interest rate and exchange rate risk	793	6,145	(20)	64	12	—	—
Credit risk	—	—	—	—	—	—	—
Basis risk	501	—	—	—	—	—	—
Other risks	—	—	—	—	—	—	—
Cash flow hedges	—	—	—	—	100	49	—
Interest rate risk	—	—	—	—	94	47	—
Exchange rate risk	—	—	—	—	(1)	1	—
Interest rate and exchange rate risk	—	—	—	—	7	1	—
Inflation rate risk	—	—	—	—	—	—	—
Other risks	—	—	—	—	—	—	—
Net investment hedges abroad	17,177	—	(283)	—	(283)	—	—
Exchange rate risk	17,177	—	(283)	—	(283)	—	—
Total	27,789	54,984	(325)	401	(534)	49	—

138

EUR million
	31 December 2024
	Amount in books of the item covered		Cumulative amount of fair value adjustments on the covered line		Change in the fair value of the item covered for inefficiency assessment	Cash flow hedge reserve / foreign currency conversion
	Assets	Liabilities	Assets	Liabilities		Coverage continues	Discontinuou s coverage
Fair value hedges	9,218	49,919	(134)	(872)	(249)	—	—
Interest rate risk	7,391	45,169	(117)	(830)	(188)	—	—
Exchange rate risk	1,165	—	—	—	—	—	—
Interest rate and exchange rate risk	662	4,750	(17)	(42)	(61)	—	—
Credit risk	—	—	—	—	—	—	—
Basis risk	—	—	—	—	—	—	—
Other risks	—	—	—	—	—	—	—
Cash flow hedges	—	—	—	—	(409)	26	122
Interest rate risk	—	—	—	—	(414)	18	122
Exchange rate risk	—	—	—	—	—	—	—
Interest rate and exchange rate risk	—	—	—	—	5	8	—
Inflation rate risk	—	—	—	—	—	—	—
Other risks	—	—	—	—	—	—	—
Net investment hedges abroad	21,132	—	(453)	—	(453)	—	—
Exchange rate risk	21,132	—	(453)	—	(453)	—	—
Total	30,350	49,919	(587)	(872)	(1,111)	26	122

139

The cumulative amount of adjustments of the fair value

hedging instruments that remain in the balance for

hedges items that are no longer adjusted by profit and

loss of coverage as at 31 December 2025 is EUR 19

million (EUR 33  million in 2024).

The following table contains information regarding the

effectiveness of the hedging relationships designated by

Banco Santander, as well as the impacts on profit or loss

and other comprehensive income as of 31 December

2025 and 2024:

EUR million
	31 December 2025
	Earnings / (losses) recognized in Other accumulated global income	Coverage inefficiency recognized in the income statement	Line of the income statement that includes ineffective coverage	Reclassified amount of reserves to the income statement due to:
				Covered transaction that affects the income statement	Line of the income statement that includes reclassified amounts
Fair value hedges	—	(16)	Gain or losses of financial assets/ liabilities
Interest rate risk	—	(1)
Exchange rate risk	—	—
Interest and Exchange rate risk	—	(15)
Credit risk	—	—
Other risks	—	—
Cash flow hedges	(100)	—	Gain or losses of financial assets/ liabilities	(21)	Net interest income/ Gains or losses of financial assets/ liabilities
Interest rate risk	(94)	—		(9)
Exchange rate risk	1	—		—
Interest and Exchange rate risk	(7)	—		(12)
Inflation rate risk	—	—		—
Other risks	—	—		—
Total	(100)	(16)		(21)

140

EUR million
	31 December 2024
	Earnings / (losses) recognized in Other accumulated global income	Coverage inefficiency recognized in the income statement	Line of the income statement that includes ineffective coverage	Reclassified amount of reserves to the income statement due to:
				Covered transaction that affects the income statement	Line of the income statement that includes reclassified amounts
Fair value hedges	—	(7)	Gain or losses of financial assets/ liabilities
Interest rate risk	—	(11)
Exchange rate risk	—	1
Interest and Exchange rate risk	—	4
Credit risk	—	(1)
Other risks	—	—
Cash flow hedges	409	(3)	Gain or losses of financial assets/ liabilities	269	Net interest income/ Gains or losses of financial assets/ liabilities
Interest rate risk	414	(3)		278
Exchange rate risk	—	—		—
Interest and Exchange rate risk	(5)	—		(9)
Inflation rate risk	—	—		—
Other risks	—	—		—
Total	409	(10)		269

The following table shows a reconciliation of each

component of equity and an analysis of other

comprehensive income in relation to hedge accounting

at 31 December 2025 and 2024:

EUR million
	2025	2024
Balance at the end of the previous year	104	(182)
Amount recognized in Other accumulated global income
Cash flow hedges	(100)	409
Interest rate risk and interest rate and exchange rate risk	(101)	409
Changes in equity by discharge at P&L	(21)	269
Remains of equity movements	(80)	140
Other risks	1	—
Changes in equity by discharge at P&L	—	—
Remains of equity movements	1	—
Taxes	31	(123)
Balance at year end	35	104

33. Off-balance-sheet funds

under management

As of 31 December 2025, Banco Santander held off-

balance-sheet funds under management, namely

investment funds and assets under management,

amounting to EUR 121,071 million (31 December 2024,

EUR 108,663 million). Marketed but not held under

management amounted to EUR 38,185 million (31

December 2024, EUR 28,971 million).

141

34. Interest income

Interest and similar income in the accompanying income

statements comprises the interest accruing in the year

on all financial assets with an implicit or explicit return,

calculated by applying the effective interest method,

irrespective of measurement at fair value, and the

rectifications of income as a result of hedge accounting.

Interest is recognized gross, without deducting any tax

withheld originally.

The detail of the main items of interest and similar

income earned in 2025 and 2024 is as follows:

EUR million
	2025	2024
Derivatives - Trading	59	57
Of which: Interest income derived from economic hedges	59	57
Debt instruments	4,565	4,100
Central Banks	68	80
Public sector	2,868	2,258
Credit entities	763	832
Other financial companies	738	845
Non-financial companies	128	85
Loans and advances	17,105	19,247
Central Banks	48	45
Public sector	519	526
Credit entities	2,494	3,137
Other financial companies	5,429	5,403
Non-financial companies	5,842	7,022
Households	2,773	3,114
Other assets	2,551	3,489
Of which, insurance contracts linked to pensions (note 23.c)	13	14
Deposits	31	73
Central Banks	—	—
Public sector	—	12
Credit entities	2	7
Other financial companies	28	51
Non-financial companies	1	3
Households	—	—
Hedging derivatives - Interest rate risk	359	61
Other financial liabilities	2	—
Debt securities issued	—	—
Total	24,672	27,027

Most of the interest and similar income was generated

by Banco Santander's financial assets that are measured

either at amortized cost or at fair value through Other

comprehensive income.

35. Interest expense

Interest expense and similar charges in the

accompanying income statements includes the interest

accruing in the year on all financial liabilities with an

implicit or explicit return, including remuneration in kind,

calculated by applying the effective interest method,

irrespective of measurement at fair value; the

rectifications of cost as a result of hedge accounting; and

the interest cost attributable to provisions recorded for

pensions.

The detail of the main items of interest expense and

similar charges accrued in 2025 and 2024 is as follows:

EUR million
	2025	2024
Derivatives - Trading	277	77
Of which: interest income from derivatives in economic hedges	277	77
Debt securities Issued	4,567	4,948
Debt securities	40	30
Central Banks	—	—
Public sector	12	6
Credit entities	2	2
Other financial companies	25	21
Non-financial companies	1	1
Loans and advances	11	13
Central Banks	—	—
Public sector	—	—
Credit entities	1	8
Other financial companies	9	5
Non-financial companies	1	—
Households	—	—
Deposits	11,015	12,901
Central Banks	466	695
Public sector	1,139	1,205
Credit entities	2,652	2,697
Other financial companies	4,067	4,672
Non-financial companies	2,237	2,871
Households	454	761
Other financial liabilities	1,008	785
Hedging derivatives - Interest rate risk	1,204	1,309
Pensions and other obligations of defined post-employment benefits (note 23)	48	49
Others	—	—
Total	18,170	20,112

Most of the interest expense and similar charges was

generated by Banco Santander's financial liabilities that

are measured at amortized cost.

142

36. Dividend income

‘Dividend income’ includes the dividends and payments

on equity instruments out of profits generated by

investees after the acquisition of the equity interest.

The detail of income from equity instruments is as

follows:

EUR million
	2025	2024
Financial assets held for trading	550	513
Non-trading financial assets mandatorily at fair value through profit or loss	9	9
Financial assets at fair value through other comprehensive income	62	90
Investments in subsidiaries, jointly controlled entities and associates	6,070	7,113
Subsidiaries	6,021	7,065
Associates	49	48
Total	6,691	7,725

Investments in subsidiaries, jointly controlled entities

and associates

The detail of the main items of interest expense and

similar charges accrued in 2025 and 2024 is as follows:

EUR million
	2025	2024
Detail of the companies:
SANTANDER HOLDINGS USA, INC	1,157	1,066
BANCO SANTANDER TOTTA, S.A.	1,117	—
GRUPO FINANCIERO SANTANDER MEXICO, S.A. DE C.V.	808	1,292
SANTANDER CONSUMER FINANCE, S.A.	600	500
SANTANDER TOTTA, SGPS, S.A.	438	979
SANTANDER INSURANCE, S.L.	359	413
BANCO SANTANDER MEXICO, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México	276	476
INVESTMENT HOLDINGS 1857, S.L.	203	—
SANTANDER UK GROUP HOLDINGS PLC (AT1)	166	145
SANTANDER HOLDINGS USA, INC (PERPETUAL PREFERRED STOCK)	154	164
SAM INVESTMENT HOLDINGS, S.L.	122	97
TEATINOS SIGLO XXI INVERSIONES, S.A.	98	58
SANTANDER CONSUMER FINANCE S.A. (AT1)	93	93
TRESMARES SANTANDER DIRECT LENDING, SICC, S.A.	79	54
BANCO SANTANDER, S.A. (Uruguay)	70	69
MERLIN PROPERTIES, SOCIMI, S.A.	46	42
OPEN BANK, S.A. Unipersonal	45	63
SANTANDER CHILE HOLDING S.A.	44	27
SANTANDER TOTTA, SGPS, S.A. (AT1)	44	20
BANCO SANTANDER PERU S.A.	30	27
SOCUR S.A.	28	7
PEREDA GESTION, S.A.	9	24
SANTANDER GLOBAL TECHNOLOGY AND OPERATIONS, S.L. UNIPERSONAL	5	23
SANTANDER UK GROUP HOLDINGS PLC	—	1,203
SANTANDER INVESTMENT, S.A.	—	110
SANTANDER INVESTMENT CHILE LIMITADA	—	35
NAVIERA TRANS ORE, A.I.E.	—	32
SANTANDER FACTORING Y CONFIRMING, S.A. Unipersonal E.F.C.	—	28
Other companies	79	66
Total	6,070	7,113

143

37. Commission income

Fee and commission income comprise the amount of all

fees and commissions accruing in favour of Banco

Santander in the year, except those that form an integral

part of the effective interest rate on financial

instruments.

The detail of fee and commission income in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Collection and payment services:	591	594
Current Accounts	177	186
Credit and debit cards	256	230
Transfers and other payment orders	121	138
Other commission income in connection with payment services	37	40
Marketing of non-banking financial products:	789	752
Collective Investment	464	556
Insurance	229	195
Other	96	1
Securities services:	418	288
Securities underwriting and placement	171	163
Transfer orders	160	19
Other	87	106
Clearing and settlement	—	73
Asset management	210	161
Custody	79	70
Structured finance	658	517
Loan granted commitments granted	401	384
Financial granted guarantees granted	331	329
Other:	671	623
Foreign currency exchange	149	159
Other concepts	522	464
Total	4,148	3,791

38. Commission expense

Fee and commission expense show the amount of all

fees and commissions paid or payable by Banco

Santander in the year, except those that form an integral

part of the effective interest rate on financial

instruments.

The detail of fee and commission expense in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Clearing and settlement	85	69
Loan commitments received	—	—
Financial guarantees received	206	180
Custody	1	1
Other A	716	616
Total	1,008	866

A. Other Includes mainly commissions paid for financial and

mediation services, as well as credit cards.

39. Gains or losses on financial

assets and liabilities

The following information is presented below regarding

the gains or losses on financial assets or liabilities:

a) Breakdown

The detail, by classification of the related instrument, of

Gains/losses on financial assets and liabilities in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Gains or losses on financial assets and liabilities not measured at fair value through profit or loss, net	100	(97)
Financial assets at amortized cost	(34)	(47)
Other financial assets and liabilities	134	(50)
Of which, debt instruments	110	(61)
Of which, equity instruments	—	—
Gains or losses on financial assets and liabilities held for trading, netA	494	704
Gains or losses on non-trading financial assets and liabilities mandatory at fair value through profit or loss	80	73
Gains or losses on financial assets and liabilities measured at fair value through profit or loss, net A	(2)	350
Gains or losses from hedge accounting, net	(16)	(6)
Total	656	1,024

A. Includes the net income obtained from transactions with debt securities,

capital instruments, derivatives and short positions included in this

portfolio when the Banco Santander jointly manages its risk in those

instruments.

144

b) Financial assets and liabilities at fair value

through profit or loss

The detail of the amount of the asset balances is as

follows:

EUR million
	2025	2024
Loans and receivables	64,250	54,181
Central Banks	657	1,239
Credit institutions	26,906	24,008
Customers	36,687	28,934
Debt instruments A	55,778	43,519
Equity instruments	22,154	17,216
Derivatives	46,583	52,462
Total	188,765	167,378

A. Include EUR 46,640 million related to Spanish and foreign

government debt securities at 31 December 2025 (31 December

2024 , EUR 36,497 million).

The foregoing table shows the maximum credit risk

exposure of these assets at 31 December 2025 and

2024, respectively. Banco Santander mitigates and

reduces this exposure as follows.

With respect to derivatives, Banco Santander has

entered into framework agreements with a large

number of credit institutions and customers for the

netting-off of asset positions and the provision of

collateral for non-payment.

'Loans and receivable' to credit institutions and loans

and receivable to 'customers' included reverse repos

amounting to EUR 95,381 million at 31 December 2025

(31 December 2024: EUR 80,003 million).

In addition, assets amounting to EUR 416 million have a

mortgage guarantee at 31 December 2025 (31

December 2024: EUR 578 million).

At 31 December 2025 and 2024, the amount of the

change in the year in the fair value of financial assets at

fair value through profit or loss attributable to variations

in their credit risk (spread) was not material.

The detail of the amount of the liability balances is as

follows:

EUR million
	2025	2024
Deposits	101,789	79,698
Central Banks	8,551	10,897
Credit Institutions	32,123	26,991
Customers	61,115	41,810
Marketable debt instruments	1,587	1,069
Short positions	30,694	25,518
Derivatives	41,524	46,121
Total	175,594	152,406

At 31 December 2025 and 2024, the amount of the

change in the fair value of financial liabilities at fair value

through profit or loss attributable to changes in their

credit risk during the year is not material.

40. Exchange differences, net

This chapter basically includes the results obtained in the

purchase and sale of currencies, the differences that

arise when converting monetary items in foreign

currency to functional currency and those from non-

monetary assets in foreign currency at the time of

disposal.

The detail of ‘Exchange differences (net)’ in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Foreign currency purchases and sales	217	(106)

Banco Santander manages the currencies to which it is

exposed together with the arrangement of derivative

instruments and, accordingly, the changes in this line

item should be analyzed together with those recognized

under Gains or losses on financial assets and liabilities

(see note 39).

145

41. Other operating income and

other operating expenses

The detail of ‘Other operating income’ in the

accompanying income statements for 2025 and 2024 , is

as follows:

EUR million
	2025	2024
Exploitation of real estate investments and operating leases	138	277
Others	296	298
Total	434	575

The detail of ‘Other operating expenses’ in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Contribution to Deposit Guarantee Fund and Resolution Fund (note 1.h)A	(14)	(16)
Other operating expensesB	(220)	(609)
Total	(234)	(625)

A. Includes the expense incurred by contribution to the National

Resolution Fund and to the Single Resolution Fund.

B. It included, at 31 December 2024, EUR 290 million for the temporary

tax on credit institutions (Law 38/2022).c

In the 2025 and 2024 financial years, it was decided that

there will not be contribution in Spain to the Single

Resolution Fund, as well as a decrease in the

contribution to the Deposit Guarantee Fund, by the

Single Resolution Board (SRB) and the Deposit

Guarantee Fund  Management Committee, respectively.

146

42. Staff costs

a) Breakdown

The detail of ‘Staff costs’ in 2025 and 2024 is as follows:

EUR million
	2025			2024
	Of which, in Spain	Of which, foreign branches	Total	Of which, in Spain	Of which, foreign branches	Total
Wages and salaries	1,932	664	2,596	1,862	638	2,500
Social security costs	379	69	448	378	63	441
Additions to provisions for defined benefit pension plans (note 23)	2	—	2	2	—	2
Contributions to defined contribution pension funds (note 23)	84	27	111	82	26	108
Equity-instrument-based remuneration	—	—	—	—	—	—
Other staff costs	133	34	167	124	35	159
Total	2,530	794	3,324	2,448	762	3,210

b) Headcount

The average number of employees at the Bank, by

professional category, is as follows:

Average number of employees
	2025	2024
Executive directors and Senior management	17	15
Other employees	20,963	21,642
Branches abroad	2,227	2,182
Total	23,207	23,839

The number of employees, as of December 31, 2025 and

December 31, 2024, is 22,856 and 23,569, respectively.

The functional breakdown, by gender, at 31 December

2025, is as follows:

	Breakdown by gender
	Executives		Other line personnel
	Men	Women	Men	Women
Breakdown by gender	82%	18%	49%	51%

The labour relations between employees and the various

Group companies and, therefore, the Bank are governed

by the related collective agreements or similar

regulations.

The number of employees with disabilities greater than

or equal to 33%, distributed by professional categories

at December 31, 2025 and 2024 , is as follows:

	2025	2024
Senior executives	—	—
Other executives	29	27
Other employees	384	405
Total	413	432

The average number of employees of Banco Santander

with a disability greater than or equal to 33%, during the

year 2025 was 419 (435 at 2024).

c) Share-based payments

The main share-based payments granted by the Group in

force at 31 December,  2025 and 2024 are described

below.

i. Bank

The variable remuneration policy for the Bank’s

executive directors and certain executive personnel of

the Bank and of other Group companies includes Bank

share-based payments, the implementation of which

requires, in conformity with the law and the Bank’s

Bylaws, specific resolutions to be adopted by the general

meeting.

147

Were it necessary or advisable for legal, regulatory or

other similar reasons, the delivery mechanisms

described below may be adapted in specific cases

without altering the maximum number of shares linked

to the plan or the essential conditions to which the

delivery thereof is subject.

These adaptations may involve replacing the delivery of

shares with the delivery of cash amounts of an equal

value.

The plans that include share-based payments are as

follows: (i) Deferred and Conditional Variable

Remuneration Plan; (ii) Deferred Multiyear Objectives

Variable Remuneration Plan; (iii) Digital Transformation

Award, (iv) Digital Transformation Award 2022, Digital

Transformation Award 2023 and (vi) PagoNxt incentive

Plan 2024 and 2025 for Santander executives. The

characteristics of the plans are set forth below:

Deferred variable remuneration systems	Description and plan beneficiaries	Conditions	Calculation Base
(i) Deferred and conditional variable remuneration plan (2015, 2016, 2017, 2018, 2019, 2020, 2021,  2022, 2023, 2024 and 2025)	The purpose of these cycles is to defer a portion of the variable remuneration of the beneficiaries over a period of three years for the sixth cycles, over three or five years for the fifth, seventh, eighth, ninth, tenth and eleventh cycles, and over four or five years for the twelfth cycle, for it to be paid, where appropriate, in cash and in Santander shares. The other portion of the variable remuneration is also to be paid in cash and Santander shares, upon commencement of the cycles, in accordance with the rules set forth below. Beneficiaries: • Executive directors and certain executives (including senior management) and employees who assume risk, who perform control functions or receive an overall remuneration which puts them on the same remuneration level as executives and employees who assume risks (fifth cycle) • In the case of the sixth, seventh, eighth, ninth, tenth, eleventh twelfth and thirteenth,  fourteenth and fifteenth cycle the beneficiaries are Material Risk Takers (Identified staff) that are not beneficiaries of the Deferred Multiyear Objectives Variable Remuneration Plan.	For the fifth and sixth cycles (2015 to 2016), the accrual of the deferred compensation is conditioned, in addition to the requirement that the beneficiary remains in the Group's employ, with the exceptions included in the plan regulations on none of the following circumstances existing during the period prior to each delivery, pursuant to the provisions set forth in each case in the plan regulations: • Poor financial performance of the Group. • Breach by the beneficiary of internal regulations, including, in particular, those relating to risks. • Material restatement of the Group's consolidated financial statements, except when it is required pursuant to a change in accounting standards. • Significant changes in the Group’s economic capital or risk profile. In the case of the seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth and fifteenth cycles, the accrual of deferred compensation is conditioned, in addition to the permanence of the beneficiary in the Bank, with the exceptions contained in the plan's regulations, to non-occurrence of a poor performance of the entity as a whole or of a specific division or area of the entity or of the exposures generated by the personnel: i. significant failures in risk management by the entity , or by a business unit or risk control unit. ii. the increase suffered by the entity or by a business unit of its capital needs, not foreseen at the time of generation of the exposures. iii. Regulatory sanctions or judicial sentences for events that could be attributable to the unit or the personnel responsible for those. Also, the breach of internal codes of conduct of the entity. iv. Irregular behaviours, whether individual or collective, considering in particular the negative effects derived from the marketing of inappropriate products and the responsibilities of the persons or bodies that made those decisions.	Fifth cycle (2015): • Executive directors and members of the Identified Staff with total variable remuneration higher than 2.6 million euros: 40% paid immediately and 60% deferred over 5 years deferral period. • Division managers, country heads (of countries which represent at least 1% of Group's economic capital), other executives of the Group with a similar profile and members of the Identified Staff  with total variable remuneration between 1.7 million euros (1.8 million in fourth cycle) and 2.6 million euros: 50% paid immediately and 50% deferred over  5 years (fifth cycle) • Other beneficiaries: 60% paid immediately and 40% deferred over 3 years. Sixth cycle (2016): • 60% of bonus will be paid immediately and 40%  deferred over a three years period. Seventh, eighth, ninth, tenth and eleventh cycle (2017, 2018, 2019, 2020 and 2021): • Beneficiaries of these plans with target total variable remuneration higher or equal to 2.7 million euros: 40%  paid immediately and 60% deferred over 5 years • Beneficiaries of these plans with target total variable remuneration between 1.7 million euros and 2.7 million euros: 50% paid immediately and 50%paid over 5 years • Other beneficiaries of these plans: 60% paid immediately and 40% deferred over 3 years. Twelfth (2022),thirteenth (2023), fourteenth (2024) and fifteenth (2025) cycle: • Beneficiaries of these plans with target total variable remuneration higher or equal to 2.7 million euros: 40% paid immediately and 60% deferred over 5 years • Beneficiaries of these plans with target total variable remuneration between 1.7 million euros and 2.7 million euros: 50% paid immediately and 50% paid over 5 years • Other beneficiaries of these plans: 60% paid immediately and 40% deferred over 4 years . T

148

Deferred variable remuneration systems	Description and plan beneficiaries	Conditions	Calculation Base
(ii)Deferred Multiyear Objectives Variable Remuneration Plan (2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024 and 2025)	The aim is simplifying the remuneration structure, improving the ex ante risk adjustment and increasing the impact of the long- term objectives on the Group’s most relevant roles. The purpose of these cycles is to defer a portion of the variable remuneration of the beneficiaries over a period of three or five years (four or five years for the seventh cycle) for it to be paid, where appropriate, in cash and in Santander shares; the other portion of the variable remuneration is also to be paid in cash and Santander shares (regarding the instruments part, executive directors in the seventh cycle have the opportunity to choose all in share options or half in share options and half in shares), upon commencement of the cycles, in accordance with the rules set forth below. The accrual of the last third of the deferral (in the case of 3 years deferral), the last 2 fourths (in the case of 4 years deferral) and the last three fifths (in the case of 5 years deferral) is also subject to long-term objectives. Beneficiaries Executive directors, senior management and certain executives of the Group’s first lines of responsibility.	In 2016 the accrual is conditioned, in addition to the permanence of the beneficiary in the Group, with the exceptions contained in the plan’s regulations, to non- occurrence of the following circumstances during the period prior to each of the deliveries in the terms set forth in each case in the plan’s regulations: i. Poor performance of the Group. ii. Breach by the beneficiary of the internal regulations, including in particular that relating to risks. iii. Material restatement of the Group’s consolidated financial statements, except when appropriate under a change in accounting regulations. iv. Significant changes in the Group’s economic capital or risk profile. In 2017, 2018, 2019, 2020 and 2021 the accrual is conditioned, in addition to the beneficiary' permanence in the Group, with the exceptions contained in the plan’s regulations, to the non-occurrence of poor financial performance from the entity as a whole or of a specific division or area thereof or of the exposures generated by the personnel, taking into account the following factors: v. Significant failures in risk management committed by the entity, or by a business unit or risk control unit. vi. the increase suffered by the entity or by a business unit of its capital needs, not foreseen at the time of generation of the exposures. vii. Regulatory sanctions or court rulings for events that could be attributable to the unit or the  personnel responsible for those. Also, the breach  of internal codes of conduct of the entity. viii. Irregular behaviours, whether individual or collective, considering in particular negative effects derived from the marketing of inappropriate products and responsibilities of persons or bodies that made those decisions. Paid half in cash and half in shares. In the seventh cycle, and only for executive directors: half in cash and 25% in share options and 25% in shares (unless the director chooses to receive options only). The maximum number of shares to be delivered is calculated by taking into account the weighted average daily volume of weighted average prices for the fifteen trading sessions prior to the previous Friday (excluding) on the date on which the board decides the bonus for the Executive directors of the Bank. In the eighth cycle, and for all Identified Staff: half in cash and 25% in shares and 25% in share options, or half in cash and half in shares, according to each executive´s choice. In the ninth and tenth cycle, half in cash and half in shares.	First cycle (2016): Executive directors and members of the Identified Staff with total variable remuneration higher than or equal to 2.7 million euros: 40% paid immediately and 60% deferred over a 5 years  period. Senior managers, country heads of countries representing at least 1% of the Group´s capital and other members of the identified staff whose total variable remuneration is between 1.7 million and 2.7 million euros: 50% paid immediately and 50% deferred over a 5 years period. Other beneficiaries: 60% paid immediately and 40% deferred over a 3 years period. The second, third, fourth, fifth and sixth cycles (2017, 2018, 2019,2020 and 2021 respectively) are under the aforementioned deferral rules, except that the  variable remuneration considered is the target for each executive and not the actual award. In 2016 the metrics for the deferred portion subject to long-term objectives (last third or last three fifths, respectively, for the cases of three years and five years deferrals) are: Earnings per share (EPS) growth in 2018 over 2015. Relative Total Shareholder Return (TSR) in the 2016-2018 period measured against a group of credit institutions. Compliance with the fully-loaded common equity tier 1 (“CET1”) ratio target for financial year 2018. Compliance with Grupo Santander’s underlying return on risk-weighted assets (“RoRWA”) growth target for financial year 2018 compared to financial year 2015. In the second, third, fourth, fifth and sixth cycle (2017, 2018, 2019, 2020 and 2021) the metrics for the deferred portion subject to long-term objectives (last third or last three fifths, respectively, for the cases of three years and five years deferrals) are: EPS growth in 2019, 2020, 2021, 2022 and 2023 (over 2016, 2017, 2018, 2019 and 2020, for each respective cycle) Relative Total Shareholder Return (TSR) measured against a group of 17 credit institutions (second and third cycles) in the periods 2017-2019 and 2018-2019, respectively, and against a group of 9 entities (fourth, fifth and sixth cycle) for the 2019-2021, 2020-2022 and 2010-2023  period. Compliance with the fully-loaded common equity tier 1 (“CET1”) ratio target for financial years 2019, 2020, 2021,2022 and 2023, respectively. In the seventh (2022), eighth cycle (2023), ninth (2025) and tenth cycle (2025), the metrics for the deferred portion subject to long-term objectives (two last fourths and last three fifths, for the cases of four years and five years deferrals) are: • Banco Santander's consolidated Return on tangible equity (RoTE) target in 2024 (7th cycle) and 2025 (8th cycle) and 2026 (9th cycle). • Relative Total Shareholder Return (TSR) measured against a group of 9 credit institutions for the period 2022-2024 (7th cycle), 2023-2025 (8th cycle) and 2024-2026 (9th cycle). • Progress level in the public targets of our Sustainability agenda.

149

Deferred variable remuneration systems	Description and plan beneficiaries	Conditions	Calculation Base
(iii) Digital Transformation Award (2019, 2020 and 2021)	The 2019, 2020 and 2021 Digital Transformation Incentive (the “Digital Incentive”) is a variable remuneration system that includes the delivery of Santander shares and share options. The aim of the Digital Incentive is to attract and retain the critical skill sets to support and accelerate the digital transformation of the Group. By means of this program, the Group offers a remuneration element which is competitive with the remuneration systems offered  by other market operators who also compete for digital talent. The number of beneficiaries is limited to a maximum of 250 employees and the total amount of the incentive is limited to 30 million euros.	The funding of this incentive is subject to meeting important milestones that are aligned with the Group´s digital roadmap and have been approved by the board of directors, taking into account the digitalization strategy of the Group, with the aim of becoming the best open, responsible global financial services platform. Performance of 2019 incentive was measured based on achievement of the following milestones: (i) Launch of a Global Trade Services (GTS) platform; (ii) launch of a Global Merchant Services (GMS) platform; (iii) migration of our fully digital bank, OpenBank, to a "next generation" platform and launch in 3 markets; (iv) extension of SuperDigital in Brazil to at least one other country; (v) and launch of our international payments app based on blockchain Pago FX to non- Santander customers. The milestones for the 2020 Digital Transformation Award were: (i) rolling out the global merchant services (GMS) platform in 3 new geographies, enhancing the platform functionality and achieving volume targets for transactions and participating merchants; (ii) doing the commercial rollout of the global trade services (GTS) platform in 8 new geographies, enhancing platform functionality, and achieving  volume targets for on- boarded clients and monthly active users; (iii) launching OpenBank in a new market and migrating the retail banking infrastructure to “new-mode” bank; (iv) launch the global platform SuperDigital in at least 4 countries, driving target active user growth; (v) deploying machine learning across pre-defined markets for 4 priority use cases, rolling out Conversion Rate Optimization (Digital marketing) for at least 40 sales programs, delivering profit targets, and driving reduction of agent handled calls in contact centers; (vi) successfully implementing initiatives related to on- board and identity services, common API (application programming interface) layer, payment hubs, mobile app for SMEs and virtual assistant services; and (vii) launching the PagoFX global platform in at least 4 countries. The milestones for 2021 were: (i)in relation to Pago Nxt Consumer payment platform: implementation of Superdigital platform in seven countries, acquisition of over 1.5 million active customer base and accelerating growth through B2B (business to business) and B2B2C (business to business to customer) partnerships, acquiring more than 50% of the new customers through these channels, which are more cost-effective; (ii)in relation to Digital Consumer Bank: launching online API for checkout lending in the European Union and completion of controllable items for Openbank launch in USA; (iii)in relation to One Santander strategy: implementation in Europe of One Common Mobile Experience and, specifically, implementation of Europe ONE app for individual customers in at least three of the four countries by December 2021; and be among the three-top rated entities in terms of Mobile NetPromoter Score (Mobile NPS) in at least two of the four countries by December 2021; (iv) In relation to cloud adoption: host 75% of migratable virtual machines on cloud technology (either public cloud or OHE) by December 2021. For these purposes, mainframes, physical servers and servers with non-x86 operating systems will be considered non-migratable.	The Digital Incentive is structured 50% in Santander shares and 50% in options over Santander shares, taking into account the fair value of the option at the moment in which they are granted. For Material Risk Takers subject to five years deferrals, the Digital Incentive (shares and options over shares) shall be delivered in thirds, on the third, fourth and fifth anniversary from their granting. For Material Risk Takers subject to three years deferrals and employees not subject to deferrals, delivery shall be done on the third anniversary from their granting. Any delivery of shares, either directly or via exercise of options overs shares, will be subject generally to the Group’s general malus & clawback provisions as described in the Group’s remuneration policy and to the continuity of the beneficiary within the Group Santander. In this regard, the board may define specific rules for non-Identified Staff. Vested share options can be exercised until maturity, with all options lapsing after ten years (for granting the 2019 incentive) and eight years (for granting the 2020 and 2021 incentive). The total achievement for 2021 Digital Incentive was 77.5% (85% en 2020 and 83% en 2019).

150

Deferred variable remuneration systems	Description and plan beneficiaries	Conditions	Calculation base
(iv) Digital Transformation Award (2022)	The board of directors approved the 2022 Digital Transformation Incentive. It is a variable remuneration scheme splits in two different blocks: • The first one, with the same mechanism than previous years, that delivers Santander shares and share options if the group hits major milestones on its digital roadmap. This is aimed at a group of up to 250 (is limited to 30 million euros)employees whose functions are deemed essential to Santander’s growth. • And the second one, which delivers PagoNxt, S.L. RSUs and premium prices options (PPOs), and is aimed at up to 50 employees (and limited to 15 million euros) whose roles are considered key to PagoNxt’s success. The aim of the Digital Incentive is to attract and retain the critical skill sets to support and accelerate the digital transformation of the Group. By means of this program, the Group offers a remuneration element which is competitive with the remuneration systems offered  by other market operators who also compete for digital talent.	Performance of the first block of the  incentive shall be measured based on achievement of the following milestones: i. Edelweiss: Our Santander future retail architecture EDELWEISS will mean moving from our current Core centric banking architecture towards a Customer and Data-Centric Core supported by lean Record Processing engines. ii. Simplification: Speed up the simplification of our technology platform and business model by Reducing the total number of applications in production and reducing number of products in the regions. iii. Agile: Agile ways of working enable a better and faster reaction to customers’ needs and is based on a value-driven delivery that increases efficiency by reducing time-to-market and development costs, and increasing quality. People working in Agile are more collaborative, engaged, empowered and creative. iv. In Digital Consumer Bank: a) To create the BNPL platform connected to at least one merchant in Netherlands and Germany, and to make sure the platform is ready to connect in Spain. b) To support the definition of Openbank US’s IT digital strategy and achieve 2022 milestones in it. c) To have the new leasing platform connected to dealers in Italy. d) To expand the Wabi B2B online business to Germany. To execute the first B2B deal with an Original Equipment Manufacturer or mobility player in at least one country. To expand coches.com business and platform to Portugal. And in regard to the second block of digital incentive: the consolidation of PagoNxt Core Perimeter.	The first block of thee Digital Incentive is structured 50% in Santander shares and 50% in options over Santander shares, taking into account the fair value of the option at the moment in which they are granted. For Material Risk Takers subject to five years deferrals, the Digital Incentive (shares and options over shares) shall be delivered in thirds, on the third, fourth and fifth anniversary from their granting. For Material Risk Takers subject to three years deferrals and employees not subject to deferrals, delivery shall be done on the third anniversary from their granting. Any delivery of shares, either directly or via exercise of options overs shares, will be subject generally to the Group’s general malus & clawback provisions as described in the Group’s remuneration policy and to the continuity of the beneficiary within the Grupo Santander. In this regard, the board may define specific rules for non-Identified Staff. Vested share options can be exercised until maturity, with all options lapsing after ten years . The total achievement for 2022 Digital Incentive was 96.5%. The second block of Digital Incentive is structures in restricted stock units (RSUs) and premium priced Options (PPOs) of PagoNxt, S.L. in a percentage determined by the internal category of the beneficiary. The total achievement for 2022 was 100%.

(v) Digital Transformation Award (2023) The board of directors approved the 2023 Digital Transformation Incentive. It is a variable remuneration scheme  which delivers PagoNxt, S.L. RSUs and premium prices options (PPOs), and is aimed at up to 50 employees (and limited to 15 million euros) whose roles are considered key to PagoNxt’s success. With this program, the Group offers a remuneration element which is competitive with the remuneration systems offered  by other market operators who also compete for digital talent. And the performance conditions were focus on key digital projects related with PagoNxt's main businesses (Trade, Merchant and Payments) in its core geographies. This incentive  is structures in restricted stock units (RSUs) and premium priced Options (PPOs) of PagoNxt S.L. in a percentage determined by the internal category of the beneficiary. The average achievement for 2023 was 88%.

(vi) PagoNxt incentive Plan 2024 and 2025 for Santander executives The board of directors approved the PagoNxt incentive Plan 2024 and 2025 Incentive. It is a variable remuneration scheme  which delivers PagoNxt, S.L. RSUs, and is aimed at approximately  to 50 - 60 employees whose roles are considered key to PagoNxt’s success. With this program, the Group offers a remuneration element which is competitive with the remuneration systems offered  by other market operators who also compete for digital talent. And the performance conditions were focus on key digital projects related with PagoNxt's main businesses (Trade, Merchant and Payments) in its core geographies. This incentive  is structures in restricted stock units (RSUs) of PagoNxt S.L. in a percentage determined by the internal category of the beneficiary. The average achievement for 2024 was 77% and  85% in 2025.

151

ii. Fair value

The fair value of the performance share plans was

calculated as follows:

– Deferred variable compensation plan linked to

multi-year objectives 2024 and 2025 :

The Group calculates at the grant date the fair value of

the plan based on the valuation report of an independent

expert, Willis Towers Watson. According to the design of

the plan for 2024 and 2025 and the levels of

achievement of similar plans in comparable entities, it

has been considered that the fair value is 70%.

43. Other general

administrative expenses

a) Breakdown

The detail of Other general administrative expenses in

the accompanying income statements for 2025 and

2024 is as follows:

EUR million
	2025	2024
Technology and systems	802	761
Fixtures and supplies	102	124
Other administrative expenses	717	734
Technical reports	165	148
Advertising	99	98
Per diems and travel expenses	68	66
Surveillance and cash courier services	40	39
Communications	39	33
Taxes other than income tax	47	61
Insurance premiums	16	19
Total	2,095	2,083

b) Technical reports and other

Technical reports include the fees from the various

Group companies (detailed in the accompanying

appendices) for the services provided by their respective

auditors, with the following detail:

EUR million
	2025A	2024A
Audit	118.5	122.3
Audit-related services	15.0	13.6
Tax services	0.1	0.9
All other	7.1	7.4
Total	140.7	144.2

A. Of those corresponding to Banco Santander, S.A. EUR 35.1  million,

EUR 2.9 million , EUR 0 million and EUR 1.5 million, respectively, as of

December 31, 2025 (EUR 32.3 million, EUR 3.6 million , EUR 0.1

million and EUR 1.1 million, respectively, as of December 31, 2024);

and Branches of Banco Santander, S.A., EUR 1.0 million, EUR 1.2

million, EUR 0 million and EUR 0 million, respectively, as of December

31, 2025 (EUR 0.7 million, EUR 1.9 million, EUR 0 million and EUR 0

million, respectively, as of December 31, 2024).

Additionally, the firm BDO has performed audit and

audit-related services totaling 1.9 million. The audit

services and main non-audit services included for each

item in the above breakdown are detailed as follows:

• Audit services: audit of the individual and

consolidated financial statements of Banco

Santander and its subsidiaries (of which PwC or

another network firm is the external auditor); audit

of the interim consolidated financial statements of

Banco Santander; integrated audits prepared in order

to file the Form 20-F  with the SEC  and the internal

control audits (SOx) for required Group's entities;

limited reviews of financial statements; and  

regulatory reports required to the external auditors

regarding several  Grupo Santander entities.

• Audit-related services: issuance of comfort letters,

verification services of financial and non-financial

information required by regulators, and other

reviews of documentation to be submitted to

domestic or foreign authorities that, due to their

nature, the external auditor typically provides.

• Tax services: tax compliance and advisory services

provided to Group companies outside Spain, which

have no direct effect on the audited financial

statements and are permitted in accordance with the

applicable independence regulations.

• Other services: agreed-upon procedure reports,

assurance reports and special reports performed

under the accepted profession's standards; as well as

other reports required by the regulators.

152

The 'Audit' heading includes the fees for the year's audit,

regardless of the date the audit was completed. Any

subsequent adjustments, which are not significant, are

shown in this note for each year for comparison

purposes. The fees corresponding to the rest of the

services are shown by reference to when the audit

committee approved them.

The services commissioned from the Group's auditors

meet the independence requirements under applicable

European and Spanish law, the SEC rules and the Public

Company Accounting Oversight Board (PCAOB),

applicable to the Group, and did not involve in any

case the performance of any work that is incompatible

with the auditor's role.

Lastly, the Group commissioned services from audit

firms other than PwC amounting to EUR 155.9 million in

2025 (EUR 206.2 million in 2024 ).

c) Number of branches

The number of offices according to their geographical

location at 31 December 2025 and 2024 is as follows:

Number of branches
	Group
	2025	2024
Spain	1,674	1,877
Group	5,450	6,209
	7,124	8,086

Number of branches
	Of which, Banco Santander
	2025	2024
Spain	1,630	1,800
International	11	10
Total	1,641	1,810

44. Impairment or reversal of

the impairment of investments

in subsidiaries, joint ventures

and associates or non-financial

assets

The detail of ‘Impairment losses on other assets (net)’ in

the accompanying income statements for 2025 and

2024 is as follows:

EUR million
	2025	2024
Investments in subsidiaries, joint ventures or associates (note 13)	1,498	(241)
Non-financial assets (notes 15 and 16)	(13)	(3)
Total	1,485	(244)

45. Gains or losses on non-

financial assets and

investments, net

The detail of ‘Gains/(losses) on disposal of assets not

classified as non-current assets held for sale’ in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
On disposal of tangible assets	—	5
On disposal of investments in subsidiaries, jointly controlled entities and associates	11	5
Total	11	10

153

46. Gains or losses on non-

current assets held for sale not

classified as discontinued

operations

The detail of ‘Gains/(losses) on non-current assets held

for sale not classified as discontinued operations’ in the

accompanying income statements for 2025 and 2024 is

as follows:

EUR million
	2025	2024
Impairment of non-current assets held for sale (note 12)	(38)	(61)
Gain / (loss) on disposal	4	3
Total	(34)	(58)

47. Related parties

The parties related to Banco Santander are deemed to

include, in addition to its subsidiaries, associates and

jointly controlled entities, Banco Santander's key

management personnel (the members of its Board of

Directors and the executive vice presidents, together

with their close family members) and the entities over

which the key management personnel may exercise

significant influence or control.

Following is a detail of the transactions performed by

Banco Santander with its related parties at 31 December

2025 and 2024, distinguishing between subsidiaries,

joint venture entities and associated entities, members

of Banco Santander's board of directors, Banco

Santander's executive vice presidents, and other related

parties, Related party transactions were made on terms

equivalent to those that prevail in arm's-length

transactions or, when this was not the case, the related

compensation in kind was recognized.

EUR million
	2025
	Subsidiaries, joint ventures and associated entities	Members of the Board of Directors A	Senior ManagementA	Other related parties A
					Assets	151,454	—	18	295
Equity instruments	98,356	—	—	—
Debt instruments	15,314	—	—	2
Loans and advances	37,784	—	18	274
From which: impaired financial assets	56	—	—	—
Others	—	—	—	19
Liabilities	32,039	10	5	376
Deposits credit institution and clients	28,881	10	5	376
Marketable debt securities	3,158	—	—	—
Income statement	7,464	—	—	7
Interest and similar income	1,673	—	—	8
Interest expense and similar charges	(955)	—	—	(4)
Interest from equity instruments	6,070	—	—	—
Gains / (Losses) on financial instruments and other	3	—	—	—
Fee and commission income	816	—	—	4
Fee and commission expense	(143)	—	—	(1)
Other	22,717	4	3	189
Contingent liabilities	13,534	3	2	61
Contingent commitments	9,183	1	1	38
Financial instruments - derivatives	—	—	—	90

A. Includes transactions carried out with both Banco Santander and with other entities of Grupo Santander.

154

EUR million
	2024
	Subsidiaries, joint ventures and associated entities	Members of the board of directors A	Senior Management	Other related parties A
					Assets	148,025	—	14	226
Equity instruments	100,142	—	—	—
Debt instruments	17,429	—	—	5
Loans and advances	30,454	—	14	221
From which: impaired financial assets	158	—	—	—
Liabilities	21,703	9	7	292
Deposits credit institution and clients	20,558	9	7	292
Marketable debt securities	1,145	—	—	—
Income statement	10,181	—	—	4
Interest and similar income	1,998	—	—	9
Interest expense and similar charges	(544)	—	—	(5)
Interest from equity instruments	7,803	—	—	—
Gains / (Losses) on financial instruments and other	828	—	—	—
Fee and commission income	132	—	—	1
Fee and commission expense	(36)	—	—	(1)
Other	17,889	4	3	216
Contingent liabilities	7,796	3	2	64
Contingent commitments	10,093	1	1	20
Financial instruments - derivatives	—	—	—	132

A. Includes transactions carried out with both Banco Santander and with other entities of Grupo Santander .

In addition to the above breakdown, pension-linked

insurance contracts with insurance undertakings

belonging to the Santander Group amounted to EUR 173

million as at 31 December 2025 (EUR 186 million as at

31 December 2024).

155

48. Fair value of financial

instruments

a) Detail

The following table summarises the fair values, at

the end of each of the years indicated, of the

financial assets and liabilities listed below,

classified according to the different valuation

methodologies used by the Bank to determine their

fair value:

EUR million
	2025			2024
	Published price quotations in active Markets (Level 1)	Internal Models (Level 2 and 3)	Total	Published price quotations in active Markets (Level 1)	Internal Models (Level 2 and 3)	Total
Financial assets held for trading	75,490	106,454	181,944	59,302	101,123	160,425
Non-trading financial assets mandatorily at fair value through profit or loss	9	1,914	1,923	21	2,106	2,127
Financial assets designated at fair value through profit or loss	—	4,898	4,898	—	4,826	4,826
Financial assets at fair value through other comprehensive income	6,136	9,584	15,720	9,511	5,801	15,312
Hedging derivatives (assets)	—	1,359	1,359	—	1,917	1,917
Financial liabilities held for trading	31,512	105,372	136,884	26,037	93,112	119,149
Financial liabilities designated at fair value through profit or loss	—	38,710	38,710	—	33,257	33,257
Hedging derivatives (liabilities)	—	2,284	2,284	—	2,516	2,516

Grupo Santander has developed a formal process for

the systematic valuation and management of financial

instruments, which has been implemented worldwide

across all the Group´s units. The governance scheme for

this process, applicable to the Bank, distributes

responsibilities between two independent divisions:

Treasury (development, marketing and daily

management of financial products) and Risk (on

a periodic basis, validation of pricing models and daily

risk certification of market data, computation of risk

metrics, new transaction approval policies,

management control  of market risk and

implementation of fair value adjustment policies).

The approval of new products follows a sequence of

steps (request, development, validation, integration in

corporate systems and quality assurance) before the

product is brought into production. This process ensures

that pricing systems have been properly reviewed and

are stable before they are used.

The following subsections set forth the most important

products and families of derivatives, and the related

valuation techniques and inputs, by asset class:

Interest rate and inflation

The fixed income asset class includes basic instruments

such as interest rate forwards, interest rate swaps and

cross currency swaps, which are valued using the net

present value of the estimated future cash flows

discounted taking into account basis (swap and cross

currency spreads) determined on the basis of the

payment frequency and currency of each leg of the

derivative. Vanilla options, including caps, floors and

swaptions, are priced using the Black-Scholes model,

which is one of the benchmark industry models. More

exotic derivatives are priced using more complex

models which are generally accepted as standard

across institutions.

156

These pricing models are fed with observable market

data such as deposit interest rates, futures rates, cross

currency swap and constant maturity swap rates, and

basis spreads, on the basis of which different yield

curves, depending on the payment frequency, and

discounting curves are calculated for each currency. In

the case of options, implied volatilities are also used as

model inputs. These volatilities are observable in the

market for cap and floor options and swaptions, and

interpolation and extrapolation of volatilities from the

quoted ranges are carried out using generally accepted

industry models. The pricing of more exotic derivatives

may require the use of non-observable data or

parameters, such as correlation (among interest rates

and cross-asset), mean reversion rates and prepayment

rates, which are usually defined from historical data or

through calibration.

Inflation-related assets include zero-coupon or year-

on-year inflation-linked bonds and swaps, valued with

the present value method using forward estimation and

discounting. Derivatives on inflation indices are priced

using standard or more complex internal models.

Valuation inputs of these models consider inflation-

linked swap spreads observable in the market and

estimations of inflation seasonality, on the basis of

which a forward inflation curve is calculated. Also,

implied volatilities taken from zero-coupon and year-

on-year inflation options are also inputs for the pricing

of more complex derivatives.

Equity and foreign exchange

The most important products in these asset classes are

forward and futures contracts; they also include vanilla,

listed and OTC (Over-The-Counter) derivatives on single

underlying assets and baskets of assets. Vanilla options

are priced using the standard Black-Scholes model and

more exotic derivatives involving forward returns,

average performance, or digital, barrier or callable

features are priced using generally accepted industry

models or internal models, as appropriate. For

derivatives on illiquid stocks, hedging takes into

account the liquidity constraints in models.

The inputs of equity models consider yield curves, spot

prices, dividends, asset funding costs (repo margin

spreads), implied volatilities, correlation among equity

stocks and indices, and cross-asset correlation. Implied

volatilities are obtained from market quotes of

European and American-style vanilla call and put

options. Various interpolation and extrapolation

techniques are used to obtain continuous volatility for

illiquid stocks. Dividends are usually estimated for the

mid and long term. Correlations are implied, when

possible, from market quotes of correlation-dependent

products. In all other cases, proxies are used for

correlations between benchmark underlyings or

correlations are obtained from historical data.

The inputs of foreign exchange models include the yield

curve for each currency, the spot foreign exchange rate,

the implied volatilities and the correlation among

assets of this class. Volatilities are obtained from

European call and put options which are quoted in

markets as of-the-money, risk reversal or butterfly

options. Illiquid currency pairs are usually handled by

using the data of the liquid pairs from which the illiquid

currency can be derived. For more exotic products,

unobservable model parameters may be estimated by

fitting to reference prices provided by other non-quoted

market sources.

Credit

The most common instrument in this asset class is the

credit default swap (CDS), which is used to hedge credit

exposure to third parties. In addition, models for first-

to-default (FTD), n-to-default (NTD) and single-tranche

collateralised debt obligation (CDO) products are also

available. These products are valued with standard

industry models, which estimate the probability of

default of a single issuer (for CDS) or the joint

probability of default of more than one issuer for FTD,

NTD and CDO.

Valuation inputs are the yield curve, the CDS spread

curve and the recovery rate. For indices and important

individual issuers, the CDS spread curve is obtained in

the market. For less liquid issuers, this spread curve is

estimated using proxies or other credit-dependent

instruments. Recovery rates are usually set to standard

values. For listed single-tranche CDO, the correlation of

joint default of several issuers is implied from the

market. For FTD, NTD and internal CDO, the correlation

is estimated from proxies or historical data when no

other option is available.

Valuation adjustment for counterparty risk or default

risk

The Credit valuation adjustment (CVA) is a valuation

adjustment to over-the-counter (OTC) derivatives as a

result of the risk associated with the credit exposure

assumed to each counterparty.

The CVA is calculated taking into account potential

exposure to each counterparty in each future period.

The CVA for a specific counterparty is equal to the sum

of the CVA for all the periods. The following inputs are

used to calculate the CVA:

• Expected exposure: including for each transaction

the mark-to-market (MtM) value plus an add-on for

the potential future exposure for each period.

Mitigating factors such as collateral and netting

agreements are taken into account, as well as a

temporary impairment factor for derivatives with

interim payments.

157

• Severity: percentage of final loss assumed in a

counterparty credit event/default.

• Probability of default: for cases where there is no

market information (the CDS quoted spread curve,

etc.), proxies based on companies holding

exchange-listed CDS, in the same industry and with

the same external rating as the counterparty, are

used.

• Discount factor curve.

The Debit Valuation Adjustment (DVA) is a valuation

adjustment similar to the CVA but, in this case, it arises

as a result of the Bank’s own risk assumed by its

counterparties in OTC derivatives.

The CVA at 31 December 2025 , at a consolidated level,

amounted to EUR 224 million (resulting in a decrease of

17.6% compared to 31 December 2024 ) and DVA

amounted to EUR 285 million (resulting in a decrease of

10.1% compared to 31 December 2024). These

decreases are primarily due to the performance of

credit markets, with lower spreads compared to

December 2024, and secondarily to changes in the

composition of certain derivatives portfolios.

Furthermore, the observed reduction in CVA is

influenced by changes in the calculation models

applicable to certain clients.

Regarding the Bank, At the end of December 2025,  CVA

amounted to EUR 130 million (EUR 180 million to 31

December 2024) and DVA amounted to EUR 134 million

(EUR 134 million to 31 December 2024).

In addition, the Group amounts the funding fair value

adjustment (FFVA) is calculated by applying future

market funding spreads to the expected future funding

exposure of any uncollateralised component of the OTC

derivative portfolio. This includes the uncollateralised

component of collateralised derivatives in addition to

derivatives that are fully uncollateralised. The expected

future funding exposure is calculated by a simulation

methodology, where available. The FFVA impact is not

material for the annual accounts as of 31 December

2025 and 2024.

During 2025, the Group has continued to apply the

criteria for classifying financial instruments within the

levels of the fair value hierarchy established to comply

with regulatory expectations. These criteria, based on

information from the price contributors and real market

transactions, represent a significant reduction in the use

of expert judgement to determine observability and

allow the measurement of the significance of non-

observable valuation inputs based on objective criteria.

There has been an increase in instruments classified as

Level 3, especially during the last quarter of the year.

This increase is due to higher holding volumes of some

of these instruments in the portfolio due to new trading

activity. No significant reclassifications were detected

due to changes in the market observability of the

valuation inputs for the remaining positions. The main

increases include long-term repo/reverse repo

transactions, illiquid equities in non-trading portfolios,

and syndicated loans with an HTC&S business model for

which there is no observable market price based on the

criteria used.

In 2025, the amount reclassified to Level 3 by Banco

Santander totalled EUR 266 million (EUR 754 million in

2024). This was mainly due to reclassifications to Level

3 of loan positions for which there was reduced access

to price contributors and actual market transactions

demonstrating their observability, and, to a lesser

extent, to certain debt instruments which, based on the

Bank’s criteria, do not meet the requirements to be

considered observable instruments.

Valuation adjustments due to model risk

The valuation models described above do not involve a

significant level of subjectivity, since they can be

adjusted and recalibrated, where appropriate, through

internal calculation of the fair value and subsequent

comparison with the related actively traded price.

However, valuation adjustments may be necessary

when market quoted prices are not available for

comparison purposes.

The sources of risk are associated with uncertain model

parameters, illiquid underlying issuers, and poor quality

market data or missing risk factors (sometimes the best

available option is to use limited models with

controllable risk). In these situations, the Group and the

Bank calculate and apply valuation adjustments in

accordance with common industry practice. The main

sources of model risk are described below:

• In the interest rate markets, the sources of model

risk include interest rate indexes correlations, basis

spread modelling, the risk of calibrating model

parameters and the treatment of near-zero or

negative interest rates. Other sources of risk arise

from the estimation of market data, such as

volatilities or yield curves, whether used for

estimation or cash flow discounting purposes.

• In the stock markets, the sources of model risk

include forward skew modelling, the impact of

stochastic interest rates, correlation and multi-curve

modelling. Other sources of risk arise from

managing hedges of digital callable and barrier

option payments. Also worthy of consideration as

sources of risk are the estimation of market data

such as dividends and correlation for quanto and

composite basket options.

158

• For specific financial instruments relating to home

mortgage loans secured by financial institutions in

the UK (which are regulated and partially financed

by the Government) and property asset derivatives,

the main input is the Halifax House Price Index

(HPI). In these cases, risk assumptions include

estimations of the future growth and the volatility

of the HPI, the mortality rate and the implied credit

spreads.

• Inflation markets are exposed to model risk

resulting from uncertainty around modelling the

correlation structure among various Consumer Price

Index (CPI) rates. Another source of risk may arise

from the bid-offer spread of inflation-linked swaps.

• The currency markets are exposed to model risk

resulting from forward skew modelling and the

impact of stochastic interest rate and correlation

modelling for multi-asset instruments. Risk may

also arise from market data, due to the existence of

specific illiquid foreign exchange pairs.

• The most important source of model risk for credit

derivatives relates to the estimation of the

correlation between the probabilities of default of

different underlying issuers. For illiquid underlying

issuers, the CDS spread may not be well defined.

Set forth below are the financial instruments of Grupo

Santander at fair value whose measurement was based

on internal models (levels 2 and 3) at 31 December

2025 and 2024 :

159

EUR million
	Fair values calculated using internal models at
	2025 A
	Level 2	Level 3	Valuation techniques	Main assumptions
ASSETS	163,796	18,487
Financial assets held for trading	139,293	6,496
Central banks B	14,191	441	Present value method	Yield curves, FX market prices
Credit institutionsB	25,815	152	Present value method	Yield curves, FX market prices
CustomersB	27,986	4,592	Present value method	Yield curves, FX market prices
Debt and equity instruments	14,470	340	Present value method	Yield curves, FX market prices
Derivatives	56,831	971
Swaps	39,716	551	Present value method, Gaussian CopulaC	Yield curves, FX market prices, HPI, Basis, Liquidity
Exchange rate options	1,332	39	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices, Liquidity
Interest rate options	1,490	39	Black's Model, multifactorial advanced models interest rate	Yield curves, Volatility surfaces, FX market prices, Liquidity
Interest rate forwards	177	—	Present value method	Yield curves, FX market prices
Index and securities options	439	120	Black's Model, multifactorial advanced models interest rate	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends,   Liquidity
Other	13,677	222	Present value method, Advanced stochastic volatility models and other	Yield curves, Volatility surfaces, FX and EQ market prices, Dividends, Correlation, HPI, Credit, Others
Hedging derivatives	3,924	7
Swaps	3,690	7	Present value method	Yield curves, FX market prices, Basis
Interest rate options	91	—	Black's Model	Yield curves, FX market prices, Volatility surfaces
Other	143	—	Present value method, Advanced stochastic volatility models and other	Yield curves, Volatility surfaces, FX market prices, Credit, Liquidity, Others
Non-trading financial assets mandatorily at fair value through profit or loss	2,465	2,889
Equity instruments	899	2,543	Present value method	Market price, Interest rates curves, Dividends and Others
Debt securities	54	175	Present value method	Yield curves
Loans and receivables	1,512	171	Present value method, swap asset model & CDS	Yield curves and Credit curves
Financial assets designated at fair value through profit or loss	5,152	34
Central banks	—	—	Present value method	Yield curves, FX market prices
Credit institutions	413	—	Present value method	Yield curves, FX market prices, HPI
Customers	4,725	14	Present value method	Yield curves, FX market prices
Debt securities	14	20	Present value method	Yield curves, FX market prices
Financial assets  at fair value through other comprehensive  income	12,962	9,061
Equity instruments C	19	272	Present value method	Yield curves, Market price, Dividends and Others
Debt securities	6,819	887	Present value method	Yield curves, FX market prices
Loans and receivables C	6,124	7,902	Present value method	Yield curves, FX market prices and Credit curves

160

EUR million
	Fair values calculated using internal models at
	2025 A
	Level 2	Level 3	Valuation techniques	Main assumptions
LIABILITIES B	198,377	1,110
Financial liabilities held for trading B	133,490	864
Central banksB	12,385	—	Present value method	FX market prices, Yield curves
Credit institutionsB	27,058	—	Present value method	FX market prices, Yield curves
Customers	36,120	—	Present value methodC	FX market prices, Yield curves
Derivatives	50,248	864
Swaps	33,597	418	Present value method, Gaussian Copula	Yield curves, FX market prices, Basis, Liquidity, HPI
Exchange rate options	903	34	Black's Model, multifactorial advanced models interest rate	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends,  Liquidity
Forwards on interest rate and variable income	1,951	95	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices
Index and securities options	1,094	151	Black-Scholes Model	Yield curves, FX market prices, Liquidity
Interest rate and equity futures	121	—	Present value method	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends, Correlation, Liquidity, HPI
Other	12,582	166	Present value method, Advanced stochastic volatility models and others	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends, Correlation, HPI, Credit, Others
Short positions	7,679	—	Present value method	Yield curves ,FX market prices, Equity
Hedging derivatives	4,229	19
Swaps D	4,191	19	Present value method	Yield curves, FX market prices
Interest rate options	—	—	Black's Model	Yield curves , Volatility surfaces, FX market prices and Liquidity
Other	38	—	Present value method, Advanced stochastic volatility models and other	Yield curves , Volatility surfaces, FX market prices, Credit, Liquidity, Other
Financial liabilities designated at fair value through profit or loss	42,148	—	Present value method	Yield curves, FX market prices
Liabilities under insurance contracts	18,510	227	Present Value Method with actuarial techniques	Mortality tables and interest rate curves

A. Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market

data.

B. Includes mainly temporary acquisitions/disposals of assets with corporate clients and, to a lesser extent, with central banks.

C. Includes mainly syndicated loans under the HTC&S business model.

D. It mainly includes short-term deposits that are managed based on their fair value.

161

EUR million
	Fair values calculated using internal models at
	2024 A
	Level 2	Level 3	Valuation techniques
ASSETS	163,941	15,319
Financial assets held for trading	138,176	3,930
Central banks B	12,966	—	Present value method
Credit institutionsB	26,546	769,000,000	Present Value method
CustomersB	24,602	1,801	Present Value method
Debt and equity instruments	11,115	413	Present Value method
Derivatives	62,947	947
Swaps	47,519	556	Present Value method, Gaussian Copula
Exchange rate options	1,583	2	Black-Scholes Model
Interest rate options	1,879	30	Black's Model, advanced multifactor interest rate models
Interest rate futures	1,445	—	Present Value method
Index and securities options	465	241	Black's Model, advanced multifactor interest rate models
Other	10,056	118	Present Value method, Advanced stochastic volatility models and other
Hedging derivatives	5,652	20
Swaps	5,390	20	Present Value method
Interest rate options	2	—	Black’s Model
Other	260	—	Present Value method, Advanced stochastic volatility models and other
Non-trading financial assets mandatorily at fair value through profit or loss	1,505	2,588
Equity instruments	763	1,841	Present Value method
Debt securities issued	205	242	Present Value method
Loans and receivables	537	505	Present Value method, swap asset model & CDS
Financial assets designated at fair value through profit or loss	5,065	106
Credit institutions	408	—	Present Value method
Customers	4,590	20	Present Value method
Debt securities	67	86	Present Value method
Financial assets  at fair value through other comprehensive  income	13,543	8,675
Equity instruments	5	375	Present Value method
Debt securities	9,644	1,047	Present Value method
Loans and receivables C	3,894	7,253	Present Value method

162

EUR million
	Fair values calculated using internal models at
	2024A
	Level 2	Level 3	Valuation techniques
LIABILITIES	179,766	1,352
Financial liabilities held for trading	121,243	934
Central banks B	13,300	—	Present Value method
Credit institutionsB	26,284	—	Present Value method
Customers	18,984	—	Present Value method
Derivatives	56,205	934
Swaps	41,283	479	Present Value method, Gaussian Copula
Interest rate options	2,295	79	Black's Model, advanced multifactor interest rate models
Exchange rate options	1,057	—	Black-Scholes Model
Index and securities options	1,160	294	Black's Model, advanced multifactor interest rate models
Interest rate and equity futures	1,276	—	Present Value method
Other	9,134	82	Present Value method, Advanced stochastic volatility models and other
Short positions	6,470	—	Present Value method
Hedging derivatives	4,740	12
Swaps	4,618	12	Present Value method
Interest rate options	3	—	Black’s Model
Other	119	—	Present Value method, Advanced stochastic volatility models and other
Financial liabilities designated at fair value through profit or loss D	36,200	160	Present Value method
Liabilities under insurance contracts	17,583	246	Present Value method with actuarial techniques

A. Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market

data.

B. Includes mainly temporary acquisitions/disposals of assets with corporate clients and, to a lesser extent, with central banks.

C. Includes mainly syndicated loans under the HTC&S business model.

D. Includes, mainly, short-term deposits that are managed based on their fair value.

163

The same information from the previous table, but referred to Banco Santander, S.A., is presented below:

EUR million
	Fair values calculated using internal models at
	2025 A
	Level 2	Level 3	Valuation techniques	Main assumptions
ASSETS	111,039	13,170
Financial assets held for trading	100,305	6,149
Central banks B	217	441	Present value method	Yield curves, FX market prices
Credit institutionsB	26,197	152	Present value method	Yield curves, FX market prices
CustomersB	26,643	4,592	Present value method	Yield curves, FX market prices
Debt and equity instruments	1,934	199	Present value method	Yield curves, FX market prices
Derivatives	45,314	765
Swaps	36,434	638	Present value method, Gaussian CopulaC	Yield curves, FX market prices, HPI, Basis, Liquidity
Exchange rate options	865	7	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices, Liquidity
Interest rate options	1,470	34	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices
Interest rate futures	349	—	Black-Scholes Model	Yield curves, FX market prices, Liquidity
Index and securities options	94	84	Present value method	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends,  Liquidity
Other	6,102	2	Present value method, Advanced stochastic volatility models and other	Yield curves, Volatility surfaces, FX and EQ market prices, Dividends, Correlation, HPI, Credit, Others
Hedging derivatives	1,345	14
Swaps	1,345	14	Present value method	Yield curves, FX market prices, Basis
Exchange rate options	—	—	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices, Liquidity
Interest rate options	—	—	Black´s Model	Yield curves, FX market prices, Volatility surfaces
Non-trading financial assets mandatorily at fair value through profit or loss	963	951
Equity instruments	38	911	Present value method	Market price, Interest rates curves, Dividends and Others
Debt securities	2	40	Present value method	Yield curves
Loans and receivables	923	—	Present value method, swap asset model & CDS	Yield curves and Credit curves
Financial assets designated at fair value through profit or loss	4,898	—
Credit institutions	557	—	Present value method	Interest rates curves, FX market prices, HPI
Customers	4,341	—	Present value method	Interest rates curves, FX market prices
Financial assets at fair value through other comprehensive income	3,528	6,056
Equity instruments	—	107	Present value method	Market price, Interest rates curves, Dividends and Others
Debt securitiesC	118	271	Present value method	Interest rates curves, FX market prices
Loans and receivablesC	3,410	5,678	Present value method	Interest and credit curves, FX market prices

164

EUR million
	Fair values calculated using internal models at
	2025A
	Level 2	Level 3	Valuation techniques	Main assumptions
LIABILITIES	145,112	1,254
Financial liabilities held for trading	104,628	744
Central banks B	5,465	—	Present value method	Interest rates curves, FX market prices
Credit institutionsB	30,602	—	Present value method	Interest rates curves, FX market prices
Customers	28,599	—	Present value method C	Interest rates curves, FX market prices
Derivatives	39,962	744
Swaps	30,563	488	Present value method, Gaussian Copula	Yield curves, FX market prices, Basis, Liquidity, HPI
Exchange rate options	797	5	Black's Model, multifactorial advanced models interest rate	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends, Liquidity
Index and securities options	1,656	79	Black-Scholes Model	FX market prices, Yield curves, Volatility surfaces
Interest rate options	819	165	Black-Scholes Model	Yield curves, FX market prices, Liquidity
Futures on interest rate and variable income	47	—	Present value method	Yield curves, FX market prices, Equity
Other	6,080	7	Present value method, Advanced stochastic volatility models	Yield curves, Volatility surfaces, FX & EQ market prices, Dividends, Correlation, Liquidity, HPI, Credit, Others
Hedging derivatives	2,265	19
SwapsD	2,265	19	Present value method	Yield curves ,FX market prices
Exchange rate options	—	—	Black-Scholes Model	Yield curves, Volatility surfaces, FX market prices, Liquidity
Interest rate options	—	—	Black's Model	Yield curves , Volatility surfaces, FX market prices, Liquidity
Other	—	—	Present value method, Advanced stochastic volatility models and other	Yield curves , Volatility surfaces, FX market prices, Credit, Liquidity, Other
Financial liabilities designated at fair value through profit or loss	38,219	491
Central banks	3,086	—	Present value method	Yield curves, FX market prices
Credit institutions	1,521	—	Present value method	Yield curves, FX market prices
Customers	33,612	491	Present value method	Yield curves, FX market prices
Liabilities under insurance contracts	—	—	Present Value Method with actuarial techniques	Mortality tables and interest rate curves

A. Level 2 internal models use data based on observable market

parameters, while level 3 internal models use significant non-

observable inputs in market data.

B. Includes mainly short-term loans/deposits and repurchase/reverse

repurchase with corporate customers (mainly brokerage and

investment companies). 

C. Includes, mainly, structured loans to corporate clients.

D. Includes, mainly, short-term deposits that are managed based on

their fair value.

165

EUR million
	Fair values calculated using internal models at
	2024A
	Level 2	Level 3	Valuation techniques
ASSETS	106,339	9,434
Financial assets held for trading	97,361	3,762
Central banks B	1,239	—	Present value method
Credit institutions B	22,659	768	Present value method
CustomersB	21,768	1,800	Present value method
Debt and equity instruments	323	259	Present value method
Derivatives	51,372	935
Swaps	38,847	688	Present value method, Gaussian Copula
Exchange rate options	8,247	9	Black’s Model, multifactorial advanced models interest rate
Interest rate options	1,949	37	Black-Scholes Model
Interest rate futures	1,045	—	Black-Scholes Model
Index and securities options	277	144	Present value method
Other	1,007	57	Present value method, Advanced stochastic volatility models and other
Hedging derivatives	1,889	28
Swaps	1,837	28	Present value method
Exchange rate options	2	—	Black-Scholes Model
Interest rate options	50	—	Black-Scholes Model
Non-trading financial assets mandatorily at fair value through profit or loss	1,125	981
Equity instruments	32	938	Present value method
Debt securities	161	43	Present value method
Loans and receivables	932	0	Present value method
Financial assets designated at fair value through profit or loss	4,826	—
Credit institutions	580	—	Present value method
Customers	4,246	—	Present value method
Financial assets at fair value through other comprehensive income D	1,138	4,663
Equity instruments	—	88	Present value method
Debt securities	12	506	Present value method
Loans and receivables	1,126	4,069	Present value method

166

EUR million
	Fair values calculated using internal models at
	2024 A
	Level 2	Level 3	Valuation techniques
LIABILITIES	127,590	1,295
Financial liabilities held for trading	92,064	1,048
Central banks B	9,122	—	Present value method
Credit institutions B	24,884	—	Present value method
Customers	13,503	—	Present value method
Derivatives	44,555	1,048
Swaps	31,589	654	Present value method, Gaussian Copula
Exchange rate options	7,584	—	Black-Scholes Model
Index and securities options	2,243	85	Black's Model, advanced multifactor interest rate models
Interest  rate options	1,036	232	Black-Scholes Model
Futures on interest rate and variable income	697	—	Present value method
Other	1,406	77	Present value method, Advanced stochastic volatility models
Hedging derivatives	2,504	12
Swaps	2,449	11	Present value method
Exchange rate options	—	—	Black-Scholes Model
Interest rate options	55	1	Black's Model
Other	—	—	Present value method, Advanced stochastic volatility models and other
Financial liabilities designated at fair value through profit or loss D	33,022	235
Central banks	1,774	—	Present value method
Credit institutions	2,107	—	Present value method
Customers	29,141	235	Present value method
Liabilities under insurance contracts	—	—	Present Value Method with actuarial techniques

A. Level 2 internal models use data based on observable market parameters, while level 3 internal models use significant non-observable inputs in market

data.

B. Includes mainly temporary acquisitions/disposals of assets with corporate clients and, to a lesser extent, with central banks.

C. Includes mainly syndicated loans under the HTC&S business model.

D. Includes, mainly, short-term deposits that are managed based on their fair

167

b) Financial Instruments (level 3)

Financial Instruments (level 3)

Set forth below are the Group and the Bank´s main

financial instruments measured using unobservable

market data as significant inputs of the internal models

(level 3):

• HTC&S (Held to collect and sale) syndicated loans

classified in the fair value category with changes in

other comprehensive income, where the cost of

liquidity is not directly observable in the market, as

well as the prepayment option in favour of the

borrower.

• Repos and reverse repos classified as financial assets

held for trading, whose valuation uses significant

unobservable inputs, mainly associated with credit

adjustments, liquidity and certain specific

characteristics of the counterparty and the collateral.

• Illiquid equity in non-trading portfolios, classified at

fair value through profit or loss and at fair value

through equity.

• Instruments in Santander UK’s portfolio (loans, debt

securities and derivatives) linked to the House Price

Index (HPI). Even if the valuation techniques used for

these instruments may be the same as those used to

value similar products (present value in the case of

loans and debt securities, and the Black-Scholes model

for derivatives), the main factors used in the valuation

of these instruments are the HPI spot rate, the growth

and volatility thereof, and the mortality rates, which

are not always observable in the market and,

accordingly, these instruments are considered illiquid.

• Callable interest rate derivatives (Bermudan-style

options) where the main unobservable input is mean

reversion of interest rates.

• Trading derivatives on interest rates, taking as an

underlying asset titling and with the amortization rate

(CPR, Conditional prepayment rate) as unobservable

main entry.

• Derivatives from trading on inflation in Spain, where

volatility is not observable in the market.

• Equity volatility derivatives, specifically indices and

equities, where volatility is not observable in the long

term.

• Derivatives on long-term interest rate and FX in some

units (mainly South America) where for certain

underlyings it is not possible to demonstrate

observability to these terms.

• Debt instruments referenced to certain illiquid interest

rates, for which there is no reasonable market

observability.The measurements obtained using the

internal models might have been different if other

methods or assumptions had been used with respect

to interest rate risk, to credit risk, market risk and

foreign currency risk spreads, or to their related

correlations and volatilities. Nevertheless, the Banco

Santander considers that the fair value of the financial

assets and liabilities recognised in the balance sheet

and the gains and losses arising from these financial

instruments are reasonable.

The net amount recognised in profit or loss for 2025

arising from valuation models whose significant inputs

are unobservable market data (Level 3) amounted to a

profit of EUR 75 million for the Bank. In 2024, the net

amount recognised in profit or loss was a profit of EUR

471 million.

The table below shows the effect, at 31 December   2025

and 2024 on the fair value of the main financial

instruments classified as level 3 of a reasonable change

in the assumptions used in the valuation. This effect was

determined by applying the probable valuation ranges of

the main unobservable inputs detailed in the following

table:

168

2025
Portfolio/Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average	Impacts (EUR million)
(Level 3)					Unfavourable scenario	Favourable scenario
Financial assets held for trading
Loans and advances to customers
Repos/Reverse repos	Market proxy	Price / Credit spread	n.a.	n.a.	(10.50)	10.50
Debt securities
Corporate debt	Discounted Cash Flows	Credit spread	0% - 10%	5.10%	(2.24)	2.29
Government debt	Discounted Cash Flows	Discount curve	0% - 8%	4.00%	(9.21)	9.24
Others	Discounted Cash Flows	Credit spread	10% - 90%	35.50%	(1.32)	0.62
Derivatives
Cap&Floor	Modelo de Black Scholes	Volatility	(6.50)bps - 6.50bps	1.00pbs	(0.38)	0.52
CCS	Discounted Cash Flows	Credit spread	146.3% - 148.3%	147.30%	(0.01)	0.01
EQ Options	EQ option pricing model	Volatility	0% - 70%	40.50%	(0.17)	0.24
EQ Options	Local volatility	Volatility	10% - 90%	50.00%	(18.86)	18.86
Fx Options	Fx option pricing model	Volatility	0% - 40%	19.80%	(0.50)	0.49
FX Forward	Forward estimation	Swap Rate	0% - 15%	8.10%	(0.01)	0.02
Inflation Derivatives	Asset Swap model	Inflation Swap Rate	2% - 8%	4.90%	(0.18)	0.17
IR Options	IR option pricing model	Volatility	0% - 30%	14.80%	(0.19)	0.19
IR Options	INF option pricing model	Volatility	0% - 30%	14.90%	(0.63)	0.63
IRS	Others	Others	5% - n.a.	n.a.	(11.24)	8.23
IRS	Discounted Cash Flows	Credit spread	19.6% - 127.5%	50.50%	(2.10)	0.84
IRS	Discounted Cash Flows	Inflation Swap Rate	1.0% - 99.0%	99.00%	—	1.41
Others	Forward estimation	Price	60bps - 300bps	179.80	(3.48)	3.47
Property derivatives	Option pricing model	Growth rate	(5)% - 5%	0.00%	(2.64)	2.64
Securitisation Swap	Discounted Cash Flows	Constant prepayment rates	10% - 90%	50.00%	—	—
Financial assets designated at fair value through profit or loss
Loans and advances to customers
Loans	Discounted Cash Flows	Credit spreads	0.1% - 3%	1.60%	(0.12)	0.12
Mortgage portfolio	Black Scholes model	Growth rate	(5)% - 5%	0.00%	(0.23)	0.23
Debt securities
Other debt securities	Others	Inflation Swap Rate	0% - 8%	4.10%	—	—
Non-trading financial assets mandatorily at fair value through profit or loss

169

2025
Portfolio/Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average	Impacts (EUR million)
(Level 3)					Unfavourable scenario	Favourable scenario
Debt securities
Property securities	Probability weighting	Growth rate	(5)% - 5%	0.00%	(0.11)	0.11
Equity instruments
Equities	Price Based	Price	90% - 110%	100.00%	(254.29)	254.29
Financial assets at fair value through other comprehensive income
Loans and advances to customers
Loans	Discounted Cash Flows	Credit spread	n.a.	n.a.	(2.33)	2.33
Loans	Discounted Cash Flows	Interest rate curve	6.1% - 7.2%	6.60%	—	—
Loans	Discounted Cash Flows	Margin of a reference portfolio	3% - 7%	5%	(0.25)	0.25
Loans	Present value method	Credit spread	121.9bps - 174.7 bps	121.9bps	(1.60)	—
Loans	Market price	Market price	(0.3)% - 0.1%	(0.30)%	(2.70)	0.54
Debt securities
Mortgage Letters	Discounted Cash Flows	Mortgage Letters	3.4% - 5.5%	4.50%	—	—
Equity instruments
Equities	Price Based	Price	90% - 110%	100.00%	(27.16)	27.16
Financial liabilities held for trading
Derivatives
Cap&Floor	Volatility option model	Volatility	10% - 90%	43.80%	(0.09)	0.07
FX Options	Volatility option model	Volatility	10% - 90%	42.30%	(0.33)	0.22
IRS	Discounted Cash Flows	Inflation Swap Rate	1% - 99%	50.40%	(1.38)	1.40
IRS	Discounted Cash Flows	Credit Spread	8.4bps - 19.2bps	10.70bps	(2.42)	0.66

1. For each instrument, the valuation technique, the unobservable inputs are shown in the 'Main observable inputs' column under probable scenarios, variation range, average value and impact resulting from

valuing the position in the established maximum and minimum range.

2. The breakdown of impacts is shown by type of instrument and unobservable inputs.

3. The estimation of the range of variation of the unobservable inputs has been carried out taking into account plausible movements of said parameters depending on the type of instrument.

4. Zero impacts from fully hedged or back-to-back transactions have not been included in this exercise.

170

2024
Portfolio/ Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average	Impacts (EUR million)
(Level 3)					Unfavourable scenario	Favourable scenario
							Financial assets held for trading
Loans and advances to customers
Repos/Reverse repos	Other	Long-term repo spread	n.a.	n.a.	(0.05)	—
Debt securities
Corporate debt	Discounted Cash Flows	Credit spread	0% - 10%	5.10%	(2.24)	2.29
Government debt	Discounted Cash Flows	Discount curve	0% - 8%	4.00%	(9.21)	9.24
Others	Discounted Cash Flows	Credit spread	10% - 90%	35.50%	(1.32)	0.62
Derivatives
Cap&Floor	Forward estimation	Interest rate	(2)bps - 2bps	0.00bps	—	—
CCS	Discounted Cash Flows	Credit spread	158% - 165%	161.50%	(0.01)	0.01
CDS	Price	Credit spread	100% - 250%	178.83%	(0.09)	0.10
EQ Options	EQ option pricing model	Volatility	0% - 70%	41.25%	(0.48)	0.69
EQ Options	Local volatility	Volatility	10% - 90%	50.00%	(21.54)	21.54
FX Forward	Forward estimation	Swap Rate	0% - 15%	8.08%	(0.06)	0.07
FX Options	FX option pricing model	Volatility	0% - 40%	20.10%	(0.65)	0.66
Inflation Derivatives	Asset Swap model	Inflation Swap Rate	2% - 8%	4.78%	(0.21)	0.18
IR Options	IR option pricing model	Volatility	0% - 30%	17.34%	(0.16)	0.22
IRS	Others	Others	5% - n.a.	n.a.	(4.09)	—
IRS	Discounted Cash Flows	Credit spread	47.8% - 273.4%	155.36%	(1.91)	1.74
IRS	Discounted Cash Flows	Swap rate	1% - 99%	49.58%	(2.45)	2.41
Others	Forward estimation	Price	60bps - 300bps	181.50bps	(3.00)	3.08
Property derivatives	Option pricing model	Growth rate	(5)% - 5%	0.00%	(3.39)	3.39
Securitisation Swap	Discounted Cash Flows	Constant prepayment rates	10% - 90%	50.00%	(0.63)	0.63
Financial assets designated at fair value through profit or loss
Loans and advances to customers
Loans	Discounted Cash Flows	Credit spreads	0.1% - 2.0%	1.05%	(0.15)	0.15
Mortgage portfolio	Black Scholes model	Growth rate	(5)% - 5%	0.00%	(0.24)	0.24
Debt securities
Other debt securities	Others	Inflation Swap Rate	0% - 8%	3.96%	(3.63)	3.55
Non-trading financial assets mandatorily at fair value through profit or loss
Debt securities

171

2024
Portfolio/ Instrument	Valuation technique	Main unobservable inputs	Range	Weighted average	Impacts (EUR million)
(Level 3)					Unfavourable scenario	Favourable scenario
							Property securities	Probability weighting	Growth rate	(5)% - 5%	0.00%	(0.24)	0.24
Equity instruments
Equities	Price Based	Price	90% - 110%	100.00%	(183.98)	183.98
Financial assets at fair value through other comprehensive income
Loans and advances to customers
Loans	Discounted Cash Flows	Credit spread	n.a.	n.a.	(18.61)	—
Loans	Discounted Cash Flows	Interest rate curve	3.4% - 6.5%	4.95%	(0.17)	0.17
Loans	Discounted Cash Flows	Margin of a reference portfolio	(1)bps - 1bps	0bps	(30.36)	30.36
Loans	Forward estimation	Credit spread	150bps - 232bps	150bps	(1.96)	—
Loans	Market price	Market price	(5)% - 20%	0.01%	(4.91)	1.23
Debt securities
Corporate debt	Discounted Cash Flows	Margin of a reference portfolio	(1)bps - 1bps	-0.09bps	(0.09)	0.09
Mortgage Letters	Discounted Cash Flows	Mortgage Letters	1.6% - 5.2%	3.40%	—	—
Equity instruments
Equities	Price Based	Price	90% - 110%	100.00%	(37.56)	37.56
Financial liabilities held for trading
Derivatives
Cap&Floor	Volatility option model	Volatility	10% - 90%	42.20%	(0.11)	0.07
FX Options	Volatility option model	Volatility	10% - 90%	45.30%	(0.03)	0.02
IRS	Discounted Cash Flows	Inflation Swap Rate	1% - 99%	47.12%	(4.77)	4.24
IRS	Discounted Cash Flows	Credit spread	34bps - 68bps	44bps	(4.09)	1.65

1. For each instrument, the valuation technique, the unobservable inputs are shown in the 'Main observable inputs' column under probable scenarios, variation range, average value and impact resulting from valuing the

position in the established maximum and minimum range.

2. The breakdown of impacts is shown by type of instrument and unobservable inputs.

3. The estimation of the range of variation of the unobservable inputs has been carried out taking into account plausible movements of said parameters depending on the type of instrument.

4. Zero impacts from fully hedged or back-to-back transactions have not been included in this exercise.

172

Lastly, the changes in the financial instruments classified as Level 3, at Grupo Santander, in 2025 and 2024:

	01/01/2025		Changes							31/12/2025
EUR million	Fair value calculated using internal models (Level 3)		Purchases/ Issuances	Sales/ Settlements	Changes in fair value recognised in profit or loss	Changes in fair value recognised in equity	Level reclassifications	Other		Fair value calculated using internal models (level 3)
Financial assets held for trading	3,930		5,353	(2,748)	57	—	(9)	(87)		6,496
Customers	1,801		4,450	(1,711)	52	—	2	(2)		4,592
Debt securities	413		110	(112)	(13)	—	(21)	(37)		340
Equity instruments	—		—	—	—	—	—	—		—
Trading derivatives	947		228	(181)	14	—	10	(47)		971
Swaps	556		1	(81)	(30)	—	(21)	126		551
Exchange rate options	2		—	—	5	—	19	13		39
Interest rate options	30		6	—	1	—	20	(18)		39
Index and securities options	241		1	(41)	37	—	(5)	(113)		120
Other	118		220	(45)	1	—	3	(75)		222
Financial assets at fair value through profit or loss	106		33	(100)	(5)	—	—	—		34
Loans and advances to customers	20		—	—	(5)	—	—	(1)		14
Debt securities	86		33	(100)	—	—	—	1		20
Non-trading financial assets mandatorily at fair value through profit or loss	2,588		324	(191)	360	—	(266)	74		2,889
Customers	505		—	—	(36)	—	(266)	(32)		171
Debt instruments	242		24	(40)	(27)	—	—	(24)		175
Equity instruments	1,841		300	(151)	423	—	—	130		2,543
Financial assets at fair value through other comprehensive income	8,675		7,635	(6,159)	—	(73)	57	(1,074)		9,061
Loans and advances	7,253		7,259	(5,621)	—	(87)	97	(999)		7,902
Debt securities	1,047		360	(530)	—	16	(40)	34		887
Equity instruments	375		16	(8)	—	(2)	—	(109)		272
TOTAL ASSETS	15,319		13,345	(9,198)	405	(73)	(222)	(1,089)		18,487
Financial liabilities held for trading	934		160	(206)	(59)	—	16	19		864
Trading derivatives	934		160	(206)	(59)	—	16	19		864
Swaps	479		1	(88)	(90)	—	19	97		418
Exchange rate options	—		—	(1)	2	—	18	15		34
Interest rate options	79		—	(25)	17	—	(3)	27		95
Index and securities options	294		1	(83)	6	—	(4)	(63)		151
Others	82		158	(9)	6	—	5	(76)		166
Hedging derivatives (Liabilities)	12		—	(1)	14	—	(6)	—		19
Swaps	12		—	—	14	—	(6)	(1)		19
Financial liabilities designated at fair value through profit or loss	160		—	(49)	—	—	(111)	—		—
Liabilities under insurance contracts	246		—	—	(19)	—	—	—		227
TOTAL LIABILITIES	1,352		160	(256)	(64)	—	(101)	19		1,110

173

	01/01/24		Changes							31/12/24
EUR million	Fair value calculated using internal models (level 3)		Purchases / Issuances	Sales/ Settlements	Changes in fair value recognized in profit or loss	Changes in fair value recognized in equity	Level reclassifications	Other		Fair value calculated using internal models (level 3)
Financial assets held for trading	2,086		3,205	(813)	302	—	(715)	(135)		3,930
Equity instruments	1		—	—	(1)	—	—	—		—
Trading derivatives	1,147		272	(405)	350	—	(338)	(79)		947
Swaps	577		184	(278)	186	—	(152)	39		556
Exchange rate options	9		—	(1)	—	—	(6)	—		2
Interest rate options	153		13	(42)	(20)	—	(74)	—		30
Index and securities options	235		42	(44)	128	—	(106)	(14)		241
Other	173		33	(40)	56	—	—	(104)		118
Swaps	—		—	—	15	—	(1)	6		20
Loans and advances to customers	31		—	—	(5)	—	(23)	17		20
Non-trading financial assets mandatorily at fair value through profit or loss	2,095		719	(349)	73	—	132	(82)		2,588
Customers	287		390	(128)	(31)	—	41	(54)		505
Debt instruments	313		4	(96)	10	—	11	—		242
Equity instruments	1,495		325	(125)	94	—	80	(28)		1,841
Financial assets at fair value through other comprehensive income	5,989		6,707	(3,781)	—	(136)	6	(110)		8,675
Loans and advances	4,938		5,962	(3,685)	—	43	—	(5)		7,253
Debt securities	559		743	(81)	—	(74)	6	(106)		1,047
Equity instruments	492		2	(15)	—	(105)	—	1		375
TOTAL ASSETS	10,351		11,048	(5,243)	403	(136)	(779)	(325)		15,319
Financial liabilities held for trading	869		472	(200)	(95)	—	(266)	154		934
Trading derivatives	869		472	(200)	(95)	—	(266)	154		934
Swaps	388		371	(20)	(205)	—	(105)	50		479
Exchange rate options	8		—	(5)	—	—	(3)	—		—
Interest rate options	139		—	(54)	3	—	(10)	1		79
Index and securities options	187		54	(14)	113	—	(40)	(6)		294
Securities and interest rate futures	—		—	—	—	—	—	—		—
Others	147		47	(107)	(6)	—	(108)	109		82
Swaps	6		—	—	—	—	—	6		12
Financial liabilities designated at fair value through profit or loss	29		41	(5)	1	—	94	—		160
Liabilities under insurance contracts	323		—	—	(26)	—	—	(51)		246
TOTAL LIABILITIES	1,227		513	(205)	(120)	—	(172)	109		1,352

174

The same information on the movement of financial instruments classified in Level 3, but referred to Banco Santander, S.A., in 2025  and 2024, is presented below:

	01/01/2025	Changes						31/12/2025
EUR million	Fair value calculated using internal models (Level 3)	Purchases/ Issuances	Sales/ Settlements	Changes in fair value recognised in profit or loss	Changes in fair value recognised in equity	Level reclassifications	Other	Fair value calculated using internal models (level 3)
Financial assets held for trading	3,762	5,216	(2,662)	44	—	(196)	(15)	6,149
Central Banks	—	437	—	4	—	—	—	441
Credit entities	768	128	(744)	—	—	—	—	152
Loans and advances to customers	1,800	4,449	(1,711)	52	—	2	—	4,592
Debt instruments and equity instrument	259	197	(39)	—	—	(218)	—	199
Trading derivatives	935	5	(168)	(12)	—	20	(15)	765
Swaps	688	4	(98)	(15)	—	19	40	638
Exchange rate options	9	—	—	3	—	(5)	—	7
Interest rate options	37	—	(15)	1	—	15	(4)	34
Index and securities options	144	1	(51)	(2)	—	(7)	(1)	84
Other	57	—	(4)	1	—	(2)	(50)	2
Hedging derivatives (Assets)	28	—	—	(10)	—	(4)	—	14
Swaps	28	—	—	(10)	—	(4)	—	14
Financial assets at fair value through profit or loss	—	—	—	—	—	—	—	—
Credit entities	—	—	—	—	—	—	—	—
Loans and advances to customers	—	—	—	—	—	—	—	—
Debt securities	—	—	—	—	—	—	—	—
Non-trading financial assets mandatorily at fair value through profit or loss	981	167	(46)	38	—	8	(197)	951
Customers	—	—	—	—	—	—	—	—
Debt securities	43	1	(3)	(1)	—	—	—	40
Equity instruments	938	166	(43)	39	—	8	(197)	911
Financial assets at fair value through other comprehensive income	4,663	5,277	(3,922)	—	(44)	97	(15)	6,056
Loans and advances	4,069	4,996	(3,415)	—	(54)	97	(15)	5,678
Debt securities	506	269	(506)	—	2	—	—	271
Equity instruments	88	12	(1)	—	8	—	—	107
TOTAL ASSETS	9,434	10,660	(6,630)	72	(44)	(95)	(227)	13,170
Financial liabilities held for trading	1,048	2	(211)	(18)	—	(52)	(25)	744
Trading derivatives	1,048	2	(211)	(18)	—	(52)	(25)	744
Swaps	654	1	(96)	(61)	—	(13)	3	488
Exchange rate options	—	—	(1)	5	—	1	—	5
Interest rate options	85	—	(25)	16	—	(16)	19	79
Index and securities options	232	1	(86)	17	—	(5)	6	165
Securities and interest rate futures	—	—	—	—	—	(19)	19	—
Others	77	—	(3)	5	—	—	(72)	7
Hedging derivatives (Liabilities)	12	—	(1)	14	—	(6)	—	19
Swaps	11	—	—	14	—	(6)	—	19
Interest rate options	1	—	(1)	—	—	—	—	—
Financial liabilities designated at fair value through profit or loss	235	419	(57)	6	—	(112)	—	491
TOTAL LIABILITIES	1,295	421	(269)	2	—	(170)	(25)	1,254

175

	01/01/2024	Changes						31/12/2024
EUR million	Fair value calculated using internal models (level 3)	Purchases/ Issuances	Sales/ Settlements	Changes in fair value recognized in profit or loss	Changes in fair value recognized in equity	Level reclassifications	Other	Fair value calculated using internal models (level 3)
Financial assets held for trading	1,424	3,067	(763)	313	—	(364)	85	3,762
Credit entities	—	770	—	—	—	(2)	—	768
Loans and advances to customers	24	1,806	(24)	—	—	(6)	—	1,800
Debt instruments and equity instrument	366	261	(363)	(2)	—	(3)	—	259
Trading derivatives	1,034	230	(376)	315	—	(353)	85	935
Swaps	861	184	(298)	161	—	(276)	56	688
Exchange rate options	10	—	(2)	3	—	(2)	—	9
Interest rate options	151	13	(42)	(17)	—	(70)	2	37
Index and securities options	12	—	(1)	117	—	(5)	21	144
Other	—	33	(33)	51	—	—	6	57
Hedging derivatives (Assets)	9	—	—	14	—	(1)	6	28
Swaps	9	—	—	14	—	(1)	6	28
Financial assets at fair value through profit or loss	203	—	—	—	—	(203)	—	—
Credit entities	—	—	—	—	—	—	—	—
Customers	203	—	—	—	—	(203)	—	—
Debt securities	—	—	—	—	—	—	—	—
Non-trading financial assets mandatorily at fair value through profit or loss	685	294	(95)	22	—	75	—	981
Customers	18	—	(18)	—	—	—	—	—
Debt securities	93	17	(55)	(12)	—	—	—	43
Equity instruments	574	277	(22)	34	—	75	—	938
Financial assets at fair value through other comprehensive income	4,332	3,754	(3,252)	—	(171)	—	—	4,663
Loans and advances	4,046	3,255	(3,203)	—	(29)	—	—	4,069
Debt securities	34	501	(34)	—	5	—	—	506
Equity instruments	252	—	(15)	—	(149)	—	—	88
TOTAL ASSETS	6,653	4,539	(4,086)	349	(171)	(485.00)	91	9,434
Financial liabilities held for trading	926	460	(178)	(133)	—	(111)	85	1,048
Trading derivatives	926	460	(178)	(133)	—	(111)	85	1,048
Swaps	593	371	(36)	(237)	—	(92)	56	654
Exchange rate options	14	—	(7)	—	—	(7)	—	—
Interest rate options	136	2	(54)	2	—	(3)	2	85
Index and securities options	39	42	(6)	146	—	(9)	20	232
Securities and interest rate futures	—	—	—	—	—	—	—	—
Others	144	45	(75)	(44)	—	—	7	77
Hedging derivatives (Liabilities)	6	—	—	1	—	—	5	12
Swaps	6	—	—	—	—	—	5	11
Interest rate options	—	—	—	1	—	—	—	1
Financial liabilities designated at fair value through profit or loss	300	103	(5)	2	—	(165)	—	235
TOTAL LIABILITIES	1,232	563	(183)	(131)	—	(276)	90	1,295

176

49. Other disclosures

a) Residual maturity periods

The detail, by maturity, of the balances of certain items

in the balance sheets as of 31 December 2025 and 2024

is as follows:

EUR million
	31 December 2025
	On demand	Within 1 month	1 to 3 months	3 to 12 months	1 to 5 years	More than 5 years	Total
Assets
Cash, cash balances at central banks and other demand deposits	74,786	—	—	—	—	—	74,786
Financial assets at fair value with changes in other comprehensive income
Representative values of debt	—	1,384	1,066	161	1,810	928	5,349
Financial assets at amortized cost
Representative values of debt	—	2,198	1,254	3,422	21,609	55,102	83,585
Loans and advances
Central banks	—	155	—	—	—	68	223
Credit institutions	255	7,053	5,736	4,664	8,348	14,826	40,882
Customer	3,419	44,363	31,180	43,981	94,380	92,416	309,739
	78,460	55,153	39,236	52,228	126,147	163,340	514,564
Liabilities:
Financial liabilities at amortized cost
Deposits
Central banks	857	1,789	3,518	1,350	—	8	7,522
Credit institutions	4,306	2,996	3,409	6,165	10,627	7,175	34,678
Customer deposits	269,765	39,023	23,184	27,546	6,921	10,103	376,542
Marketable debt securities	—	8,271	10,437	18,351	55,340	45,598	137,997
Other financial liabilities	8,426	14	37	150	899	529	10,055
	283,354	52,093	40,585	53,562	73,787	63,413	566,794
Difference (assets less liabilities)	(204,894)	3,060	(1,349)	(1,334)	52,360	99,927	(52,230)

177

EUR million
	31 December 2024
	On demand	Within 1 month	1 to 3 months	3 to 12 months	1 to 5 years	More than 5 years	Total
Assets:
Cash, cash balances at Central Banks and other deposits on demand	97,457	—	—	—	—	—	97,457
Financial assets at fair value through other comprehensive income
Representative values of debt	—	409	1,626	214	1,451	5,173	8,873
Financial assets at amortized cost
Loans and advances	—	201	238	6,464	21,641	37,373	65,917
Loans and advances
Central banks	—	177	—	41	—	—	218
Credits institutions	1,321	1,545	4,794	3,835	8,110	15,106	34,711
Customers	1,358	35,364	34,029	46,355	86,837	87,654	291,597
	100,136	37,696	40,687	56,909	118,039	145,306	498,773
Liabilities:
Financial liabilities at amortized cost
Deposits
Central banks	—	1,228	2,457	1,425	—	7	5,117
Credit institutions	2,578	8,154	3,464	6,836	10,242	7,417	38,691
Customer deposits	256,779	36,267	19,031	22,664	6,048	8,123	348,912
Debt securities issued	—	6,538	10,572	19,918	58,667	50,418	146,113
Other financial liabilities	7,290	750	19	606	3,720	862	13,247
	266,647	52,937	35,543	51,449	78,677	66,827	552,080
Difference (assets less liabilities)	(166,511)	(15,241)	5,144	5,460	39,362	78,479	(53,307)

178

b)  Equivalent euro value of assets and liabilities

The detail of the main foreign currency balances in the

balance sheets as of 31 December 2025 and 2024 , based

on the nature of the related items, is as follows:

Countervalue in EUR million
	2025	2024
Assets	276,679	251,663
Cash, cash balances at central banks and other deposits on demand	25,374	32,283
Financial assets held for trading	62,022	51,655
Non-trading financial assets mandatorily at fair value through profit or loss	103	276
Financial assets designated at fair value through profit or loss	276	212
Financial assets at fair value through other comprehensive income	9,027	6,968
Financial assets at amortized cost	132,884	114,278
Hedging derivatives	635	508
Changes in the fair value of hedged items in portfolio hedges of interest rate risk	—	—
Investments	41,513	44,507
Tangible assets	6	10
Intangible assets	27	28
Tax assets	231	180
Other assets	359	758
Non-current assets held-for-sale	4,222	—
Liabilities	220,762	205,004
Financial liabilities held for trading	40,013	34,949
Financial liabilities designated at fair value through profit or loss	11,587	10,995
Financial liabilities at amortized cost	166,886	156,495
Hedging derivatives	828	1,349
Changes in the fair value of hedged items in portfolio hedges of interest risk rate	—	—
Provisions	133	169
Tax liabilities	163	95
Refundable equity on demand	—	—
Other liabilities	1,152	952
Liabilities associated with non-current assets held-for-sale	—	—

c) Fair value of financial assets and liabilities not

measured at fair value

Financial assets are measured at fair value in the

accompanying balance sheets, except for loans and

receivables under a business model whose objective is to

collect the flows of principal and interest , equity

instruments whose market value cannot be estimated

reliably and derivatives that have these instruments as

their underlying and are settled by delivery thereof.

Similarly, financial liabilities except for financial

liabilities held for trading, those measured at fair value

and derivatives having equity instruments whose market

value cannot be estimated reliably as their underlying-

are measured at amortized cost in the accompanying

balance sheets.

The following is a comparison between the value of

Grupo Santander's financial instruments valued using

other criteria rather than fair value and their

corresponding fair value at year-end:

Financial assets and liabilities measured at other than

fair value

The fair value of financial instruments measured at

amortized cost as of 31 December 2025 was as follows:

a. The fair value of debt securities is 0.71% higher

than their carrying amount.

b. The fair value of loans and advances is 0.52% 

lower than their carrying amount.

c. The fair value of deposits is 0.06% lower than

their carrying amount.

d. The fair value of the issued debt securities is

0.17%  higher than their carrying amount.

179

Set forth below are the main valuation methods and

inputs used in the estimates made at 31 December 2025

to determine the fair values of the financial assets and

liabilities recognized at cost detailed above:

• Loans and receivables: The fair value has been

estimated using the present cost method, the

estimation has considered factors such as the

expected maturity of the portfolio, market interest

rates, spreads of new concession of operations, or

market spreads – If these were available.

• Held to maturity portfolio: The fair value has been

determined based on market prices for those

instruments.

• Financial liabilities at amortized cost:

a. The fair value of deposits at Central Banks has

been assimilated to their carrying amount

because they are mainly short-term balances.

b. Credit Institutions: Fair value has been obtained

using the present value technique by applying

interest rates and market spreads.

c. Customer deposits: Fair value has been

estimated using the present value technique. The

estimation has considered factors such as the

expected maturity of the operations and the

current financing cost of Grupo Santander in

similar operations. On demand accounts are not

valued.

d. Marketable debt securities: Fair value has been

determined based on market prices for these

instruments, when available, or using the

present value technique, by applying interest

rates and market spreads.

Additionally, the fair value of Cash, Cash Balances at

central banks and other deposits on demand has been

assimilated to its carrying amount, mainly because of

short-term balances.

d) Offsetting of financial instruments

On the table below is the detail of financial assets and

liabilities that were offset on the balance sheet as of 31

December 2025 and 2024 :

EUR million
	2025
Assets	Gross amount of financial assets	Gross amount of financial assets offset on the balance sheet	Net amount of financial assets presented on the balance sheet
Derivatives	103,644	(55,702)	47,942
Repos	147,735	(52,354)	95,381
Total	251,379	(108,056)	143,323

EUR million
	2024
Assets	Gross amount of financial assets	Gross amount of financial assets offset on the balance sheet	Net amount of financial assets presented on the balance sheet
Derivatives	133,335	(78,956)	54,379
Repos	112,443	(32,440)	80,003
Total	245,778	(111,396)	134,382

EUR million
	2025
Liabilities	Gross amount of financial liabilities	Gross amount of financial liabilities offset on the balance sheet	Net amount of financial liabilities presented on the balance sheet
Derivatives	99,510	(55,702)	43,808
Repos	156,990	(52,354)	104,636
Total	256,500	(108,056)	148,444

EUR million
	2024
Liabilities	Gross amount of financial liabilities	Gross amount of financial liabilities offset on the balance sheet	Net amount of financial liabilities presented on the balance sheet
Derivatives	127,593	(78,956)	48,637
Repos	120,653	(32,440)	88,213
Total	248,246	(111,396)	136,850

At December 31, 2025 the balance sheet amounts EUR

142,143 million on derivatives and temporary

acquisition of assets and EUR 144,713 million on

derivatives and repos as liabilities that are subject to

netting and collateral arrangements (EUR 133,139

million and EUR 136,037 million in 2024, respectively) .

180

50. Risk management

a) Risk principles and culture

The principles on which Grupo and Banco Santander's

risk management and control are based are detailed

below. They take into account regulatory requirements,

best market practices and are mandatory:

1. All employees are responsible for risk management.

They must understand the risks arising from their

activities and take ownership for managing them.

2. Senior management involvement. Through conduct,

actions and communications, senior management

promotes consistent risk management, fosters our risk

culture, and oversees that the risk profile remains

within the appetite set.

3. Independence: Risk management and control

functions operate independently according to our

three-lines-of-defence model, with clearly defined

roles and responsibilities.

4. Holistic, forward-looking approach: We take a

comprehensive approach to risk management and

control that extends to all businesses and risk types

that could have a material impact. This approach is

forward-looking and considers trends across several

time horizons and scenarios.

5. Corporate oversight of subsidiaries: Banco Santander

sets minimum risk management and control standards

through reference documents. Subsidiaries are

responsible for translating these standards into their

own internal policies and procedures.

1. Key risk types

Grupo and Banco Santander’s risks categorization allows

effective risk management, control and reporting, and

includes, among others the following risk types:

• Credit risk is the risk of loss arising from the failure

of a customer or counterparty to meet its obligations

to which the Santander Group has provided financing

or entered into a contractual commitment, or from

the deterioration of their credit quality.

• Market risk is the risk incurred as a result of the

effect of changes in market factors interest rates,

exchange rates, equities and commodities, among

others, may have on profits or capital.

• Liquidity risk is the risk incurred because of adverse

movements in the factors that determine the market

value of financial instruments, such as interest rates,

exchange rates, equity prices and commodities,

among others.

• Structural Risk is the risk of changes in the value or

margin generation of the assets or liabilities in the

banking book resulting from changes in market and

behavioural factors. It also includes risks associated

with insurance and pension activities, as well as the

risk of not having an adequate amount or quality of

capital to meet internal business objectives,

regulatory requirements, or market expectations.

• Capital risk , included within the scope of structural

risk, is the risk that arises from the possibility of

having an inadequate quantity or quality of capital to

meet internal business objectives, regulatory

requirements or market expectations.

Grupo and Banco Santander also take into account, on an

ongoing basis in its risk management, operational

(includes fraud, technological, cyber, legal and conduct

risks), financial crime (includes, among others, money

laundering, terrorism financing, violation of international

sanctions, corruption, bribery and tax evasion), model,

reputational and strategic risks.

These risks may be affected by a range of factors that we

identify and assess in line with regulatory requirements

and industry practice, including: geopolitical

developments (international conflicts, economic and

monetary decisions, new regulations or trade tensions);

digital and transformation initiatives linked to

technological change or shifts in business models; and

sustainability factors — environmental (natural and

climate-related, including extreme events and resource

scarcity, as well as those arising from the transition to a

more sustainable economy), social (relating to people’s

rights, welfare and interests) and governance, both

within Grupo and Banco Santander and among our

counterparties.

In particular, from an environmental and climate

perspective, the relevant elements cover, on the one

hand, those stemming from the physical effects of

climate change and, on the other, those linked to the

transition towards a more sustainable economy,

including legislative and regulatory, technological or

behavioural changes among economic agents.

Given the nature of its operations, the Group and Bank

have no environment-related liabilities, expenses, assets

or contingencies that may be material to its consolidated

equity, financial situation and results.

181

According to market consensus and our materiality

assessment, exposure in the sectors where

environmental factors may have the most impact mainly

relate to wholesale customers. Our management of

these customers considers environmental aspects in the

preliminary assessment, credit origination and the

preparation and review of their credit ratings, which

influence the parameters we use to calculate their

probability of default (PD). Thus, we embed the most

material climate factors in our assessments and in

capital loss and provisions calculations.

Moreover, to cover and anticipate potential future losses

from severe climate events, such as the Valencia DANA

or Hurricane Milton in Florida, we have set overlays

whose amount to date has not been material to the

Group's total loan loss reserves.

Grupo Santander has enhanced its methodological

framework to quantify and assess transition and physical

risks in credit losses for climate impacts that are not

specifically captured through the forward-looking

component implemented under the IFRS 9 framework.

We assess these risks under several scenarios published

by the NGFS, which explore varying assumptions on

shifts in climate policies, emissions, temperatures and

physical risk impacts. We take a proportionality

approach by assessing the impact on the Group’s core

markets and portfolios, especially non-financial entities

and mortgage products.

Regarding impact on companies’ credit quality, the

model assesses the transmission of customers’ physical

and transition climate risk through defined channels

(sector GVA, GHG emissions, carbon price, regional GDP,

or collateral valuations).

For mortgage products, climate risk appears mainly

through a deterioration in collateral values, as reflected

in the loan-to-value ratio, which is the main transmission

channel into LGD.

These methodologies enable us to embed potential

climate-event impacts on credit losses in credit risk

management. Against this backdrop, we carried out both

internal capital self-assessment exercises and regulatory

stress tests.

In light of the above and based on the best information

available at the date of these consolidated annual

financial statements, we also assessed the potential

additional impact of climate and environmental risks on

the Group’s equity, financial situation and results in

2025. We did not identify any significant or material

impacts. .

2. Risk and compliance governance

Grupo and Banco Santander  robust risk and compliance

governance structure allows us to conduct effective

oversight in line with our risk appetite. Grupo and Banco

Santander stand on three lines of defence, a structure of

committees and strong Group-subsidiary relations,

guided by our risk culture, Risk Pro.

2.1 Lines of defence

Grupo and Banco Santander’s model of three lines of

defence effectively manages and controls risks:

• First line: formed business functions, as well as all

other functions that generate risk, constitute the first

line of defence. They must establish an appropriate

environment to manage all risks associated with the

business and support compliance with internal

policies and regulation. Risk management must

operate within the approved risk appetite and

associated limits. The first line executes mitigation

plans for risks where weaknesses are identified in its

control environment.

• Second line: formed by the risk and compliance

functions, independently oversees and challenges

the risk management activities that the first line

carries out. Its role is to help verify that we manage

risks in line with the established risk appetite and to

promote a strong risk culture across the

organization.

• Third line: formed by Internal Audit is a permanent

function, independent of any other functions or units,

whose objective is to provide the Management Body

and the senior management with independent

assurance on the quality and effectiveness of

internal control, risk management (current or

emerging) and governance processes and systems,

thereby helping to protect the company’s value,

solvency, and reputation.

R isk, Compliance and Internal Audit are sufficiently

separate and autonomous functions, with direct access

to the board and its committees. The risk and compliance

functions report to the risk supervision, regulation and

compliance committee and the internal audit function

reports to the audit committee.

2.2 Risk committee structure

The board of directors has final oversight of risk and

compliance management and control to promote a

sound risk culture and review and approve risk appetite

and frameworks, with support from its risk, regulation

and compliance committee (RSRCC) and its executive

committee.The Group and the Bank's risk governance

keeps risk control and risk-taking areas separate.

182

Our governance structure also includes key roles and

executive committees that strengthen oversight and

support the effective performance of the control

function.

The Group chief risk officer (CRO), who leads the

application and execution of risk strategy and promotes

proper risk culture, is in charge of overseeing all risks

and challenging and advising business lines on risk

management.

The Group chief compliance officer (CCO) leads the

application and execution of the compliance and conduct

risk strategy and reports the status of risks being

monitored in order to provide the Chief Risk Officer with

a comprehensive view of all risks.

The CRO and the CCO report directly to both the risk

supervision, regulation and compliance committee and

the board of directors.

The executive risk, risk control and compliance and

conduct committees are executive committees with

powers delegated from the board.

Furthermore, the executive-level committees delegate

part of their responsibilities to forums and/or standing

meetings to manage and control each risk type.

Their responsibilities include:

• Inform the CRO, the CCO, the risk control committee

and the compliance and conduct committee if risks are

being managed within risk appetite;

• Conduct regular follow-ups for each key risk type; and

• Overseeing the measures adopted to meet supervisor's

and auditor's expectations.

Besides, Grupo and Banco Santander, in order to

establish an adequate control environment for the

management of each risk types, the risk and compliance

functions have effective internal regulation to create the

right environment to manage and control all risks.

Grupo and Banco Santander may introduce additional

governance measures for special situations to reinforce

the monitoring of all risks, with particular focus on

trends in key macroeconomic indicators and liquidity, the

identification of vulnerable sectors/customers, and the

strengthening of cybersecurity, among other aspects.

Activating these special-situations forums helps the

Group address the effects of the geopolitical and

macroeconomic environment with resilience.

2.3 The Group's relationship with subsidiaries

Grupo Santander subsidiaries’ risk and compliance

management and control model is consistent with the

frameworks approved by the Group board of directors.

Subsidiaries adhere to the frameworks through their

own boards and can only adapt to higher standards

according to local law and regulation.

As part of Santander's aggregated risk oversight, we

challenge and review subsidiaries’ internal regulations

and activities. This enables us to maintain a common risk

management and control model across the Group.

The risk and compliance functions support the

businesses and oversee risks at both global and local

levels. In addition, over the year we continued to

strengthen the Group–subsidiary relationship model,

leveraging our global scale to identify synergies under a

common operating model and shared platforms. The

model promotes process simplification and the

reinforcement of control mechanisms to support the

growth of our businesses.

Santander's Group–subsidiary governance model

(GSGM) sets out the principles that govern the

relationship between Group key roles and the

subsidiaries, which helps safeguard the independence of

local second lines. The CRO and CCO take part in the

appointment, objectives, performance reviews and

remuneration of their local counterparts, which helps

confirm that they are controlling risks appropriately.

We continue to strengthen the relationship between the

Group and its subsidiaries through close cooperation

among our subsidiaries to develop common initiatives

more efficiently, such as:

• Transformation of organizational structures, sharing

benchmarks across countries and contributing to the

function’s strategic vision to promote the rollout of

more advanced risk-management infrastructures

and practices.

• Exchange of best practices to strengthen processes

and drive innovation.

• Promotion of internal talent and mobility, both

geographic and functional, as well as fostering

diversity within teams to reflect the diversity of the

environments in which we operate.

• Developing our risk professionals, improving

innovation, the quality of decisions, and fostering a

global mindset is key to enhance organizational

resilience and reinforcing a global mindset.

The GSGM model also applies to the Group’s global

businesses. This gives us a global-local organization in

which countries ultimately remain responsible for

delivering the budget, the business and customer

strategy, and financial management, while the global

businesses lead shared initiatives through common

183

operating models and shared technologies, improving

local performance.

3. Management processes and tools

Grupo and Banco Santander have these effective risk

management processes and tools:

3.1 Risk appetite and structure of limits

Risk appetite is the aggregate level and types of risk that

Grupo Santander deems prudent for our business

strategy, even in unforeseen circumstances. Risk

appetite is governed throughout the Group by the

following principles:

• Risk appetite is part of the board's duties. The board

prepares the risk appetite statement (RAS) for the

whole Group every year. Through a cascading-down

process, each subsidiary's board also sets its own risk

appetite.

• Comprehensiveness and forward-looking approach.

Our appetite includes all material risks to which we are

exposed and defines our target risk profile for the

current and medium term, with a forward-looking

view that considers stress scenarios.

• Common standards embedded in the day-to-day risk

management. The Group shares the same risk appetite

model, which sets common requirements for

processes, metrics, governance bodies, controls and

standards. This facilitates effective and traceable

embedding of risk appetite into more granular

management policies and limits across our

subsidiaries..

• Continuous monitoring and adaptation. Risk appetite

is regularly monitored, reviewed and updated to

reflect changes in market conditions, regulatory

requirements and supervisory expectations.

Compliance with risk appetite limits is monitored on a

regular basis through dedicated reporting to senior

management and the board and its committees.

Breaches or potential breaches are subject to

predefined escalation, remediation and follow-up

processes, with oversight proportionate to their

materiality through senior management and the

Group’s governing bodies.

• Alignment with strategy and business plans. Before

approving the three-year strategic plans, annual

budget, and capital and liquidity plans, the Group

verifies their consistency with the limits set in the Risk

Appetite Statement. We promote the alignment of

strategic and business plans with our risk appetite by:

• considering the risk appetite, long-term strategic

view and the risk culture when drafting strategic and

business plans.

• challenging business and strategic plans against the

risk appetite. Misalignments trigger a review of

either the three-year strategic plan (to make sure we

stay within RAS limits) or risk appetite limits, with

independent governance.

• continuous monitoring of risk appetite compliance

through the three lines of defence model.

The main elements underpinning Grupo and Banco 

Santander’s risk appetite and defining the business

model are:

• a medium-low, predictable target risk profile,

customer focus, internationally diversified

operations and a significant market share;

• stable, recurrent earnings and shareholder

remuneration, sustained by a sound base of capital,

liquidity and sources of funding;

• autonomous subsidiaries that are self-sufficient in

terms of capital and liquidity to safeguard their risk

profiles against compromising the Group and the

Bank’s risk profile;

• an independent risk function and a senior

management actively engaged in supporting a

robust control environment and risk culture; and

• a conduct model that protects our customers and our

Simple, Personal and Fair culture.

The risk appetite is expressed through qualitative

statements and limits on metrics representative of the

bank’s risk profile at present and under stress. Those

metrics cover all risk types according to our corporate

risk framework. Grupo Santander articulates them in five

axes that provide the Bank with a holistic view of all risks

it incurs in the development of its business model. These

five axes are applicable to all Santander's key risk types,

and comprise:

• P&L volatility: control of P&L volatility of business

plan under baseline and stressed conditions (under

normal and stressed conditions).

• Solvency: control of capital ratios under baseline and

stressed scenarios (aligned with ICAAP) .

• Liquidity: control of liquidity ratios under base and

stress scenarios (aligned with ILAAP).

• Concentration: control of credit concentration on top

clients, portfolios and industries.

• Non financial risk and control environment: robust

control on non financial risks aimed to minimize

events which could lead to financial loss, operative,

technological, legal and regulatory breaches,

conduct issues or reputational damage.

184

b) Credit risk

1.  Introduction to the credit risk treatment

Grupo and Banco Santander take a holistic view of the

credit risk cycle, including the transaction, the customer

and the portfolio, in order to identify, analyse, control

and decide on credit risk.

Credit risk identification facilitates active and effective

portfolio management and control. Grupo and Banco

Santander classify external and internal risk in each

business to adopt any corrective or mitigating measures

through:

1.1. Planning

Planning allows to set business objectives and define

concrete action plans, integrating the risk appetite

statement into portfolio management.

Strategic commercial plans (SCPs) are the management

and control tool that the Business and Risk areas define

for credit portfolios, with support from the other

functions involved (Finance, Management Control,

among others). They set out the commercial strategy,

risk policies, and the resources and infrastructure

required, providing a holistic view of portfolio

management.

They also provide an up-to-date view of portfolio credit

quality, enable risk measurement, support the execution

of internal controls over the defined strategy, allow for

periodic monitoring, and help detect material deviations

or potential impacts, facilitating the adoption of

corrective measures when necessary.

SCPs are aligned with subsidiaries’ risk appetite and

capital objectives, as well as those of the Group, and are

approved and overseen by local senior management

before being reviewed and ratified at Group and Bank

level.

1.2. Risk assessment and credit rating

Credit risk approval criteria focus on borrowers’ ability to

meet their financial obligations. The assessment uses

statistical models and an analysis of the net funds or

cash flows generated by economic activity, or of regular

income, to determine customers’ repayment capacity in

a consistent and sustainable manner.

Some statistical credit quality assessment models feed

into decision engines to deliver a credit risk assessment

quickly and in a consistent, standardised way. These

engines support faster and more uniform decision-

making, reduce manual errors, apply the same

assessment criteria to all customers, and provide

traceability and support regulatory compliance. These

ratings have multiple uses in risk management,

including the origination process (application of limits

and pre-approvals), risk monitoring, and as an input to

transaction pricing.

These credit rating models may be:

• Rating: from mathematical algorithms that have a

quantitative model based on balance sheet ratios or

macroeconomic variables or behavioural

information, and a qualitative module supplemented

by the credit analyst’s expert judgement. It is used

for large corporates, corporates, institutional and

SME segments (with individualised treatment).

• Scoring: an automated system that assesses credit

applications based on the information provided

(admission scoring) or customers’ credit profiles

based on their relationship with the institution

(behavioural scoring). Both are complemented by

other available information (for example, from

external databases). The system automatically

assigns each customer an individual score, which

then supports the subsequent decision. It is used for

individuals and small businesses with no assigned

analyst.

The Group and the Bank´s parameter estimation models

rely on econometric models built on historical default

and loss data from the portfolios. The Group, and

therefore the Bank, use them to calculate economic and

regulatory capital, and IFRS 9 and Bank of Spain Circular

4/2017 provisions, at operation, customer and portfolio

level.

A rigorous governance framework covers the ongoing

monitoring and continuous calibration of these models

to assess their suitability, predictive power, performance

and granularity, as well as compliance with credit

policies.

In addition, the Group and the Bank review ratings using

the latest available financial information and other

relevant data.

Grupo and Banco Santander´s limits, pre-classifications

and pre-approvals processes determine the level of risk

the Group can take on with each customer. Automated

processes approve and monitor these decisions.

Approved limits must align with expected profitability.

To support this, we use profitability estimation and risk-

based pricing tools that contribute to sustainable

portfolio growth.

185

Grupo and Banco Santander apply various limits models

to each segment:

• Large corporate groups are subject to a pre-

classification model based on a system for measuring

and monitoring economic capital. Pre-classification

models express the level of risk Grupo and Banco

Santander are willing to assume in transactions with

customers/groups.

• In the corporate segment, for customers that meet

certain predefined criteria (including internal rating

and profitability), the Group applies a pre-classification

model for the main products related to the customer’s

recurring business. The model operates through the

setting of internal nominal limits, which define the

level of risk to take on with each customer based,

among other factors, on their repayment capacity and

leverage.

Corporate transactions that exceed certain limits or have

specific features must be handled through the approval

process for an ad hoc proposal.

• For individual customers and SMEs with low turnover,

Grupo Santander manages large volumes of credit

transactions using automated decision models that

assess each case and assign a limit per customer and

transaction.

1.3. Scenario analysis

Grupo and Banco Santander’s scenario analyses

determine the potential risks in its credit portfolios and

provide a better understanding of our portfolios'

performance under various macroeconomic conditions.

They allow us to anticipate management strategies that

will avoid future deviations from defined plans and

targets.

They simulate the impact of alternative scenarios in

portfolios’ credit parameters (PD, LGD) and expected

credit losses. Grupo Santander compares findings with

portfolios’ credit profile indicators to find the right

measures for managers to take. Credit risk management

of portfolios and SCPs incorporate scenario analyses.

1.4. Monitoring

Regular, holistic monitoring of customers and portfolios

is an essential element of the Group’s credit risk

management, as it enables continuous monitoring of

credit quality, early identification of potential

impairment and analysis of business performance

against predefined plans and objectives.

The monitoring process systematically analyses changes

in credit exposures, customers’ financial and qualitative

characteristics, and any relevant changes in their risk

classification. This preventive approach draws on

transactional information, behavioural indicators and

advanced analytics tools, including early-warning

engines, which support early identification of potential

deterioration and the implementation of specific actions

at both customer and portfolio level, based on the

assigned monitoring level.

Monitoring adapts to customer segmentation and the

applicable management approach:

• in the large corporate segment, monitoring is carried

out jointly by the commercial managers and the risk

analysts, which provides an up-to-date,

comprehensive view of the customer’s credit quality at

all times and supports the early identification of any

potential deterioration.

• In the commercial banking, institutions and SMEs with

an assigned a credit analyst, he teams carry out

enhanced monitoring of customers whose risk profile

or specific circumstances require it. This includes the

periodic review of their internal ratings based on

relevant financial, behavioural and environmental

indicators.

• Monitoring of individual customers, businesses and

smaller SMEs follows a system of automatic alerts to

detect shifts in portfolios’ performance.

The Group, and therefore the Bank, structure this

process for customers with an assigned analyst through

the SCAN (Santander Customer Assessment Note)

monitoring framework. SCAN assigns a specific

monitoring level to each customer, sets the related

operating policies, defines concrete management

actions, identifies accountable owners and establishes a

review frequency aligned with the customer’s risk profile

and relevance.

In addition, the Group and therefore the Bank have

aggregated control and analysis procedures that track

portfolio performance, identify material deviations from

strategic plans or defined alert thresholds, and help

prioritise management focus areas. The process is

complemented by contingency plans (risk playbooks),

which support the early identification and management

of impacts from external factors — such as

macroeconomic, sector or market changes — and, where

appropriate, trigger corrective measures, including

adjustments to risk policies.

186

1.5. Credit risk mitigation techniques

Grupo and Banco Santander Risk approval criteria

generally focus on borrowers’ ability to meet their

financial obligations, without prejudice to any collateral

that the Bank may require. Collateral and guarantees

provided by the obligor in favour of the Bank aim to

modulate the level of exposure.

To determine ability to pay, the Group and the Bank

analyses funds or cash flows from businesses or other

regular income, not including guarantors or loan

collateral which are always considered at credit approval

as a secondary means of recourse.

A guarantee is an additional protection mechanism in a

credit transaction, intended to mitigate loss in the event

of a failure to meet the payment obligation. The Group

applies different credit risk mitigation techniques

depending, among other factors, on the customer and

product type. Some are specific to an individual

transaction (e.g., real estate guarantees), while others

apply to a set of transactions (e.g., derivatives netting or

collateral arrangements). These techniques may be

grouped into personal guarantees, real guarantees and

hedges using credit derivatives.

The correct acceptance of these mitigation techniques is

established by verifying their legal enforceability in all

jurisdictions. The entire process is subject to internal

control and effective monitoring of the valuation of the

guarantees, especially real estate guarantees.

1.6. Collections & recoveries management

Recovery activity is a relevant function within Grupo

Santander’s risk management and control framework, as

it contributes to portfolio quality as one of the key pillars

supporting the Bank’s development, growth and

business sustainability. Collections and debt recovery

management is a specific, ongoing focus to keep

portfolio quality within the expected levels.

The Collections and Recoveries area defines a global

management strategy, based on an end-to-end

approach and general lines of action for subsidiaries.

Recovery management operates under policies and an

independent control environment defined by the risk

function, aligned with regulatory requirements and with

the Group Santander conduct risk management model.

The Group carries out this activity in line with strategies

defined by the recovery function, in coordination with

the Risk areas.

The recovery strategy combines advanced customer

segmentation and the intensive use of digital tools. This

supports the optimisation of mass portfolio

management and provides tailored support for

customers who require individual treatment. The

customer remains the focus, and recovery strategies are

defined in the context of the relationship with the

customer, prioritising the customer’s viability. As a

result, teams manage the customer holistically across all

phases of the cycle.

The function’s approach covers the entire credit cycle,

prioritising solutions that support customer viability.

Even after the asset is written off (failed risk), the Group

continues to carry out the necessary actions to maximise

recovery. The failed risk category includes debt

instruments, whether past due or not, for which,

following an individual assessment, recovery is

considered remote due to a significant and irreversible

deterioration in the solvency of the exposure or the

holder. Classification in this category entails the full or

partial cancellation of the exposure’s gross carrying

amount and its derecognition from the balance sheet,

without implying that the Group stops negotiations and

legal proceedings to recover the amount.

187

2. Main aggregates and variations

Below are the main aggregates relating to credit risk

from our activities with customers:

Main credit risk performance metrics from activity with customers A
December data
	Credit risk with customers        (EUR million) B			Credit impaired loans (EUR million)			NPL ratio (%)
	2025	2024		2025	2024		2025	2024
Spain	302,271	285,883		5,915	7,672		1.96	2.68
UK	244,303	248,061		2,645	3,299		1.08	1.33
Portugal	44,674	41,418		928	993		2.08	2.40
Poland	46,427	44,704		1,549	1,636		3.34	3.66
US	147,303	148,643		7,150	7,012		4.85	4.72
Mexico	53,476	49,927		1,420	1,352		2.65	2.71
Brazil	105,410	104,519		7,192	6,418		6.82	6.14
Chile	44,146	44,590		2,528	2,394		5.73	5.37
Argentina	8,813	8,411		677	173		7.68	2.06
DCB Europe	144,039	141,312		3,642	3,527		2.53	2.50
Corporate Centre	6,356	5,959		271	301		4.27	5.06
Total Group	1,181,945	1,157,273		34,393	35,265		2.91	3.05

	NPL coverage ratio (%)			Loan-loss provisions C (EUR million)			Cost of risk (%/risk) D
	2025	2024		2025	2024		2025	2024
Spain	55.0	53.0		1,142	1,259		0.44	0.50
UK	33.0	29.0		177	64		0.07	0.03
Portugal	83.0	79.0		-8	11		(0.02)	0.03
Poland	65.0	62.0		283	511		0.71	1.38
US	55.0	64.0		2,244	2,507		1.63	1.82
Mexico	105.0	100.0		1,239	1,277		2.69	2.64
Brazil	83.0	83.0		4,409	4,487		4.73	4.51
Chile	48.0	50.0		531	497		1.32	1.19
Argentina	90.0	177.0		574	284		7.34	4.59
DCB Europe	87.0	83.0		1,363	1,209		0.97	0.88
Corporate Centre	24.0	25.0		198	(3)		3.30	(0.05)
Total Group	66.0	65.0		12,411	12,333		1.15	1.15

A. Management perimeter according to the reported segments.

B. Includes gross loans and advances to customers, guarantees and documentary credits.

C. Post write-off recoveries (EUR 1,795 million).

D. Provisions to cover losses due to impairment of loans in the last 12 months / average customer loans and advances of the last 12 months.

188

Information on the estimation of impairment losses

The calculation of provisions for credit risk losses is

performed at financial asset level, estimating potential

credit losses through the difference between the

contractual cash flows and the expected cash flows,

ensuring that the results are adequate considering the

status of the transaction, economic conditions and

available forward-looking information.

The Bank of Spain circular 4/2017 impairment model

applies to financial assets valued at amortized cost; debt

instruments valued at fair value with changes in other

comprehensive income; leasing receivables; and

commitments and guarantees not valued at fair value.

The portfolio of financial instruments subject to the Bank

of Spain circular 4/2017 has three credit risk categories

(or stages) according to the status of each instrument in

relation to its level of credit risk:

• Stage 1: financial instruments with no significant

increase in risk since initial recognition – the

impairment provision reflects expected credit losses

from defaults over the 12 months from the reporting

date.

• Stage 2: financial instruments with a significant

credit risk increase since initial recognition but no

materialized impairment event – the impairment

provision reflects expected losses from defaults over

the financial instrument’s residual life.

• Stage 3: financial instruments with true signs of

impairment as a result of one or more events

resulting in a loss – the impairment provision reflects

expected losses for credit risk over the instrument’s

expected residual life.

The classification of financial instrument in the Bank of

Spain circular 4/2017 stages is carried out in accordance

with the guidelines through the risk management

policies of the Bank, which are consistent with the

Group's policies.

Estimation of expected loss

The Group and the Bank use parameters (mainly EAD,

PD, LGD and the discount rate) to calculate impairment

provisions. These parameters build on the infrastructure

of internal models used to calculate regulatory capital

and on regulatory and management expertise, and they

also reflect each financial asset’s stage classification.

However, these parameters are not a simple adaptation

of existing models. We designed and validated them

specifically in line with IFRS 9 requirements and

guidance from bodies such as the EBA, , National

Competent Authority (NCA), Bank for International

Settlements (BIS) or Global Public Policy Committee

(GPPC). Their development incorporates forward-looking

information, a point-in-time (PIT) approach, multiple

scenarios and lifetime loss estimation through lifetime

PD, among other elements.

Determination of significant increase in credit risk

(SICR)

To determine classification in Stage 2, the Group

assesses whether a SICR has occurred since the initial

recognition of the exposures. The Group performs this

assessment under common principles applicable across

the Group, reviewing all financial instruments subject to

this analysis and taking into account the specific features

of each portfolio and product type through a range of

quantitative and qualitative indicators.

Expert judgement from analysts supports the SICR

assessment. Analysts set the thresholds within an

integrated management framework and in line with the

approved corporate governance. The principles are as

follows:

• Universality: all financial instruments subject to a

credit rating must be assessed for their possible

SICR.

• Proportionality: the definition of the SICR must take

into account the particularities of each portfolio.

• Materiality: its implementation must be also

consistent with the relevance of each portfolio so as

not to incur in unnecessary costs or efforts.

• Holistic vision: the approach selected must be a

combination of the most relevant credit risk aspects

(e.g. quantitative and qualitative).

• Application of IFRS 9 and Bank of Spain Circular

4/2017: the approach must take into consideration

IFRS 9 and Bank of Spain Circular 4/2017

characteristics, focusing on a comparison with credit

risk at initial recognition, as well as considering

forward-looking information.

• Risk management integration: the criteria must be

consistent with those metrics considered in the day-

to-day risk management.

• Documentation: appropriate documentation must be

prepared.

189

The techniques are summarised below:

• Stability of stage 2: in the absence of significant

changes in the portfolios credit quality, the volume

of assets in stage 2 should maintain a certain

stability as a whole.

• Economic reasonableness: at transaction level, stage

2 is expected to be a transitional rating for exposures

that could eventually move to a deteriorating credit

status at some point or stage 3, as well as for

exposures that have suffered credit deterioration and

whose credit quality is improving and returns to

stage 1.

• Predictive power: it is expected that the SICR

definition avoids, as far as possible, direct migrations

from stage 1 to stage 3 without having been

previously classified in stage 2.

• Time in stage 2: it is expected that the exposures do

not remain categorized as stage 2 for an excessive

time.

The application of the aforementioned techniques,

conclude in the setting of one or several thresholds for

each portfolio in each geography. Likewise, these

thresholds are subject to a regular review by means of

calibration tests, which may entail updating the

thresholds types or their values.

Identifying a significant increase in credit risk: when

classifying financial instruments under stage 2, Banco

Santander considers:

• Quantitative criteria: Grupo and Banco Santander

review and quantify changes in the risk of default

during their expected life based on their credit risk

level on initial recognition.

For the purposes of assessing significant changes

when financial instruments are classified in Stage 2,

each subsidiary has set quantitative thresholds for its

portfolios in line with Group guidelines, seeking a

consistent interpretation across all our geographies.

The calibration principles for these thresholds are set

out in the previous paragraph and may result in two

types of thresholds:

• Relative. Thresholds that compare current credit

quality with credit quality at origination, expressed

as a percentage change.

• Absolute. Thresholds that compare current credit

quality with credit quality at origination, expressed

as an absolute change..

In addition, in line with the ECB’s supervisory

expectations, the Group has set a 200% cap on the

relative threshold, known as the 'threefold increase'.

As a result, exposures whose credit quality has

deteriorated by more than 200% in relative terms —

using an approach analogous to the relative

threshold described in the previous paragraph —

transfer from Stage 1 to Stage 2.

  Meeting any of the absolute thresholds, the relative

thresholds or the 200% cap on the relative threshold

(threefold increase) on an individual basis results in

the transfer of the financial instrument exposure

from Stage 1 to Stage 2.

In addition, the Group may apply the Low Credit Risk

Exemption at the reporting date, so that certain

exposures that continue to meet this condition may

remain in Stage 1. This exemption applies only to

quantitative significant increase in credit risk criteria;

therefore, qualitative criteria are not eligible for

exemption. The Group uses it on a limited basis,

documents it and reviews it periodically. When an

exposure no longer meets the low credit risk

condition, it transfers to Stage 2 in line with the

criteria above.

• Qualitative criteria: several indicators aligned with

ordinary credit risk management indicators (e.g. past

due for over 30 days, forbearance, early warning

indicators system, etc.). Each subsidiary has defined

these indicators for their portfolios, with special

attention to reinforcing these qualitative criteria

through expert judgment and aligning them to the

criteria used in management.

      When the presumption of a significant deterioration

of credit risk is removed, due to a sufficient

improvement of the credit quality, the obligor can be

re-classified to stage 1, without any probationary

period in stage 2.

• Definition of default: Grupo and Banco Santander

incorporated the new definition to provisions

calculation according to the EBA’s guidelines; the

Group and the Bank are also considering applying it

to prudential framework. In addition, the default

definition and stage 3 have been aligned.

  This definition considers the following criteria to

classify exposures as stage 3: financial instruments

with one or more payments more than 90

consecutive days past due, representing at least 1%

of the client's total exposure or the identification of

other criteria demonstrating, even in the absence of

defaults, that it is unlikely that the counterparty is

unlikely to meet all of its financial obligations.

The Group and the Bank apply the default criteria to

all exposures of the impaired client. Where an

obligor belongs to a group, the default criteria may

also be applied to all exposures of the group.

The default classification is maintained during the 3-

month test period following the disappearance of all

default indicators described above, and this period is

extended to one year for forbearances that have

been classified as default.

190

• Expected life of financial instruments: Grupo and

Banco Santander estimate the expected life of

financial instruments according to their contractual

terms (e.g. prepayments, duration, purchase options,

etc.).

The contractual period (including extension options)

is the maximum time frame for measuring the

expected credit loss. If financial instruments have an

undefined maturity period and undrawn amounts

(e.g. credit cards), the Group and the Bank estimate

their expected life based on the total exposure period

and effective management practices to mitigate

exposure.

1. Forward-looking vision

Estimating expected credit losses (ECL) requires

significant expert judgement and the incorporation of

historical, current and forward-looking information.

Expected loss estimates are therefore based on an

unbiased, probability-weighted likelihood of up to five

possible future scenarios that could affect the collection

of contractual cash flows. These scenarios consider the

time value of money, relevant information available on

past events, current conditions and forecasts of the

macroeconomic factors considered important in

estimating this amount (e.g. GDP, house prices and the

unemployment rate, among others).

Grupo and Banco Santander use forward-looking

information in internal management and regulatory

processes under several scenarios. The Group and the

Bank's guidelines and governance seek synergy and

consistency between these different processes.

2. Additional elements

Additional elements will be required when necessary

because they have not been captured under the two

previous elements. This has included, among others, the

analysis of sectors most affected if their impacts are not

sufficiently captured by the macroeconomic scenarios.

Also collective analysis techniques, when the potential

impairment in a group of clients cannot be identified

individually.

With the elements indicated above, Grupo and Banco

Santander have evaluated the evolution of the credit

quality of its customers, for the purposes of classifying

them into stages and consequently calculating expected

loss.

Management overlays

During 2025, the Group strengthened coverage across its

portfolios by implementing overlays, mainly in Brazil,

Chile and Mexico, where it increased the PMA buffer to

anticipate the impact of the year’s model recalibrations,

as well as other potential deviations.

In addition, the Group gradually released the

adjustments related to climate events, such as the

Valencia dana experienced in late October 2024, in the

case of Santander Spain and the Spanish DCB office.

Overall, the amount of overlays at year-end 2025

remains immaterial compared with the Group’s total

allowance for credit losses.

Exposure and loan-loss reserves

Then, considering the most relevant units of the Group

(United Kingdom, Spain, United States, Brazil, also Chile,

Mexico, Portugal, Poland, Argentina and Santander

Consumer Finance), which represent approximately 96%

of the total Group's provisions. The table below shows

the loan-loss reserves associated with each stage as of

31 December 2025 and 2024. In addition, depending on

the transactions credit quality, the exposure is divided

into four categories according to Standard & Poor's

rating scale:

Exposure and impairment losses by stage
EUR million
	2025
Credit quality A	Stage 1	Stage 2	Stage 3	Total
From AAA to AA-	121,023	2,295	—	123,318
From A+ to BB	383,494	15,188	—	398,682
From BB- to B-	300,108	47,292	—	347,400
CCC and below	8,146	17,733	32,664	58,543
Total exposure B	812,771	82,508	32,664	927,943
Impairment losses C	3,147	4,915	13,900	21,962

Exposure and impairment losses by stage
EUR million
	2024
Credit quality A	Stage 1	Stage 2	Stage 3	Total
From AAA to AA-	108,977	2,599	—	111,576
From A+ to BB	431,544	16,600	—	448,144
From BB- to B-	288,302	45,129	—	333,431
CCC and below	10,431	17,088	32,901	60,420
Total exposure B	839,254	81,416	32,901	953,571
Impairment losses C	3,276	4,715	13,669	21,660

A. Detail of credit quality ratings calculated for Group management

purposes.

B. Total exposure includes loan balances (drawn amounts) and off

balance (letters of credit + guarantees) and excludes REPOs, FV

portfolio, trading portfolio and undrawn commitments.

C. Includes provisions for undrawn authorized lines (loan

commitments).

191

The remaining units that form the totality of the Group

exposure, account for EUR 93,731 million EUR

89,094 million in stage 1; EUR 3,528 million in stage 2;

and EUR 1,109 million in stage 3 (in 2024 EUR

80,541 million in stage 1; EUR 2,534 million in stage 2,

and EUR 874 million in stage 3.

The remaining exposure, including all financial

instruments not included before, amounts to EUR

834,911 million (EUR 665,476 million in  2024), and it

includes all undrawn authorized lines (loan

commitments).

As of 31 December 2025, the Group had EUR 334 million

net of provisions (EUR 559 million at 31 December 2024)

of purchased credit-impaired assets, which relate mainly

to the business combinations carried out by the Group.

In relation to the evolution of credit risk provisions, the

Group, together with its main geographies, monitors

them through sensitivity analyses that assess the impact

of changes in macroeconomic scenarios and their key

variables on the allocation of financial assets across

stages and on the measurement of credit risk provisions.

Additionally, based on consistent macroeconomic

scenarios, Grupo and Banco Santander also perform

stress tests and sensitivity analysis in a regular basis,

such as ICAAP, strategic plans, budgets and recovery and

resolution plans. In this sense, a prospective view of the

sensitivity of each of the Group’s loan portfolio is created

in relation to the possible deviation from the base

scenario, considering both the macroeconomic

developments in different scenarios and the three year

evolution of the business. These tests include potentially

adverse and favourable scenarios.

3. Credit risk management

Following is the risk information relating to the

geography of Grupo España portfolio in terms of

exposure and risk allowances.

This information includes sensitivity analysis, consisting

on simulations of +/-100 bp in the main macroeconomic

variables. A set of specific and complete scenarios is

used in each geography, where different shocks that

affect both the reference macroeconomic variable as

well as the rest of the parameters is simulated, with

different intensities. These shocks collect mainly the

most relevant risks and may be originated by

productivity, tax, wages or exchange and interest rates

factors.

Sensitivity is measured as the average variation on

expected loss corresponding to the aforementioned

movement of +/-100 bp. Following a conservative

approach, the negative movements take into account

one additional standard deviation in order to reflect the

potential higher variability of losses.

3.1. Credit portfolio in Spain

Portfolio overview

Santander España’s credit risk totalled EUR

302,271 million (26% of Grupo Santander’s total). It is

appropriately diversified among products and customer

segments.

The NPL ratio was 1.96%, 73 bps lower than in

December 2024. This decrease was driven by the

portfolio’s strong performance, supported by the

execution of the NPL reduction plan.

The NPL coverage ratio increased slightly to 55%(+2 p.p.

year-on-year). The cost of risk decreased to 0.44% (-7

bps vs. December 2024), driven by the strong

performance of the SME and corporate portfolios, partly

offset by the performance of the individuals portfolio.

Macroeconomic projections suggest the economy will

moderate its growth pace slightly, but will remain

dynamic and well above the eurozone average, as the

Spanish economy has largely been supported by

stronger domestic demand amid a weaker-than-

expected external sector.

Residential mortgage portfolio

Residential mortgages in Spain, including Santander

Consumer Finance business, amounted to EUR

60,002 million in 2025 (EUR 59,316 millions  in 2024),

99.64% of which have a mortgage guarantee (99.65% in

2024).

192

EUR million
	2025
	Santander Group Spain		Of Which, Banco Santander, S.A.
	Gross amount	Of which: impaired	Gross amount	Of which: Non- performing
Home purchase loans to families	60,002	625	59,809	620
Without mortgage collateral	215	7	215	7
With mortgage collateral	59,787	618	59,594	613

EUR million
	2024
	Santander Group Spain		Of Which, Banco Santander, S.A.
	Gross amount	Of which: impaired	Gross amount	Of which: Non- performing
Home purchase loans to families	59,316	789	59,113	785
Without mortgage collateral	208	11	209	11
With mortgage collateral	59,108	778	58,904	774

The NPL ratio for the residential mortgages portfolio

stood at 1.03%, with a reduction of 29 bps, compared to

31 December 2024, mainly due to by portfolio sales,

although credit risk registered an increase of 1.2%

compared to December 2024.

The mortgage portfolio for the acquisition of homes in

Spain is characterised by its medium-low risk profile,

which limits expectations of any potential additional

impairment:

• Principal is repaid on all mortgages from the start.

• Early repayment is common so the average life of the

transaction is well below that of the contract.

• High quality of collateral, concentrated almost

exclusively in financing for first homes.

• The average affordability rate at 22% (24% in2024).

• The 94% of the portfolio has a LTV below 80%

calculated as total risk/latest available house

appraisal.

• All customers applying for a residential mortgage are

subject to a rigorous credit risk and viability

assessment, analysing whether their income is

sufficient to meet all repayments and will remain

stable over the term of the loan.

193

Breakdown of the credit with mortgage guarantee to

households for house acquisition, according to the

percentage that the total risk represents on the amount

of the latest available valuation (loan to value):

EUR million
	2025
	Loan to value ratio
	Less than or equal to 40%	More than 40% and less than 60%	More than 60% and less than 80%	More than 80% and less than or equal to 100%	More than 100%	Total
Santander Group
Gross amount	17,191	20,310	18,811	2,812	663	59,787
Of which impaired	122	158	151	84	103	618
Of which, Banco Santander, S.A.
Gross amount	17,102	20,245	18,783	2,804	660	59,594
Of which,  impaired	119	157	151	84	102	613

In November 2022, Royal Decree-Law 19/2022 was

published, which establishes a Code of Good Practices in

response to the rise in interest rates on mortgage loans

for primary residences and Royal Decree-Law 6/2012 of

protection measures for mortgage debtors without

resources. The code of good practices is focused on

granting capital grace periods and extending the term of

the operations. The requests made have not been

significant.

Corporate & SME financing

Credit risk with SME and corporates in commercial

banking amounted to EUR 99,395 million, lower than

December 2024, mainly due to the fall in the portfolio of

SMEs of 10.1%. This portfolio accounting for 33% of the

total, compared to 41% of CIB's portfolio, which from

2022 includes branches in Europe.

Most of the portfolio corresponds to clients who have

been assigned a credit analyst, who performs continuous

management of said clients during all phases of the risk

cycle.The portfolio is broadly diversified and not

concentrated by sector of activity.

The ICO loans that were granted as a result of the

pandemic (25,428 million euros) are being repaid

normally and there is a balance of EUR 10.857 billion, so

they now represent only around 3.6% of Santander

Spain's total portfolio. During 2025, Santander Spain

maintained its support and close engagement with SMEs

and the self-employed through the various support lines,

which were significantly less material than the post-

pandemic programmes (Líneas ICO Empresas y

Emprendedores, Línea ICO Internacional y Rehabilitación

de vivienda).

In the case of delinquent operations with ICO guarantee,

the transfer of the overdue guaranteed amounts will

take place as the guarantee is executed, regardless of

whether the guarantor is subrogated to the right to

receive said amounts, according to the regulation of

these guarantees. The de-recognition of the transferred

guaranteed amounts will entail the recognition, at its fair

value, of a collection right against the guarantor.

The portfolio’s NPL ratio stood at 4.10% in December

2025. The NPL ratio decreased by 97 bps compared to

December 2024, largely due to a proactive effort to

reduce the stock of NPLs in the SME portfolio, through

proactive management of non-performing exposures

supported by portfolio sales and the management of

specific cases.

Real estate activity

Santander has specialized teams that are in charge of

managing real estate business production and risk areas

that cover the entire life cycle of these operations.

The changes in gross property development loans to

customers were as follows:

EUR million
	2025	2024
Balance at beginning of year	2,545	2,433
Foreclosed assets	—	—
Net variation	441	112
Written-off assets	(2)	0
Balance at end of year	2,984	2,545

194

The NPL ratio of this portfolio (considering only the on

balance amount) ended the year at 1.04% (compared

with 2.28% at December 2024). The table below shows

the distribution of the portfolio. The coverage ratio of the

real estate doubtful exposure in Spain stands at 36.21%

in 2024).

EUR million
	2025
	Santander Group			Of which,  Banco Santander, S.A.
EUR Million	Gross amount	Excess of gross exposure over maximum recoverable amount of effective collateral	Specific allowance	Gross amount	Excess of gross exposure over maximum recoverable amount	Specific allowance
Financing for construction and property development (including land) (business in Spain)	2,984	211	17	3,015	875	(17)
Of which impaired	31	—	11	31	4	(11)
Memorandum items written-off assets	240	—	—	240	—	—

Memorandum items: Data from the public balance sheet
EUR million
	2025
	Carrying amount
	Santander Group	Of which, Banco Santander, S.A.
Total loans and advances to customers excluding the Public sector (business in Spain) (Book value)	240,609	228,645
Total consolidated assets (Total business) (Book value)	1,867,515	836,783
Impairment losses and credit risk allowances. Coverage for unimpaired assets (business in Spain)	1,086	1,145

195

At year-end, the distribution of this portfolio was as

follows:

EUR Million
	Loans: Gross amount
	Santander Group	Of which,  Banco Santander, S.A.
1. Without mortgage guarantee	14	14
2. With mortgage guarantee	2,970	3,001
2.1 Completed buildings	976	995
2.1.1 Residential	658	677
2.1.2 Other	318	318
2.2 Buildings and other constructions under construction	1,981	1,993
2.2.1 Residential	1,913	1,925
2.2.2 Other	68	68
2.3 Land	13	13
2.3.1 Developed consolidated land	9	9
2.3.2 Other land	4	4
Total	2,984	3,015

Foreclosed properties

At 31 December 2025, the net balance of these assets

amounted to EUR 1,898 million (EUR 2,131 million at 31

December 2024), gross amount of EUR 4,258 million

(EUR 4,823 million at 31 December 2024); recognised

allowance of EUR 2,360 million (EUR 2,692 million at 31

December 2024).

196

EUR million
	2025
	Gross carrying amount	Valuation adjustments	Of which impairment losses on assets since time of foreclosure	Net Carrying amount
Property assets arising from financing provided to construction and property development companies	3,843	2,144	1,591	1,699
Of which:
Completed buildings	481	324	282	157
Residential	129	71	60	58
Other	352	253	222	99
Buildings under construction	107	49	35	58
Residential	—	—	—	—
Other	107	49	35	58
Land	3,255	1,771	1,274	1,484
Developed land	776	429	260	347
Other land	2,479	1,342	1,014	1,137
Property assets from home purchase mortgage loans to households	334	172	119	162
Other foreclosed property assets	81	44	36	37
Total property assets	4,258	2,360	1,746	1,898

The same information in the previous table reference to Banco Santander, S.A. is presented below:

EUR million
	2025
	Gross carrying amount	Valuation adjustments	Of which impairment losses on assets since time of foreclosure	Net Carrying amount
Property assets arising from financing provided to construction and property development companies	277	189	165	88
Of which:
Completed buildings	268	184	160	84
Residential	71	39	33	32
Other	197	145	127	52
Buildings under construction	—	—	—	—
Residential	—	—	—	—
Other	—	—	—	—
Land	9	5	5	4
Developed land	5	3	3	2
Other land	4	2	2	2
Property assets from home purchase mortgage loans to households	313	163	113	150
Other foreclosed property assets	64	35	29	29
Total property assets	654	387	307	267

197

In addition, the Group has shareholdings in entities

holding foreclosed assets amounting to EUR 36 million

and equity instruments foreclosed or received in

payment of debts amounting to EUR 10 million.

In recent years, the Group and the Bank have considered

foreclosure to be an option to resolve cases of default

instead of legal proceedings. The Group and the Bank

initially recognise foreclosed assets at the lower of the

carrying amount of the debt (net of provisions) and the

fair value of the foreclosed asset (less estimated costs to

sell). Subsequent to initial recognition, the assets are

measured at the lower of fair value (less costs to sell)

and the amount initially recognised.

The fair value of this type of assets is determined by the

market value (appraisal) adjusted with discounts

obtained according to internal valuation methodologies

based on the entity's sales experience in goods with

similar characteristics.

The management of real estate assets on the balance

sheet is carried out through companies specializing in

the sale of real estate that is complemented by the

structure of the commercial network. The sale is realised

with at prices in accordance with the market situation

and the offer of wholesale buyers.

The gross movement in foreclosed properties were as

follows (EUR billion):

	2025	2024
Gross additions	0.1	0.1
Disposals	(0.7)	(0.8)
Difference	(0.6)	(0.7)

Information on the estimation of impairment losses

The detail of Santander Spain exposure and loan-loss

reserves associated with each of the stages at 31

December, 2025 and  2024 is shown below. In addition,

the exposure is divided in four tranches of the Standard

& Poor's rating scale, according to their current credit

quality:

Exposure and loan-loss reserves by stage
EUR million
	2025
Credit quality A	Stage 1	Stage 2	Stage 3	Total
From AAA to AA-	35,407	171	—	35,578
From A+ to BB	109,001	1,453	—	110,454
From BB- to B-	37,089	8,262	—	45,351
CCC and below	2,189	1,680	5,761	9,630
Total exposure B	183,686	11,566	5,761	201,013
Impairment losses C	382	483	2,204	3,069

Exposure and loan-loss reserves by stage
EUR million
	2024
Credit quality A	Stage 1	Stage 2	Stage 3	Total
From AAA to AA-	35,347	110	—	35,457
From A+ to BB	104,197	1,124	—	105,321
From BB- to B-	37,413	8,844	—	46,257
CCC and below	2,084	3,199	6,618	11,901
Total exposure B	179,041	13,277	6,618	198,936
Impairment losses C	340	570	2,953	3,863

A. Detail of credit quality ratings calculated for Group management

purposes. Excluding the SCIB branches business

B. Total exposure includes loan balances (drawn amounts) and off

balance (letters of credit + guarantees) and excludes REPOs, FV

portfolio, trading portfolio and undrawn commitments.

C. Includes provisions for undrawn authorized lines (loan commitments).

From the information detailed above, Banco Santander,

S.A. reaches a total gross exposure of EUR 353,957

million in the heading of financial assets at amortized

cost (see note 6 and 10) and EUR 149,881 million in loan

commitments granted for off-balance sheet exposures

(see note 31) Impairment losses amount to EUR 3,113

and EUR 179 million, respectively. (The amount of losses

due to impairment of off-balance sheet exposures

includes the coverage of financial guarantees and other

commitments granted in addition to the aforementioned

loan commitments).

For the estimation of the expected losses, the

prospective information is taken into account.

Specifically, Santander Spain considers three

macroeconomic scenarios, which are updated

periodically. The projected evolution for a period of five

years of the main macroeconomic indicators used by

Santander Spain for estimating expected losses as of

2025, is presented below:

	2026-2030
Variables	Pessimistic scenario	Base scenario	Optimistic scenario
Interest rate	2.7%	2.5%	2.3%
Unemployment rate	12.1%	9.7%	8.2%
Housing price change	3.3%	4.1%	4.7%
GDP growth	0.2%	1.6%	2.4%

198

Each macroeconomic scenarios is associated with a given

weight. As for its allocation, Santander Spain associates

the Base scenario with the highest weight, while

associating the lower weights to the most extreme

scenarios:

	2025	2024
Pessimistic scenario	30%	30%
Base scenario	40%	40%
Optimistic scenario 1	30%	30%

The sensitivity analysis of the main portfolios expected

loss to variations of +/-100 bp for the macroeconomic

variables used in the construction of the scenarios, at

December 31 2025, is as follows:

	Change in Provision
	Mortgages	Corporates	Others
GDP Growth
-100 bps	8.5%	1.1%	2.1%
+100 bps	(3.6)%	(0.9)%	(1.9)%
Housing price change
-100 bps	8.4%	1.5%	3.4%
+100 bps	(6.7)%	(0.7)%	(1.8)%
Unemployment rate
-100 bps	(6.0)%	(1.5)%	(3.7)%
+100 bps	14.7%	1.8%	4.7%

To determine Stage 2 classification, Santander Spain

applies quantitative criteria based on identifying

increases in the lifetime PD of an exposure above a

relative or absolute threshold. The threshold differs by

portfolio depending on the characteristics of the

exposures, and an exposure is considered to exceed the

threshold when its lifetime PD increases by a set amount

compared with the PD at initial recognition. Santander

Spain calibrates these thresholds periodically, as

described in previous paragraphs. In addition, Santander

Spain applies a backstop to the relative threshold across

all portfolios. As a result, Santander Spain classifies

contracts as Stage 2 when their current PD has increased

by more than two times compared with the PD at

origination.

Santander Spain also considers specific qualitative

criteria that indicate a significant increase in credit risk,

regardless of how the PD has evolved since initial

recognition. Among other criteria, Santander Spain

considers that an exposure shows a significant increase

in credit risk when it is more than 30 days past due or

when its early warning system so determines.

4. Other credit risk aspects

4.1. Credit risk by activity in the financial markets

This section covers credit risk from treasury, with money

market financing and counterparty risk products to

satisfy the needs of customers (especially credit

institutions) and the Group and the Bank.

Counterparty credit risk is defined as the risk that could

arise from a total or partial failure to meet the financial

obligations entered into with the entity, because a

customer may default before the final settlement of the

transaction’s cash flows. This risk usually increases the

longer the period between the trade date and the

settlement date. It is a bilateral credit risk that can affect

both parties to the transaction, and its magnitude is

uncertain, as it depends on volatile market factors.

Within counterparty credit risk exposure, an additional

risk known as wrong-way risk may arise. It occurs when

exposure to a portfolio or counterparty increases at the

same time as its credit quality deteriorates. In other

words, wrong-way risk exists when default risk

increases and, as a result, the exposure to the

counterparty also increases. Santander has specific

models to measure and control this risk.

Settlement risk arises when the settlement of a

transaction involves a bilateral exchange of flows or

assets between two counterparties. For example, when

a counterparty buys dollars in exchange for euros,

settlement involves one party delivering euros and

receiving an equivalent amount of dollars from the

other. Settlement risk is the risk that one of the parties

fails to meet its settlement obligations. We have also

developed a global infrastructure and specific models to

measure this risk.

To manage and control counterparty risk, it is essential

to have an infrastructure that allows measuring current

and potential exposure at different levels of aggregation

and granularity in an agile and dynamic way, ensuring

the generation of reports with sufficient detail to

facilitate the understanding of exposures and the

decision-making process.

To measure exposure, Grupo Santander follows two

methodologies: mark-to-market (MtM or replacement

value in derivatives) plus potential future exposure (add-

on), and Monte Carlo simulation for calculating exposure

for some countries and products. Additionally, Santander

calculates capital at risk or unexpected loss, which is the

loss that constitutes economic capital net of guarantees

and recoveries, after deducting the expected loss.

199

After market close, Grupo Santander recalculates

exposures by adjusting all operations to their new time

horizon, adapting the potential future exposure and

applying mitigation measures (netting, collateral, among

others), so that exposures can be controlled daily against

the limits approved by senior management within the

risk appetite. Santander performs risk control through a

real-time integrated system, which allows the Group to

know at any moment the available exposure limit with

any counterparty, in any product and term, and across all

subsidiaries.

Grupo Santander runs monthly stress tests on

derivatives portfolios and securities financing

transactions (SFT). These exercises form an integral part

of the counterparty credit risk management process.

They allow us to assess the resilience of exposures

under adverse scenarios and support appropriate

identification, measurement and control of the

associated risks.

4.2. Concentration risk

Concentration risk control is an essential aspect of Grupo

and Banco Santander's management. The Group and the

Bank continuously monitors the level of concentration in

its credit risk portfolios applying various criteria:

geographic areas and countries, economic sectors and

groups of customers.

The board, via the risk appetite framework, determines

the maximum levels of concentration.

In line with these maximum levels and limits, the

executive risk committee establishes the risk policies

and reviews the appropriate exposure levels for the

effective management of the degree of concentration in

Santander’s credit risk portfolios.

Grupo and Banco Santander must adhere to the

regulation on large risks contained in the CRR, according

to which the exposure contracted by an entity with a

customer or group of associated customers will be

considered a large exposure when its value is equal to or

greater than 10% of eligible capital.

In addition, in order to limit large exposures, no entity

may assume exposures exceeding 25% of its eligible

capital with a single customer or group of associated

customers, having factored in the credit risk mitigation

effect contained in the regulation.

At the end of December, after applying risk mitigation

techniques, no group reaches the above-mentioned

thresholds.

Regulatory credit exposure with the 20 largest groups

within the scope of large risks represented 5.3% of the

outstanding credit risk with customers (lending to

customers plus off-balance sheet risks) as of December

2025. While the regulatory credit exposure with the 40

largest groups represents 8.4% of the credit risk.

The detail, by activity and geographical area of the

Group's risk concentration at 31 December 2025 is as

follows:

200

EUR million
	2025 A
	Total	Spain	Other EU countries	America	Rest of the world
Central banks and Credit institutions	326,316	61,256	71,853	119,532	73,675
Public sector	267,765	82,131	62,620	109,109	13,905
Of which:
Central government	239,153	66,479	57,468	101,768	13,438
Other central government	28,612	15,652	5,152	7,341	467
Other financial institutions (financial business activity)	207,044	16,301	50,819	101,600	38,324
Non-financial companies and individual entrepreneurs (non- financial business activity) (broken down by purpose)	447,496	103,836	94,760	188,078	60,822
Of which:
Construction and property development	20,322	4,130	2,090	9,396	4,706
Civil engineering construction	5,128	1,835	1,740	1,468	85
Large companies	291,515	53,841	63,635	127,003	47,036
SMEs and individual entrepreneurs	130,531	44,030	27,295	50,211	8,995
Households – other (broken down by purpose)	543,928	88,602	98,262	142,560	214,504
Of which:
Residential	333,552	61,818	27,030	46,605	198,099
Consumer loans	192,746	19,784	69,670	87,491	15,801
Other purposes	17,630	7,000	1,562	8,464	604
Total	1,792,549	352,126	378,314	660,879	401,230

A. For the purposes of this table, the definition of risk includes the following items in the public balance sheet: 'Loans and advances to credit institutions', 'Loans

and advances to Central Banks', 'Loans and advances to Customers', 'Debt securities', 'Equity Instruments', 'Trading Derivatives', 'Hedging derivatives',

'Investments and financial guarantees given'.

201

The same information in the previous table referring to Banco Santander, S.A. it is presented below:

EUR million
	2025 A
	Total	Spain	Other EU countries	America	Rest of the world
Central banks and Credit institutions	217,775	78,878	62,473	45,966	30,458
Public sector	130,438	63,072	44,153	15,173	8,040
Of which:
Central government	110,899	47,550	40,218	15,150	7,981
Other central government	19,539	15,522	3,935	23	59
Other financial institutions (financial business activity)	243,923	57,011	53,837	68,533	64,542
Non-financial companies and individual entrepreneurs (Non- financial business activity) (broken down by purpose)	212,496	92,836	41,938	40,760	36,962
Of which:
Construction and property development	3,823	3,055	749	18	1
Civil engineering construction	3,433	1,835	909	604	85
Rest of purposes	205,240	87,946	40,280	40,138	36,876
Large companies	167,555	50,996	40,185	39,560	36,814
SMEs and individual entrepreneurs	37,685	36,950	95	578	62
Households – other (broken down by purpose)	78,720	76,883	491	710	636
Of which:
Residential	60,863	59,377	426	485	575
Consumer loans	10,795	10,722	8	29	36
Other purposes	7,062	6,784	57	196	25
Total	883,352	368,680	202,892	171,142	140,638

A. For the purposes of this table, the definition of risk includes the following items in the public balance sheet: 'Loans and advances to credit institutions', 'Loans

and advances to Central Banks', 'Loans and advances to Customers', 'Debt securities', 'Equity Instruments', 'Trading Derivatives', 'Hedging derivatives',

'Investments and financial guarantees given'.

4.3 Sectors identification and management

Grupo and Banco Santander conduct a quarterly review

of exposure to customers operating in sectors that could

be more affected by macroeconomic conditions (energy

consumption, commodity prices, and key

macroeconomic variables). This monitoring is

complemented by the use of internal tools that allow

projecting the behaviour and evolution of clients in each

sector under different macroeconomic scenarios.

Additionally, this process considers, among other things,

the following information at the sector level:

• Market information: Industries’ stock market

performance.

• Analysts’ EBITDA forecasts for the coming years.

• Internal information: Changes in credit exposure,

defaults (in different timelines) and stagings.

• Our industry experts’ opinion, based on specific

details about our exposures and our relationships

with customers.

The Group, and therefore the Bank, continued to

strengthen our ability to analyse potential losses at the

highest possible level of granularity by enhancing the

methodology and sector projection tools, based on the

resilience of each company’s financial statements under

different macroeconomic scenarios.

4.4. Sovereign risk and exposure to other public sector

entities

Sovereign risk arises from central bank transactions

(including regulatory cash reserves), government bonds

issued by the Treasury or equivalent bodies (public debt

portfolio), and transactions with public-sector entities

funded exclusively by a state’s budget revenues and with

no commercial activity.

202

Grupo and Banco Santander's The standard historically

applied by Grupo Santander differs from the one used by

the EBA in its periodic stress tests. The most significant

differences are that the EBA’s approach does not include

deposits with central banks, exposures held in insurance

companies, or indirect exposures through guarantees or

other instruments. By contrast, it does include public

administrations more broadly (including regional and

local authorities), and not only those of the central

government.

Grupo and Banco Santander continue to track and

manage transactions with sovereign risk based on

available information, such as reports by rating agencies

and international organizations. Grupo and Banco

Santander monitor each country where the Group and

the Bank have cross-border¹ and sovereign risk. The

Group and the Bank analyse events that could affect the

country’s political or institutional stability and assign its

government or central bank a credit rating. This helps us

set limits for transactions with sovereign risk.

Over recent years, total sovereign risk exposure has

remained in line with regulatory requirements and the

strategy defined for managing this portfolio. Changes in

exposure across countries reflect the liquidity

management strategy and hedging of interest rate and

foreign exchange risk. International exposure is

diversified across countries with different

macroeconomic expectations and, consequently,

different growth, interest rate and exchange rate

scenarios..

At the end of December 2025, Grupo and Banco

Santander´s local sovereign exposure, in currencies other

than the official currency of the country of issuance, is

not significant (EUR 4,908 million, 1.2% of total

sovereign risk) according to our management criteria.

Furthermore, exposure to non-local sovereign issuers

involving cross-border risk is even less significant2EUR

17,002 million, 4.0% of total sovereign risk).

Sovereign exposure in Latin America is mostly in local

currency, and is recognised in the local accounts and

concentrated in short- term maturities.

¹  Risks with domestic public or private borrowers in foreign currency and

originated outside the country.

²    Countries that are not considered low risk by Banco de España.

Our investment strategy for sovereign risk considers

country’s credit quality to set the maximum exposure

limits. The following table shows the percentage of

exposure by rating^A:

	2025	2024
AAA	18%	21%
AA	17%	18%
A	43%	41%
BBB	14%	11%
Less than BBB	9%	9%

A.    Internal ratings are applied.

203

Sovereign exposure at the end of December 2025 is

shown in the table below (data in million euros):

	2025						2024
	Portfolio
Country	Financial assets held for trading and Financial assets designated as FV with changes in results	Financial assets at fair value through other comprehensive income	Financial assets at amortised cost	Non-trading financial assets mandatorillly at fair value through profit or loss	Total net direct exposure		Total net direct exposure
Spain	3,852	112	58,044	—	62,008		56,293
Portugal	(659)	1,199	6,767	—	7,307		7,652
Italy	2,875	440	12,557	—	15,872		12,915
Greece	—	—	—	—	—		—
Ireland	(38)	—	—	—	(38)		—
Rest Eurozone	3,684	254	10,443	—	14,381		6,212
UK	907	1,001	5,687	—	7,595		8,772
Poland	1,141	6,339	13,333	—	20,813		14,286
Rest of Europe	8	—	526	—	534		954
US	4,783	4,320	15,943	—	25,046		24,926
Brazil	8,089	9,533	8,543	—	26,165		26,641
Mexico	10,663	7,652	7,599	—	25,914		21,642
Chile	676	2,666	5,254	—	8,596		6,900
Rest of America	2,593	1,654	2,151	—	6,398		4,431
Rest of the World	211	17	4,128	—	4,356		7,003
TOTAL	38,785	35,187	150,975	—	224,947		198,627

204

5. Forborne loan portfolio

The customer debt redirection policy incorporates the

regulatory requirements of the EBA guidelines on the

management of non-performing exposures, refinancing

and restructuring. This policy acts as a reference for the

transposition in our subsidiaries and shares the

applicable supervisory expectations.

This policy also sets down rigorous criteria for

evaluating, classifying and monitoring forbearances to

support the strictest possible care and diligence in

recovering due amounts. Thus, it dictates that Grupo and

Banco  Santander must adapt payment obligations to

customers' current circumstances. Our forbearance

policy also defines classification criteria to support Grupo

and Banco Santander recognize risks appropriately.

Forbearances must remain classified as non-performing

or in watch-list for a prudential period for reasonable

certainty of repayment. In no case will repayments be

used to delay the immediate recognition of losses or so

that their use distorts the timely recognition of the risk

of non-payment.

At 31 December 2025, forbearance stock fell again and

stood at EUR 25,235 million, due to the good payment

behaviour in the main geographies. In terms of credit

quality, 53% of the loans is classified as credit impaired,

with a coverage ratio of 41%. In addition, 47% of the

portfolio is classified as performing.

The following terms are used with the meanings

specified below:

• Refinancing transaction: transaction that is granted

or used, for reasons relating to current or

foreseeable financial difficulties of the borrower, to

repay one or more of the transactions granted to it,

or through which the payments on such transactions

are brought fully or partially up to date, in order to

enable the borrowers of the cancelled or refinanced

transactions to repay their debt (principal and

interest) because they are unable, or might

foreseeably become unable, to comply with the

conditions there of in due time and form.

• Restructured transaction: transaction with respect to

which, for economic or legal reasons relating to

current or foreseeable financial difficulties of the

borrower, the financial terms and conditions are

modified in order to facilitate the payment of the

debt (principal and interest) because the borrower is

unable, or might foreseeably become unable, to

comply with the aforementioned terms and

conditions in due time and form, even if such

modification is envisaged in the agreement.

205

Current refinancing and restructuring balances
Amounts in EUR million, except number of transactions that are in units
	2025
	Total							Of which, non-performing/Doubtful
	Without real guarantee		With real guarantee					Without real guarantee		With real guarantee
					Maximum amount of the actual collateral that can be considered		Impairment of accumulated value or accumulated losses in fair value due to credit risk					Maximum amount of the actual collateral that can be considered		Impairment of accumulated value or accumulated losses in fair value due to credit risk
	Number of transactions	Gross amount	Number of transactions	Gross amount	Real estate guarantee	Rest of real guarantees		Number of transactions	Gross amount	Number of transactions	Gross amount	Real estate guarantee	Rest of real guarantees
Credit entities	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Public sector	14	6	9	7	5	—	8	5	2	9	7	5	—	8
Other financial institutions and: individual shareholder	933	94	462	182	117	15	94	579	50	259	75	22	11	89
Non-financial institutions and individual shareholder	489,192	5,095	42,700	5,596	3,271	923	2,713	296,008	2,901	26,767	2,585	1,166	420	2,420
Of which financing for constructions and property development	249	21	523	739	695	4	75	167	3	264	156	115	4	50
Other warehouses	3,000,071	4,556	515,253	9,699	3,752	3,777	3,665	1,620,343	2,401	296,470	5,313	1,730	2,232	2,991
Total	3,490,210	9,751	558,424	15,484	7,145	4,715	6,480	1,916,935	5,354	323,505	7,980	2,923	2,663	5,508
Financing classified as non-current assets and disposable groups of items that have been classified as held for sale	13,499	261	4,630	566	406	14	171	6,901	120	1,720	235	110	5	145

206

The same information in the previous table referring to Banco Santander, S.A. it is presented below:

Current refinancing and restructuring balances
Amounts in EUR million, except number of transactions that are in units
	2025
	Total							Of which, non-performing/Doubtful
	Without real guarantee		With real guarantee					Without real guarantee		With real guarantee
					Maximum amount of the actual collateral that can be considered		Impairment of accumulated value or accumulated losses in fair value due to credit risk					Maximum amount of the actual collateral that can be considered		Impairment of accumulated value or accumulated losses in fair value due to credit risk
	Number of transactions	Gross amount	Number of transactions	Gross amount	Real estate guarantee	Rest of real guarantees		Number of transactions	Gross amount	Number of transactions	Gross amount	Real estate guarantee	Rest of real guarantees
Credit entities	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Public sector	9	3	1	1	1	—	—	3	—	1	1	1	—	—
Other financial companies and sole proprietorships (financial business activity)	122	52	53	166	114	11	(52)	55	10	31	62	20	10	(47)
Non-financial corporations and sole proprietorships (non-financial business activity)	19,801	1,882	3,893	1,594	783	186	(791)	11,790	925	2,633	965	414	97	(731)
Of which, financing for construction and real estate development (including land)	3	—	72	41	38	3	(10)	3	—	40	25	21	3	(9)
Other warehouses	11,930	151	10,917	649	594	3	(194)	3,382	42	5,971	368	328	2	(157)
Total	31,862	2,087	14,864	2,410	1,491	199	(1,037)	15,230	977	8,636	1,397	763	108	(935)
Financing classified as non-current assets and disposable groups of items that have been classified as held for sale	—	—	—	—	—	—	—	—	—	—	—	—	—	—

207

In 2025, the amortised cost of financial assets owned by

the Bank whose contractual cash flows were modified

during the year when the corresponding loss adjustment

was valued at an amount equal to the expected credit

losses over the life of the asset amounted to EUR 178

million (EUR 291 million in 2024), without these

modifications having a material impact on the income

statement. Also, during 2025, the total of financial

assets owned by the Bank that have been modified since

the initial recognition, and whose correction for expected

loss has gone from being valued during the entire life of

the asset to the following twelve months, amounts to

EUR 966 million (EUR 1,746 million in 2024).

The transactions presented in the foregoing tables were

classified at 31 December 2025 by nature, as follows:

• Credit impaired: Operations that rest on an

inadequate payment scheme will be classified within

the non-performing category, regardless they

include contract clauses that delay the repayment of

the operation throughout regular payments or

present amounts written off the balance sheet for

being considered irrecoverable.

• Performing: Operations not classifiable as non-

performing will be classified within this category.

Operations will also be classified as normal if they

have been reclassified from the non-performing

category for complying with the specific criteria

detailed below:

a A period of a year must have passed from the

refinancing or restructuring date.

b The owner must have paid for the accrued

amounts of the capital and interests, thus

reducing the rearranged capital amount, from the

date when the restructuring of refinancing

operation was formalised.

c The owner must not have any other operation

with amounts past due by more than 90

consecutive days of material delay on the date of

the reclassification to the normal risk category.  

Attending to the credit attention 47% of the forborne

loan transactions are classified as other than non-

performing. Particularly noteworthy are the level of

existing guarantees ( 47% of transactions are secured by

collateral) and the coverage provided by specific

allowances (representing 26% of the total forborne loan

portfolio and 41% of the non-performing portfolio).

c) Market, structural and liquidity risk

1. Activities subject to market risk and types of

market risk

Activities exposed to market risk encompass transactions

where risk is assumed as a consequence of potential

changes in interest rates, inflation rates, exchange rates,

stock prices, credit spreads, commodity prices, volatility

and other market factors; the liquidity risk from our

products and markets, and the balance-sheet liquidity

risk. Therefore, they include trading risks and structural

risks.

• Interest rate risk arises from movements in interest

rates that reduce the value of a financial instrument,

a portfolio or the Group or the Bank . It can affect

loans, deposits, debt securities, most assets and

liabilities held for trading, and derivatives.

• Inflation rate risk arises from movements in

inflation that can reduce the value of a financial

instrument, a portfolio or the Group or the Bank. It

can affect loans, debt securities and derivatives (e.g.

inflation swaps and futures) whose profitability is

linked to inflation.

• Exchange rate risk is the possibility of loss because

the currency of a long or open position will

depreciate against the base currency. It can affect

debt in subsidiaries whose local currency is not the

euro, as well as loans denominated in a foreign

currency.

• Equity risk is the possibility of loss from open

positions in securities if their market price or

expected future dividends fall. It affects shares, stock

market indices, convertible bonds and derivatives

with shares as the underlying asset (put, call, equity

swaps, etc.).

• Credit spread risk is the possibility of loss from open

positions in fixed-income securities or credit

derivatives if their yield curve, or the recovery rate of

their issuer or type change. A spread is the yield

difference between financial instruments against a

benchmark (e.g. the internal rate of return (IRR) of

government bonds and interbank interest rates).

• Commodity price risk is the possibility of loss from

movements in commodity prices. Grupo and Banco

Santander's commodity exposure is minor and stems

mainly from commodity derivatives.

• Volatility risk is the possibility of loss caused by

movements in interest rates, exchange rates, the

stock market, credit spreads and other risk factors

affecting portfolio value. It is inherent to all financial

instruments whose value considers volatility

(especially options contracts).

208

Derivative contracts (such as options, futures, forwards

and swaps) can mitigate market risks partially or fully.

Additionally, other more complex coverage market risks

are considered, such as correlation risk, market liquidity

risk, prepayment or cancellation risk and subscription

risk .

• Correlation risk is the possibility of loss due to an

adverse correlation between risk variables that affect

portfolio value. Risk variables could be the same (e.g.

two FX rates) or different (e.g. an interest rate and a

commodity price).

• Market liquidity risk is the possibility that fewer

market makers or institutional investors, a large

number of transactions, market instability and other

factors will cause the Group or a subsidiary to exit a

position at a worse market price or trade cost.

Exposure to different products and currencies can

also increase this risk.

• Pre-payment or cancellation risk originates when

mortgages, deposits and other on-balance-sheet

instruments give holders the option to buy or sell

them, thus altering future cash flows. Potential

mismatches on the balance sheet pose a risk since

cash flows may have to be reinvested at an interest

rate that is potentially lower (assets) or higher

(liabilities).

• Underwriting risk is the possibility that the bank will

have to hold part of a debt issue it has underwritten

or agreed to place if it cannot all be placed among

potential buyers.

Balance sheet liquidity risk (unlike market liquidity risk)

is the possibility of loss caused by forced disposal of

assets or cash flow imbalance if the bank meets its

payment obligations late or at excessive cost. It can

cause losses by forced asset sales or impacts on margins

due to the mismatch between expected cash inflows and

outflows.

Pension and actuarial risks (explained at the end of this

section) also depend on market variables.

Grupo and Banco Santander aim to comply with the

Basel Committee’s Fundamental Review of the Trading

Book (FRTB) and the EBA’s Guidelines on the

management of interest rate risk arising from non-

trading book activities. The purpose of several projects

Grupo Santander runs is to provide risk control managers

and teams with the best market risk management tools

under the right governance framework for the models

Grupo Santander uses for metric reporting; and to

comply with regulation on the risks mentioned above.

2. Trading market risk management

Setting market risk limits in a dynamic process according

to the risk appetite in the annual limits plan prepared by

senior management and extended to all subsidiaries.

The standard methodology for risk management and

control in trading, measures the maximum expected loss

with a specific level of confidence and time frame. The

standard for historical simulation is a confidence level of

99% over one day.

Grupo and Banco Santander apply statistical

adjustments efficiently to incorporate recent

developments affecting our levels of risk. Our time

frame is two years or at least 520 days from the

reference date of the VaR calculation.

The balance sheet items in the Group’s consolidated

position that are subject to market risk are shown below,

distinguishing those positions for which the main risk

metric is VaR from those for which risk monitoring is

carried out using other metrics:

209

EUR million
		Main market risk metric
	Balance sheet amount	VaR	Other	Main risk factor for 'Other' balance
Assets subject to market risk
Cash, cash balances at central banks and other deposits on demand	152,281		152,281	Interest rate
Financial assets held for trading	252,318	252,318
Non-trading financial assets mandatorily at fair value through profit or loss	7,761	5,815	1,946	Interest rate, spread
Financial assets designated at fair value through profit or loss	8,046	—	8,046	Interest rate, spread
Financial assets designated at fair value through other comprehensive income	74,612	2,281	72,331	Interest rate, spread
Financial assets at amortized cost	1,202,689		1,202,689	Interest rate, spread
Hedging derivatives	3,931		3,931	Interest rate, exchange rate
Changes in the fair value of hedged items in portfolio hedges of interest risk	50		50	Interest rate
Other assets	165,827
Total assets	1,867,515
Liabilities subject to market risk
Financial liabilities held for trading	171,546	171,546
Financial liabilities designated at fair value through profit or loss	42,148	—	42,148	Interest rate, spread
Financial liabilities at amortized cost	1,421,184		1,421,184	Interest rate, spread
Hedging derivatives	4,248		4,248	Interest rate, exchange rate
Changes in the fair value of hedged items in portfolio hedges of interest rate risk	49		49	Interest rate
Other liabilities	115,592
Total liabilities	1,754,767
Equity	112,748

210

The following table displays the latest and average VaR

values at 99% by risk factor over the last three years. It

also shows the minimum and maximum VaR values in

2025 and 97.5% ES at the end of December 2025:

VaR statistics and expected shortfall by risk factorA
EUR million. VaR at 99% and ES at 97.5% with one day time horizon
	2025						2024
	VaR (99%)				ES (97.5%)		VaR
	Min	Average	Max	Latest	Latest		Average	Latest
Total Trading	9.6	17.6	29.2	18.7	16.9		17.1	18.7
Diversification effect	(10.7)	(21.0)	(59.3)	(17.7)	(18.9)		(19.8)	(27.3)
Interest rate	11.2	16.5	23.0	15.3	16.4		17.0	20.2
Equities	2.4	6.5	10.8	8.1	7.5		6.0	9.5
Exchange rate	3.3	7.4	37.5	6.3	5.8		5.8	5.9
Credit spread	3.2	5.7	10.2	4.8	4.8		4.9	5.3
Commodities	0.2	2.5	7.0	1.9	1.3		3.2	5.1
Total Europe	9.6	15.0	28.2	13.2	13.2		12.7	16.0
Diversification effect	(8.9)	(18.0)	(32.4)	(15.9)	(17.8)		(15.4)	(18.4)
Interest rate	9.0	13.3	19.2	11.4	13.3		12.0	14.4
Equities	2.7	6.4	11.0	7.4	7.1		5.9	8.8
Exchange rate	3.7	7.3	19.7	5.3	5.7		5.1	5.8
Credit spread	3.0	5.8	10.4	4.9	4.8		4.9	5.3
Commodities	0.1	0.2	0.3	0.1	0.1		0.2	0.1
Total North America	3.7	5.8	8.9	5.5	5.3		6.9	6.4
Diversification effect	(0.4)	(1.7)	(6.3)	(1.6)	(1.8)		(1.1)	(0.8)
Interest rate	3.8	5.9	8.8	4.8	4.9		6.9	6.6
Equities	0.1	0.8	3.2	1.0	1.0		0.2	0.1
Exchange rate	0.2	0.8	3.2	1.3	1.2		0.9	0.5
Total South America	3.2	7.6	16.5	5.8	5.9		9.0	9.5
Diversification effect	(0.3)	(5.2)	(28.7)	(8.7)	(6.2)		(6.9)	(5.5)
Interest rate	2.8	7.2	18.1	4.0	3.8		8.8	6.5
Equities	0.2	1.5	7.2	2.2	2.3		1.2	2.1
Exchange rate	0.4	1.6	12.9	6.5	4.7		2.7	1.3
Commodities	0.1	2.5	7.0	1.8	1.3		3.2	5.1

A. In South and North America, VaR levels of credit spreads and commodities are not shown separately due to their low or null materiality.

VaR at the end of December (EUR 18.7 million was only

EUR 0.03 million compared to the end of 2024,

reflecting sustained high market volatility, ongoing

geopolitical risk and concerns over inflation trends,

which could pick up again as a result of new US trade

policies.

By risk factor, average VaR (EUR 17.6 million was hig her

across several risk factors, especially for foreign

exchange, with high market volatility for certain

currencies such as the US dollar and the Argentine peso.

Temporary spikes in VaR across the different factors

generally reflect isolated increases in market price

volatility rather than significant changes in positions.

By region, average VaR was higher than the 2024

average in Europe, mainly due to interest rate and

foreign exchange risk factors, while it was lower in North

America and South America.

211

Backtesting

Actual losses can differ from predicted losses because of

the VaR’s limitations. The Bank and the Group measures

the accuracy of the VaR calculation model to make sure it

is reliable. The most important tests Grupo Santander

and Banco run involve backtesting:

• In hypothetical P&L backtesting and for the total

portfolio, two exceptions (a daily loss higher than

VaR or a daily gain higher than VaE) were observed in

2025 for VaR at a 99% confidence level, on 9 and 11

April, as a result of high market volatility, mainly

driven by uncertainty over the potential impact of

new US trade policies

• The exceptions observed in the past year are

consistent with the assumptions of the VaR calculation

model.

3. Structural balance sheet risks

3.1. Main aggregates and variations

Consistent with previous years, the market risk profile of

Grupo and Banco Santander’s balance sheet remained

moderate in 2025 in terms of asset, shareholders’ equity

and NII volumes, each subsidiaries.

Each subsidiary’s finance division manages interest rate

risk from commercial banking and is responsible for

handling structural risk from interest rate fluctuations.

To measure interest rate risk, Grupo Santander uses

statistical models based on strategies to mitigate

structural risk with interest-rate instruments (such as

bonds and derivatives) to keep risk profile within risk

appetite.

The NII and EVE sensitivities below are based on

scenarios of parallel interest rate movements from -100

to +100 basis points.

Structural VaR

With such a homogeneous metric as VaR, Grupo

Santander can fully monitor market risk in the banking

book (excluding CIB trading activity). The Bank

differentiates fixed income based on interest rates and

credit spreads in ALCO portfolios, FX rates and shares.

In general, the structural VaR of Grupo and Banco

Santander total assets and equity is minor.

Structural VaR
EUR million. Structural VaR 99% with a temporary horizon of one day.
	2025					2024
	Minimum	Average	Maximum		Latest	Average	Latest
Structural VaR	598.5	662.9	751.9		690.1	747.7	687.5
Diversification effect	(155.9)	(258.4)	(265.6)		(206.6)	(386.4)	(268.6)
VaR Interest Rate A	158.3	177.3	205.8		177.6	412.0	235.2
VaR Exchange Rate	486.0	597.7	648.7		572.4	571.7	594.4
VaR Equities	110.1	146.3	163.0		146.7	150.4	126.5

A. Includes credit spread VaR on ALCO portfolios.

Structural interest rate risk:

– Europe

At the end of December, net interest income (NII) for our

main balance sheets showed positive sensitivity to

interest rate increases. As of the same date, the

economic value of equity (EVE) showed negative

sensitivity to interest rate increases.

At the end of December 2025, under the scenarios

previously described, the most significant NII sensitivity

risk was concentrated in the euro, at EUR 561 million;

the pound sterling, EUR 169 million; the Polish złotyr,

EUR 51 million; and the US dollar, EUR 50 million , all

linked to interest rate cut risk.

212

The most significant risk to the economic value of equity

was concentrated in the euro yield curve, at EUR

1,087 million; in pound sterling, at EUR 614 million; the

Polish złoty, at EUR 275 million euros; and the US dollar,

at EUR 104 million euros, all linked to interest rate rise

risk.

Exposure was moderate in relation to annual budget and

capital levels in 2025.

– North America

At the end of December, net interest income (NII) for our

North America balance sheets showed positive

sensitivity to interest rate increases in the United States,

while showing negative sensitivity to the same scenario

in Mexico. In both cases, the economic value of equity

(EVE) showed negative sensitivity to interest rate

increases.

Exposure was moderate in relation to annual budget and

capital levels in 2025.

At the end of December 2025, significant risk to NII was

mainly in the US and amounted to EUR 49 million.

The most significant risk to EVE was in the US and

amounted to EUR 570 million.

– South America

EVE and NII on our main South American balance sheets

are generally positioned for interest rate cuts.

In 2025, exposure across all countries remained

moderate in relation to the annual budget and capital

levels.

At the end of December, the most significant risk to NII

was mainly in Brazil (EUR 57 million).

Most significant risk to EVE was recorded in Brazil (EUR

257 million) and in Chile (EUR 225 million).

Structural foreign currency rate risk/results hedging

Grupo Santander's structural FX risk stems mainly from

the income and hedging of foreign currency transactions

for permanent financial investments. In the dynamic

management of this risk, Grupo Santander aims to limit

the impact of FX rate movements on the core capital

ratio. In 2025, the hedged of the different currencies that

have an impact on our core capital ratio was close to

100%.

In December 2025, the largest permanent exposures

(with their potential impact on equity) were, in this

order, in pound sterling, US dollars, Brazilian reais,

Mexican pesos, Polish zlotys and Chilean pesos.

Grupo and Banco Santander use FX derivatives to hedge

part of those permanent positions. The Finance division

manages FX risk and hedging for the expected profits

and dividends of subsidiaries whose base currency is not

the euro.

Structural equity risk

Grupo Santander holds equity positions in its banking

and trading books. They are either equity instruments or

stock, depending on the share of ownership or control.

At the end of December 2025, the equities and

shareholdings in the banking book were diversified

among Spain, China, Morocco, Poland and other

countries. Most of them invest in the financial and

insurance sectors. Grupo Santander has minor equity

exposure to property and other sectors.

Structural equity positions are exposed to market risk.

The Group calculates its VaR with a set of market prices

and proxies. At the end of the year 2025, VaR at a 99%

confidence level over a one-day horizon was EUR

147 million (EUR 127 million in 2024).

3.2.Methodologies

Structural interest rate risk

The Group and the Bank measure the potential impact of

interest rate movements on EVE and NII. Because

changing rates may generate impacts, Grupo Santander

must manage and control many subtypes of interest rate

risk, such as repricing risk, curve risk, basis risk and

option risk (e.g. behavioural or automatic).

Interest rate risk in the balance sheet and market

conditions and outlooks could necessitate certain

financial measures to achieve Group and Bank’s desired 

risk profile (such as selling positions or setting interest

rates on products markets).

The metrics uses to monitor IRRBB include NII and EVE

sensitivity to interest rate movements.

• Net interest income sensitivity

Net interest income (NII) is the difference between

interest income from assets and the interest cost of

liabilities in the banking book over a typical one- to

three-year horizon (one year being standard in Grupo

Santander). Because NII sensitivity is the difference in

income between a selected scenario and the base

scenario, its values can be as many as considered

scenarios. It enables us to see short-term risks and

supplement economic value of equity (EVE) sensitivity.

• Economic value of equity sensitivity

Economic value of equity (EVE) is the difference between

the current value of all assets minus the current value of

all liabilities in the banking book. It does not include

shareholders’ equity and non-interest-bearing

instruments. The sensitivity of the economic value of

own funds is obtained as the difference between said

economic value calculated with a selected scenario and

that calculated with a base scenario.

213

Because EVE sensitivity is the difference in EVE between

a selected scenario and the base scenario, it can have as

many values as considered scenarios. It enables us to

see long-term risks and supplement NII sensitivity.

Structural exchange-rate risk/hedging of results

Every day, Grupo Santander measures FX positions, VaR

and P/L.

Structural equity risk

Grupo Santander measures equity positions, VaR and P/

L.

4. Liquidity risk

Structural liquidity management aims to fund the Group

and the Bank’s recurring activity optimising maturities

and costs, while avoiding taking on undesired liquidity

risks.

Grupo and Banco Santander’s liquidity management is

based on the following principles:

• Define liquidity risk and provide detailed

assessments of current and emerging material

liquidity risks.

• Define liquidity risk metrics, review and challenge

liquidity risk appetite and limits on first line of

defence proposals.

• Evaluates and challenges commercial/business

proposals; It provides senior management and

business units with the necessary elements to

understand the liquidity risk of Santander's

businesses and operations.

• Supervise the liquidity risk management of the first

line of defence and assess the permanence of

businesses within the limits of liquidity risk.

• Reports on compliance with risk appetite limits and

exceptions, if any, to governing bodies.

• Provides a consolidated view of liquidity risk

exposures and liquidity risk profile.

• Confirms the existence of adequate liquidity

procedures to manage the business within the limits

of risk appetite.

The effective application of these principles by all

institutions comprising the Group required the

development of a unique management framework built

upon three fundamental pillars:

• A solid organisational and governance model that

supports the involvement of the subsidiaries’ senior

management in decision-taking and its integration

into the Group’s global strategy. The decision-making

process for all structural risks, including liquidity and

funding risk, is carried out by local Asset and Liability

Committees (ALCOs) in coordination with the global

ALCO, which is the body empowered by the Bank's

board in accordance with the corporate Asset and

Liability Management (ALM) framework.

This governance model has been reinforced as it has

been included within Santander's Risk Appetite

Framework. This framework meets demands from

regulators and market players emanating from the

financial crisis to strengthen banks’ risk management

and control systems.

• In-depth balance sheet analysis and measurement of

liquidity risk, supporting decision-taking and its

control. The Group and Bank’s objective is to maintain

adequate liquidity levels necessary to cover its short-

and long-term needs with stable funding sources,

optimising the impact of their costs on the income

statement. Grupo and Banco Santander’s liquidity risk

management processes are contained within a

conservative risk appetite framework established in

each geographic area in accordance with its

commercial strategy. This risk appetite establishes the

limits within which the subsidiaries and, therefore, the

Bank can operate in order to achieve their strategic

objectives.

• Management adapted in practice to the liquidity needs

of each business . Every year, based on business needs,

a liquidity plan is developed which seeks to achieve:

– a solid balance sheet structure, with a diversified

presence in the wholesale markets;

– the use of liquidity buffers and limited

encumbrance of assets;

– compliance with both regulatory metrics and

other metrics included in each entity’s risk

appetite statement.

Over the course of the year, all dimensions of the plan

are monitored.

Grupo Santander continues to develop the ILAAP

(Internal Liquidity Adequacy Assessment Process), an

internal self-assessment of liquidity adequacy which

must be integrated into the Group’s other risk

management and strategic processes. It focuses on both

quantitative and qualitative matters and is used as an

input to the SREP (Supervisory Review and Evaluation

Process). The ILAAP evaluates the liquidity position both

in ordinary and stressed scenarios.

214

i. Liquidity risk measurement

Grupo Santander uses the Basel regulatory definition

and calculates a set of metrics and stress scenarios in

relation to intraday liquidity risk to maintain a high level

of management and control. On the one hand, the

regulatory liquidity metrics (LCR, NSFR) are prepared

following the regulatory criteria established in the CRR 2

and CRD IV. Regarding internal metrics, liquidity

scenarios are determined using a combination of

behavioral observation in actual liquidity crises occurred

at other banks, regulatory assumptions and expert

judgment.

a) Liquidity Coverage Ratio (LCR)

The liquidity coverage ratio (LCR) is a regulatory metric.

Its purpose is to promote the short-term resilience of a

bank’s liquidity profile and make sure it has enough

high-quality liquid assets to withstand a considerable

idiosyncratic or market stress scenario over 30 calendar

days.

b) Net Stable Funding Ratio (NSFR)

The net stable funding ratio (NSFR) is a regulatory metric

we use to measure long-term liquidity risk. It is the ratio

of available stable funding to required stable funding. It

requires banks to keep a robust balance sheet, with off-

balance-sheet assets and operations financed by stable

liabilities.

c) Liquidity buffer

The liquidity buffer is the total liquid assets a bank has to

cope with cash outflows during periods of stress. The

assets are free of encumbrances and can be used

immediately to generate liquidity without losses or

excessive discounts. The liquidity buffer is a tool for

calculating most liquidity metrics. It is also a metric with

defined limits for each subsidiary.

d) Wholesale liquidity metric

The wholesale liquidity metric measures the number of

days Grupo and Banco Santander would survive if it used

liquid assets to cover lost liquidity from a wholesale

deposit run-off (without possible renewal) over a set

time horizon. Grupo and Banco Santander also uses it as

an internal short-term liquidity metric to reduce risk

from dependence on wholesale funding.

e) Asset Encumbrance metrics

Grupo and Banco Santander calculate two metrics to

measure asset encumbrance risk. On the one hand, the

asset encumbrance ratio gives the proportion of

encumbered assets to total assets; on the other, the

structural asset encumbrance ratio gives the proportion

of encumbered assets by structural funding transaction

(namely long-term collateralized issues and credit

transactions with central banks).

f) Other additional liquidity indicators

In addition to traditional tools to measure short and

long-term liquidity and funding risk , Grupo and Banco

Santander have a set of additional liquidity indicators to

complement those and to measure other non-covered

liquidity risk factors. These include concentration

metrics, such as the main and the five largest funding

counterparties, or the distribution of funding by

maturity.

In this sense, deposits do not show a tendency towards

concentration, maintaining a stable structure at 31

December 2024, where approximately 75% are

transactional and more than 80% of retail deposits are

insured by deposit guarantee systems of the different

countries.

g) Liquidity scenario analysis

As liquidity stress tests, Grupo and Banco Santander

have five standard scenarios have been defined:

i. An idiosyncratic scenario of events detrimental only

to the Group and the Bank;

ii. a local market scenario of events highly detrimental

to a base country’s financial system or real economy;

iii. a global market scenario of events highly detrimental

to the global financial system; and

iv. combined scenario consisting of a combination of

more severe idiosyncratic and market events (local

and global) occurring simultaneously and

interactively.

v. climate scenarios where different stress cases derived

from the effects that climate change could have on

the economy are collected.

Grupo and Banco Santander use these stress test

outcomes as tools to determine risk appetite and

support business decision-making.

h) Liquidity early warning indicators

Early warning indicator system consists of quantitative

and qualitative liquidity indicators that help predict

stress situations and weaknesses in the funding and

liquidity structure of Grupo, and therefore, Banco

Santander entities. External indicators relate to market-

based financial variables; internal indicators relate to our

own performance.

i) Intraday liquidity metrics

Grupo and Banco Santander follow Basel regulation and

calculates several metrics and stress scenarios for

intraday liquidity risk to maintain a high level of control.

215

ii. Liquidity coverage ratio and net stable financing

ratio

The regulatory requirement for the LCR ratio has been

set at 100% since 2018.

Below is a breakdown of the Group's liquid assets

composition according to the criteria established in the

supervisory prudential information (Commission

Implementing Regulation (EU) 2017/2114 of 9

November 2017) for the determination of high-quality

liquid assets for the calculation of the LCR ratio (HQLA):

EUR million
	2025	2024
	Amount weighted applicable	Amount weighted applicable
High-quality liquid assets-HQLAs
Cash and reserves available at central banks	150,883	188,745
Marketable assets Level 1	173,744	150,912
Marketable assets Level 2A	5,726	4,696
Marketable assets Level 2B	7,584	6,951
Total high-quality liquid assets	337,937	351,304

EUR million
	2025	2024
High-quality liquid assets-HQLAs (numerator)	301,618	315,524
Total net cash outflows (denominator)	208,388	206,889
Cash outflows	287,044	278,760
Cash inflows	78,656	71,871
Consolidated LCR ratio (%)	145%	153%
NSFR ratio (%)	126%	126%

Since 2024, the calculation of the consolidated LCR ratio

has been updated to comply with a series of

requirements regarding asset transferability restrictions

in third countries. This new consolidated ratio includes

an adjustment whereby any excess liquidity above 100%

of LCR outflows, which is subject to transferability

restrictions (legal or operational) in third countries, is not

taken into account. This applies even if the surplus

liquidity can be used to cover additional outflows within

the country itself, which is not subject to any restrictions.

The total high-quality liquid assets differ from the high-

quality liquid assets (HQLAs) considered as the

numerator within the consolidated LCR ratio, due to the

aforementioned adjustment.

In addition, since 2024, we have been calculating a

Group LCR ratio using an internal methodology that

determines the minimum common coverage percentage

simultaneously across all the Group's markets and

considers all existing restrictions on liquidity transfers in

third countries. This methodology reflects the Group's

resilience to liquidity risk more accurately and the

internal ratio presents a level that is consistent with

what would be achieved by applying the criteria

followed until mid-2024, which did not include

restrictions on liquidity transfers between subsidiaries.

Regarding the net stable funding ratio (NSFR), its

definition was approved by the Basel Committee in

October 2014. The transposition of this requirement into

European regulation took place in June 2019 with the

publication in the Official Journal of the European Union

of Regulation (EU) 2019/876 of the European Parliament

and of the Council of 20 May 2019. The Regulation

establishes that entities must have a net stable funding

ratio, as defined in the Regulation, above 100% from

June 2021.

As for the funding structure, given the inherently

commercial nature of the Group's balance sheet, the

loan portfolio is mainly financed by customer deposits.

In note 22, 'Debt securities,' the composition of these

liabilities is presented based on their nature and

classification, the movements and maturity profile of the

debt securities issued by the Group, reflecting the

strategy of diversification by products, markets, issuers,

and terms followed by the Group in its approach to

wholesale markets.

iii.Asset encumbrance

Finally, the moderate use of assets by Grupo Santander

as collateral in the sources of structural financing of the

balance sheet should be highlighted.

In accordance with the guidelines established by the

European Banking Authority (EBA) in 2014 on committed

and uncommitted assets, the concept of assets

committed in financing transactions (asset

encumbrance) includes both on-balance sheet assets

provided as collateral in transactions to obtain liquidity

and off-balance sheet assets that have been received

and reused for similar purposes, as well as other assets

associated with liabilities for reasons other than

financing.

216

The residual maturities of the liabilities associated with

the assets and guarantees received and committed are

presented below, as of 31 of December of 2025 (EUR

billion):

Residual maturities of the liabilities	Unmatured	<=1month	>1 month <=3 months	>3 months <=12 months	>1 year <=2 years	>2 years <=3 years	3 years <=5 years	5 years <=10 years	>10 years	Total
Committed assets	24.2	50.7	14.1	38.4	38.8	29.5	37.7	36.3	36.6	306.4
Guarantees received committed	2.2	85.2	28.2	61.8	4.0	0.8	1.9	1.1	—	185.2

The reported Group information as required by the EBA

at 2025 year-end is as follows:

On-balance-sheet encumbered assets
EUR billion
	Carrying amount of encumbered assets	Fair value of encumbered assets	Carrying amount of unencumbered assets	Fair value of unencumbered assets
Loans and advances	152.5		1,149.4
Equity instruments	11.4	11.4	18.7	—
Debt securities	117.9	118.5	182.2	180.7
Other assets	23.1		212.4
Total assets	304.9		1,562.7

Encumbrance of collateral received
EUR billion
	Fair value of encumbered collateral received or own debt securities issued	Fair value of collateral received or own debt securities issued available for encumbrance
Collateral received	185.2	70.3
Loans and advances	0.5	—
Equity instruments	12.2	7.1
Debt securities	172.5	63.1
Other collateral received	—	0.1
Own debt securities issued other than own covered bonds or ABSs	1.4	1.1

Encumbered assets and collateral received and matching liabilities
EUR billion
	Matching liabilities, contingent liabilities or securities lent	Assets, collateral received and own debt securities issued other than covered bonds and ABSs encumbered
Total sources of encumbrance (carrying amount)	472.0	491.5

On-balance-sheet encumbered assets amounted to

EUR304,923 million, of which 50% are loans (mortgage

loans, corporate loans, etc.). Guarantees received

committed amounted to EUR 185,160 million, relating

mostly to debt securities received as security in asset

purchase transactions and re-used.

Taken together, these two categories represent a total of

EUR 491,519 million of encumbered assets, which give

rise to EUR 472,045 million matching liabilities.

As of December 2025, total asset encumbrance in

funding operations represented 23.10% of the Group’s

extended balance sheet under EBA criteria (total assets

plus guarantees received: EUR 2,122,932 million),

similar to December 2024.

d) Capital risk

The second line of defence can independently challenge

business and first-line activities by:

• Supervising capital planning and adequacy exercises

through a review of the main components affecting

the capital ratios.

• Identifying key metrics to calculate the Group’s

regulatory capital, setting tolerance levels and

analysing significant variations, as well as single

transactions with impact on capital.

• Reviewing and challenging the execution of capital

actions proposed in line with capital planning and

risk appetite.

217

Grupo Santander commands a sound solvency position,

above the levels required by regulators and by the

European Central bank.

Regulatory capital

At 31 December 2025, at a consolidated level, the Group

must maintain a minimum capital ratio of 9.84% of CET1

( 4.50% being the requirement for Pillar I, 0.98% being

the requirement for Pillar 2R (requirement), 2.50% being

the requirement for capital conservation buffer, 1.25%

being the requirement for global systemically entity (D-

SIB), 0.55% being the requirement for anti-cyclical

capital buffer) and a systemic risk requirement of 0.05% .

Grupo Santander must also maintain a minimum capital

ratio of 11.66% of tier 1 and a minimum total ratio of

14.10% .

In 2025, the solvency target set was achieved.

Santander’s CET1 ratio stood at 13.46%¹ at t he close of

the year, demonstrating its organic capacity to generate

capital. The key regulatory capital figures are indicated

below:

Reconciliation of accounting capital with regulatory capital
EUR million
	2025	2024
Subscribed capital	7,345	7,576
Share premium account	36,792	40,079
Reserves	84,700	76,568
Treasury shares	(96)	(68)
Attributable profit	14,101	12,574
Approved dividend	(1,698)	(1,532)
Shareholders’ equity on public balance sheet	141,144	135,197
Valuation adjustments	(37,973)	(36,596)
Non-controlling interests	9,578	8,726
Total Equity on public balance sheet	112,748	107,327
Goodwill and intangible assets	(15,037)	(16,098)
Eligible preference shares and participating securities	9,645	10,371
Accrued dividend C	(1,827)	(1,611)
Other adjustments A	(11,146)	(9,817)
Tier 1B	94,383	90,172

A. Fundamentally for non-computable non-controlling interests and

deductions and reasonable filters in compliance with CRR .

B. Figures calculated by applying the transitional provisions of CRR 3

IFRS 9.

C. Assumes 25% of underlying profit, see note 4.a for proposed

distribution of results.

Note: Certain figures presented in this capital note have been rounded for

ease of presentation. Consequently, the amounts corresponding to the

rows or columns of totals in the tables presented in this note may not

coincide with the arithmetic sum of the concepts or items that make up

the total.

¹ Data calculated applying the transitional provisions of CRR 3.

The following table shows the capital coefficients and a

detail of the eligible internal resources of the Group:

Capital coefficients
	2025	2024
Level 1 ordinary eligible capital (EUR million)	84,739	79,800
Level 1 additional eligible capital (EUR million)	9,645	10,371
Level 2 eligible capital (EUR million)	17,460	18,418
Risk-weighted assets (EUR million)	629,430	624,503
Level 1 ordinary capital coefficient (CET 1)	13.46%	12.78%
Level 1 additional capital coefficient (AT1)	1.53%	1.66%
Level 1 capital coefficient (TIER1)	15.00%	14.44%
Level 2 capital coefficient (TIER 2)	2.77%	2.95%
Total capital coefficient	17.77%	17.39%

Eligible capital
EUR million
	2025	2024
Eligible capital
Common Equity Tier I	84,739	79,800
Capital	7,345	7,576
(-) Treasure shares and own shares financed	(1,892)	(1,694)
Share Premium	36,792	40,079
Reserves	84,663	76,608
Other retained earnings	(39,918)	(38,617)
Minority interests	9,037	8,479
Profit net of dividends	10,576	9,431
Deductions	(21,863)	(22,061)
Goodwill and intangible assets	(15,037)	(15,957)
Others	(6,826)	(6,104)
Additional Tier I	9,645	10,371
Eligible instruments AT1	8,937	9,725
AT1-excesses-subsidiaries	708	645
Tier II	17,460	18,418
Eligible instruments T2	17,754	18,869
Excess IRB provision on PE	—	—
T2-excesses - subsidiaries	(294)	(450)
Total eligible capital	111,845	108,589

Note: Banco Santander, S.A. and its affiliates had not taken part in any

State aid programmes.

218

Leverage ratio

Basel III established the leverage ratio as a non-risk

sensitive measure aimed at limiting excessive balance

sheet growth relative to available capital.

The Group performs the calculation in accordance with

Regulation (EU) 2019/876 of 20 May 2019 amending

Regulation (EU) No 575/2013 as regards the leverage

ratio.

This ratio is calculated as tier 1 capital divided by

leverage exposure. Exposure is calculated as the sum of

the following items:

• Accounting assets, excluding derivatives and items

treated as deductions from tier 1 capital (for

example, the balance of loans is included, but not

that of goodwill) further excluding the exposures

referred to in Article 429.a (1) of the regulation.

• Off-balance-sheet items (mainly guarantees, unused

credit limits granted and documentary credits)

weighted using credit conversion factors.

• Inclusion of net value of derivatives (gains and losses

are netted with the same counterparty, minus

collaterals if they comply with certain criteria) plus a

charge for the future potential exposure.

• A charge for the potential risk of security funding

transactions.

• Lastly, it includes a charge for the risk of credit

derivative swaps (CDS).

With the publication of Regulation (EU) 2019/876 of 20

May, 2019, amending Regulation (EU) n.º 575/2013 as

regards the leverage ratio, the final calibration of the

ratio is set at 3% for all entities and, for systemic entities

G-SIB, is established an additional surcharge which

would be 50% of the cushion ratio applicable to the

EISM, applicable from January 2023. In addition,

modifications are included in its calculation, including

the exclusion of certain exposures from the total

exposure measure: public loans when exceptional

circumstances arise, public loans, transfer loans and

officially guaranteed export credits, transfer loans and

officially guaranteed export credits.

EUR million
	2025	2024
Leverage
Level 1 Capital	94,385	90,170
Exposure	1,924,349	1,885,572
Leverage Ratio	4.90%	4.78%

Global systemically important banks

Grupo Santander is one of 29 banks designated as global

systemically important banks (G-SIBs).

The designation as a globally systemic entity comes

from a measurement established by the regulators (FSB

and BCBS) that they have implemented based on five

indicators (size, interjurisdictional activity,

interconnection with other financial entities,

substitutability and complexity). The list uses data as of

the end of 2024 and is based on a methodology agreed

in July 2018 and implemented for the first time in the

assessment of G-SIBs as of the end of 2021,

incorporating, among other things, an additional score

considering the Member States of the SRM as a single

jurisdiction.

This definition means it has to fulfil certain additional

requirements, which consist mainly of a capital buffer

( 1% ), in TLAC requirements (total loss absorbing

capacity), that Grupo Santander has to publish relevant

information more frequently than other banks, greater

regulatory requirements for internal control bodies,

special supervision and drawing up of special reports to

be submitted to supervisors.

Additionally, Grupo Santander appears both on the list of

global systemic entities and on the list of domestic

systemic entities. Bank of Spain, based on rule 23 of

Circular 2/2016, requires the application of the highest

of the two corresponding buffers, in the case of Grupo

Santander being the domestic one, 1.25%, a surcharge

payable by 2025.

The fact that Grupo Santander has to comply with these

requirements makes it a more solid bank than its

domestic rivals.

219

Appendix I

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
2 & 3 Triton Limited (j)	United Kingdom	0.00%	100.00%		100.00%	100.00%	Real estate	0	0	0
A & L CF (Guernsey) Limited (j) (n)	Guernsey	0.00%	100.00%		100.00%	100.00%	Leasing	1	0	0
Abbey Covered Bonds (Holdings) Limited	United Kingdom	—	(b)		—	—	Securitization	0	0	0
Abbey Covered Bonds (LM) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Abbey Covered Bonds LLP	United Kingdom	—	(b)		—	—	Securitization	1,807	(589)	0
Abbey National Business Office Equipment Leasing Limited (j)	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Abbey National Nominees Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Abbey National PLP (UK) Limited (j)	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Abbey National Property Investments	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	240	8	158
Abbey Stockbrokers (Nominees) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Abbey Stockbrokers Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Abent 3T, S.A.P.I de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Electricity production	(127)	(22)	0
Ablasa Participaciones, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	811	208	894
Aduro S.A.	Uruguay	0.00%	100.00%		100.00%	100.00%	Payments and collection services	1	0	1
Aevis Europa, S.L.	Spain	96.34%	0.00%		96.34%	96.34%	Cards	2	0	1
AFB SAM Holdings, S.L.	Spain	1.00%	99.00%		100.00%	100.00%	Holding company	1	0	0
Afisa S.A.	Chile	0.00%	100.00%		100.00%	100.00%	Fund management company	4	0	4
Agro Flex Fundo de Investimento em Direitos Creditórios	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	419	54	425
Allane Leasing GmbH	Austria	0.00%	46.95%		100.00%	100.00%	Renting	(2)	0	0
Allane Location Longue Durée S.a.r.l.	France	0.00%	46.95%		100.00%	100.00%	Renting	25	4	0
Allane Mobility Consulting AG	Switzerland	0.00%	46.95%		100.00%	100.00%	Consulting services	0	0	0
Allane Mobility Consulting B.V.	Netherlands	0.00%	46.95%		100.00%	100.00%	Consulting services	(3)	0	0
Allane Mobility Consulting GmbH	Germany	0.00%	46.95%		100.00%	100.00%	Consulting services	11	10	5
Allane Mobility Consulting Österreich GmbH	Austria	0.00%	46.95%		100.00%	100.00%	Consulting services	(1)	0	0
Allane Mobility Consulting S.a.r.l	France	0.00%	46.95%		100.00%	100.00%	Consulting services	(2)	0	0
Allane Schweiz AG	Switzerland	0.00%	46.95%		100.00%	100.00%	Renting	10	(6)	2
Allane SE	Germany	0.00%	46.95%		92.07%	92.07%	Renting	172	24	150
Allane Services GmbH & co. KG	Germany	0.00%	46.95%		100.00%	100.00%	Services	2	0	0
Allane Services Verwaltungs GmbH	Germany	0.00%	46.95%		100.00%	100.00%	Management of portfolios	0	0	0
Alliance & Leicester Investments (No.2) Limited (j)	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0

220

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Alliance & Leicester Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Alliance & Leicester Personal Finance Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	2	0	2
Altamira Santander Real Estate, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	138	(4)	164
Alternative Leasing, FIL (Compartimento B)	Spain	100.00%	0.00%		100.00%	100.00%	Investment fund	88	6	74
Amazonia Trade Limited	United Kingdom	100.00%	0.00%		100.00%	100.00%	Inactive	0	0	0
América Gestão Serviços em Energía S.A.	Brazil	0.00%	62.90%		70.00%	70.00%	Electricity production	2	(1)	1
Amherst Pierpont Commercial Mortgage Securities LLC	United States	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Amherst Pierpont International Ltd.	Hong-Kong	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
AMS Auto Markt Am Schieferstein GmbH (d)	Germany	0.00%	90.01%		100.00%	100.00%	Vehicle sales	0	0	0
AN (123) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Andromeda Principal Investments, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	—	Holding company	72	5	72
ANITCO Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
AP Acquisition Trust I	United States	0.00%	100.00%		100.00%	100.00%	Trust company	0	0	0
AP Acquisition Trust II	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
AP Asset Acquisition LLC	United States	0.00%	100.00%		100.00%	100.00%	Financial services	1	0	1
APSG GP LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	0	0	0
Aquanima Brasil Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	E-commerce	2	(1)	2
Aquanima Chile S.A.	Chile	0.00%	100.00%		100.00%	100.00	Services	3	(1)	3
Aquanima México S. de R.L. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	E-commerce	4	(1)	2
Aquanima S.A.	Argentine	0.00%	100.00%		100.00%	100.00%	Services	2	0	4
Ararinha Renda Fixa Crédito Privado - Fundo de Investimento Financeiro	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	8	0	7
Artarien S.A.	Uruguay	100.00%	0.00%		100.00%	100.00%	Insurance mediation	6	18	2
Atempo Growth I - Sub-Fund 4	Luxembourg	100.00%	0.00%		100.00%	100.00%	Investment fund	30	4	31
Atempo Growth II - Sub Fund 3	Luxembourg	100.00%	0.00%		100.00%	—	Investment fund	5	0	5
Atlantes Mortgage No. 3	Portugal	—	(b)		—	—	Securitization	0	0	0
Atual - Fundo de Invest Multimercado Crédito Privado Investimento no Exterior	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	521	27	492
Auto ABS DFP Master Compartment France 2013	France	—	(b)		—	—	Securitization	0	0	0
Auto ABS French Leases 2023	France	—	(b)		—	—	Securitization	0	0	0
Auto ABS French Leases 2025	France	—	(b)		—	—	Securitization	0	0	0
Auto ABS French Leases Master Compartment 2016	France	—	(b)		—	—	Securitization	0	0	0
Auto ABS French Loans 2024	France	—	(b)		—	—	Securitization	0	0	0
Auto ABS French Loans Master	France	—	(b)		—	—	Securitization	0	0	0

221

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Auto ABS Italian Balloon 2019-1 S.r.l.	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Rainbow Loans S.r.l. (j)	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Stella Loans 2023-1 S.r.l.	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Stella Loans S.r.l. (series 2024-1)	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Stella Loans S.r.l. (series 2024-2)	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Stella Loans S.r.l. (series 2025-1)	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Italian Stella Loans S.r.l. (series 2025-2)	Italy	—	(b)		—	—	Securitization	0	0	0
Auto ABS Spanish Loans 2022-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitization	0	0	0
Auto ABS Spanish Loans 2024-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitization	0	0	0
Autodescuento, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Vehicles purchased by internet	3	(1)	12
Autohaus24 GmbH	Germany	0.00%	46.95%		100.00%	100.00%	Internet	(2)	0	0
Auto-Interleasing AG	Switzerland	0.00%	100.00%		100.00%	100.00%	Renting	27	4	22
Auttar HUT Processamento de Dados Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	IT services	7	(1)	6
Aviación Antares, A.I.E.	Spain	99.99%	0.01%		100.00%	100.00%	Renting	72	(14)	28
Aviación Británica, A.I.E.	Spain	99.99%	0.01%		100.00%	100.00%	Renting	28	1	6
Aviación Comillas, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Renting	7	0	8
Aviación Laredo, S.L.	Spain	99.00%	1.00%		100.00%	100.00%	Air transport	3	0	3
Aviación Oyambre, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Renting	1	0	0
Aviación Santillana, S.L.	Spain	99.00%	1.00%		100.00%	100.00%	Renting	6	1	2
Aviación Suances, S.L.	Spain	99.00%	1.00%		100.00%	100.00%	Air transport	7	1	3
Banco Bandepe S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Banking	825	100	831
Banco de Albacete, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Banking	14	0	9
Banco Hyundai Capital Brasil S.A.	Brazil	0.00%	44.93%		50.00%	50.00%	Banking	92	30	55
Banco Santander - Chile	Chile	0.00%	67.13%		67.18%	67.18%	Banking	4,056	994	3,646
Banco Santander (Brasil) S.A.	Brazil	0.04%	89.82%		90.45%	90.60%	Banking	12,347	2,395	10,795
Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander México como Fiduciaria del Fideicomiso 100740	Mexico	0.00%	99.98%		100.00%	100.00%	Finance company	182	20	149
Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander México como Fiduciaria del Fideicomiso 2002114	Mexico	0.00%	99.98%		100.00%	100.00%	Finance company	9	0	10
Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander México como Fiduciaria del Fideicomiso GFSSLPT	Mexico	0.00%	99.98%		100.00%	100.00%	Finance company	11	1	12
Banco Santander Argentina S.A.	Argentine	0.00%	99.82%		99.77%	99.77%	Banking	2,427	379	598
Banco Santander Colombia S.A.	Colombia	92.95%	7.05%		100.00%	100.00%	Banking	272	11	299

222

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Banco Santander International	United States	0.00%	100.00%		100.00%	100.00%	Banking	879	176	1,055
Banco Santander International SA	Switzerland	34.70%	65.30%		100.00%	100.00%	Banking	1,424	(46)	809
Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México	Mexico	24.93%	75.05%		99.98%	99.98%	Banking	6,161	1,531	8,373
Banco Santander Perú S.A.	Peru	99.90%	0.10%		100.00%	100.00%	Banking	329	70	132
Banco Santander S.A.	Uruguay	97.75%	2.25%		100.00%	100.00%	Banking	660	156	180
Banco Santander Totta, S.A.	Portugal	99.42%	0.45%		99.87%	99.96%	Banking	3,608	946	6,149
Banque Stellantis France	France	0.00%	50.00%		50.00%	50.00%	Banking	998	152	881
Bansa Santander S.A.	Chile	0.00%	100.00%		100.00%	100.00%	Real estate	28	5	34
Beyond Wealth, S.A.	Spain	99.99%	0.01%		100.00%	100.00%	Consulting services	3	(1)	2
Bilkreditt 7 Designated Activity Company (j)	Ireland	—	(b)		—	—	Securitization	0	0	0
Blecno Investments, S.L. Unipersonal (e)	Spain	—	—		—	100.00%	Real estate	—	—	—
Blue Ocean SBT, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	404	6	389
BRS Investments S.A.	Argentine	5.10%	94.90%		100.00%	100.00%	Finance company	100	13	75
Cántabro Catalana de Inversiones, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	419	4	422
Capital Street Delaware LP	United States	0.00%	100.00%		100.00%	100.00%	Holding company	0	0	0
Capital Street Holdings, LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	11	0	11
Capital Street REIT Holdings, LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	973	26	999
Capital Street S.A.	Luxembourg	0.00%	100.00%		100.00%	100.00%	Finance company	0	0	0
Carmine D - Services, Unipessoal Lda.	Portugal	0.00%	100.00%		100.00%	100.00%	Software	0	0	2
Cartasur Cards S.A.	Argentine	0.00%	99.82%		100.00%	100.00%	Finance company	13	1	15
Casa de Bolsa Santander, S.A. de C.V., Grupo Financiero Santander México	Mexico	0.00%	99.97%		99.97%	99.97%	Securities company	92	15	107
Cater Allen Holdings Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Cater Allen International Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Cater Allen Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Banking	284	100	255
Cater Allen Syndicate Management Limited	United Kingdom	0.00%	100.00%		100.00%	100.00	Inactive	0	0	0
CCAP Auto Lease Ltd.	United States	0.00%	100.00%		100.00%	100.00%	Leasing	398	22	420
Centro de Capacitación Santander, A.C.	Mexico	0.00%	99.98%		100.00%	100.00%	Non-profit institute	1	0	1
Certidesa, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Aircraft rental	(67)	(8)	0
Charlotte 2023 Funding Plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Charlotte 2023 Holdings Limited	United Kingdom	—	(b)		—	—	Securitization	0	0	0
Cianite New Energy, S.r.l.	Italy	0.00%	49.00%		70.00%	70.00%	Renewable energies	1	0	1
CIMA Commodities 2025-4	Ireland	—	(b)		—	—	Securitization	0	0	0
CIMA Finance DAC Series 2022-1	Ireland	—	(b)		—	—	Securitization	0	0	0

223

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
CIMA Finance DAC Series 2023-1	Ireland	—	(b)		—	—	Securitization	0	0	0
CIMA Luxembourg S.à r.l. 2025-1	Luxembourg	—	(b)		—	—	Securitization	0	0	0
CLM Fleet Management Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Vehicle rental	2	0	7
Cobranza Amigable, S.A.P.I. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Collection services	5	0	4
Community Development and Affordable Housing Fund LLC (c)	United States	0.00%	96.00%		96.00%	96.00%	Asset management	33	(2)	30
Compagnie Generale de Credit Aux Particuliers - Credipar S.A.	France	0.00%	50.00%		100.00%	100.00%	Banking	363	(313)	428
Compagnie Pour la Location de Vehicules - CLV	France	0.00%	50.00%		100.00%	100.00%	Banking	28	6	26
Comparanet, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Insurance mediation	7	0	7
Consumer Totta 1	Portugal	—	(b)		—	—	Securitization	0	0	0
Consumer Totta 2	Portugal	—	(b)		—	—	Securitization	0	0	0
Consumer Totta 3 2025	Portugal	—	(b)		—	—	Securitization	0	0	0
Contrato de Fideicomiso Irrevocable de Administración INV/6206	Mexico	—	(b)		—	—	Trust company	12	(8)	0
Contrato de Fideicomiso Irrevocable de Administración Nro. 6168	Mexico	—	(b)		—	—	Trust company	0	13	0
Contrato de Fideicomiso Irrevocable Nro. F/6236	Mexico	—	(b)		—	—	Trust company	0	17	0
Credileads S.A.	Uruguay	0.00%	100.00%		100.00%	100.00%	Advertising	1	0	5
D365 Fundo de Investimento em Direitos Creditórios	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	(16)	19	3
Darep Designated Activity Company	Ireland	100.00%	0.00%		100.00%	100.00	Reinsurances	12	2	13
Decarome, S.A.P.I. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Finance company	24	(1)	22
Decarope S.A.C.	Peru	0.00%	100.00%		100.00%	100.00%	Investment company	9	2	9
Deva Capital Advisory Company, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Advisory services	4	1	2
Deva Capital Holding Company, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	891	(12)	946
Deva Capital Investment Company, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	862	3	810
Deva Capital Management Company, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Advisory services	20	(12)	7
Deva Capital Servicer Company, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	59	0	59
Diamante New Energy S.r.l.	Italy	0.00%	80.00		80.00	0.00%	Renewable energies	2	0	1
Diglo Servicer Company 2021, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Real estate management	26	3	19
Diners Club Spain, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Cards	10	2	11
Dirección Estratega, S.C.	Mexico	0.00%	100.00%		100.00%	100.00%	Services	0	0	0
Drive Auto Receivables Trust 2024-1	United States	—	(b)		—	—	Securitization	(127)	82	0
Drive Auto Receivables Trust 2024-2	United States	—	(b)		—	—	Securitization	(286)	166	0
Drive Auto Receivables Trust 2025-1	United States	—	(b)		—	—	Securitization	0	(157)	0
Drive Auto Receivables Trust 2025-2	United States	—	(b)		—	—	Securitization	0	(223)	0

224

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Drive S.r.l.	Italy	0.00%	100.00%		100.00%	75.00%	Renting	5	(3)	9
Ductor Real Estate, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	22	4	17
Ebury Agent UK Limited	United Kingdom	0.00%	66.43%		100.00%	—	Financial services	0	0	0
Ebury Banco de Cambio S.A.	Brazil	0.00%	66.43%		100.00%	100.00%	Payment services	21	5	17
Ebury Banco Holding Participações Ltda.	Brazil	0.00%	66.43%		100.00%	100.00%	Holding company	10	0	8
Ebury Brasil Consultoria S.A.	Brazil	0.00%	66.43%		100.00%	100.00%	Consulting services	93	0	95
Ebury Brasil Holding Ltda.	Brazil	0.00%	66.43%		100.00%	100.00%	Holding company	11	0	93
Ebury Brasil Participações S.A.	Brazil	0.00%	66.43%		100.00%	100.00%	Holding company	95	0	95
Ebury Facilitadora De Pagamentos Ltda.	Brazil	0.00%	66.43%		100.00%	100.00%	Software	0	0	0
Ebury Global Services, S.L.	Spain	0.00%	66.43%		100.00%	—	Advisory services	0	0	0
Ebury Mass Payments Holdco Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Holding company	8	3	18
Ebury Mass Payments Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Payment services	6	0	0
Ebury Partners (DIFC) Limited (g)	Arab United Emirates	0.00%	66.43%		100.00%	100.00%	Finance company	4	0	5
Ebury Partners Australia Pty Ltd. (g)	Australia	0.00%	66.43%		100.00%	100.00%	Finance company	2	0	2
Ebury Partners Belgium NV / SA (g)	Belgium	0.00%	66.43%		100.00%	100.00%	Payment services	20	11	20
Ebury Partners Canada Limited (g)	Canada	0.00%	66.43%		100.00%	100.00%	Finance company	2	1	6
Ebury Partners Chile SpA	Chile	0.00%	66.43%		100.00%	100.00%	Finance company	0	0	0
Ebury Partners China Limited	China	0.00%	66.43%		100.00%	100.00%	Marketing	0	0	0
Ebury Partners Finance Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Finance company	(11)	(5)	0
Ebury Partners Hong Kong Limited (g)	Hong-Kong	0.00%	66.43%		100.00%	100.00%	Finance company	2	2	3
Ebury Partners Limited (g)	United Kingdom	0.00%	66.43%		66.43%	66.43%	Holding company	222	(18)	412
Ebury Partners Lithuania UAB	Lithuania	0.00%	66.43%		100.00%	—	Payment services	0	0	4
Ebury Partners Markets Cyprus Limited (g)	Cyprus	0.00%	66.43%		100.00%	100.00%	Finance company	0	0	1
Ebury Partners Markets Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Finance company	23	2	17
Ebury Partners México, S.A. de C.V.	Mexico	0.00%	66.43%		100.00%	100.00%	Payment services	0	0	0
Ebury Partners Payment Solutions Uganda Limited	Uganda	0.00%	66.43%		100.00%	—	Finance company	0	0	0
Ebury Partners Payments - L.L.C.	Arab United Emirates	0.00%	66.43%		100.00%	—	Payment services	0	0	0
Ebury Partners Payments Solutions Limited	Kenya	0.00%	66.43%		100.00%	—	Payment services	0	0	0
Ebury Partners South Africa (Pty) Ltd (g)	Republic of South Africa	0.00%	66.43%		100.00%	100.00%	Finance company	0	(1)	0
Ebury Partners Switzerland AG (g)	Switzerland	0.00%	66.43%		100.00%	100.00%	Finance company	6	1	5
Ebury Partners Tanzania Limited	Tanzania	0.00%	66.43%		100.00%	—	Payment services	0	0	0
Ebury Partners UK Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Electronic money	19	6	158

225

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Ebury Payments PTE Ltd. (g)	Singapore	0.00%	66.43%		100.00%	100.00%	Payment services	1	0	1
Ebury Soluções de Pagamentos Ltda.	Brazil	0.00%	66.43%		100.00%	100.00%	Financial services	2	0	4
Ebury Technology Limited (g)	United Kingdom	0.00%	66.43%		100.00%	100.00%	Software	(56)	6	0
Ebury Technology Spain, S.L.	Spain	0.00%	66.43%		100.00%	—	IT consulting	0	(1)	0
EDT FTPYME Pastor 3, Fondo de Titulización de Activos	Spain	—	(b)		—	—	Securitization	0	0	0
Elcano Renovables, S.L.	Spain	0.00%	70.00%		70.00%	70.00%	Holding company	0	0	0
Electrolyser, S.A. de C.V.	Mexico	0.00%	99.98%		100.00%	100.00%	Services	0	0	0
Elevate Tech Platforms, S.L. Unipersonal (e)	Spain	—	—		—	100.00%	Holding company	0	0	0
Emdia Serviços Especializados em Cobranças Ltda.	Brazil	0.00%	89.86%		100.00%	100.00%	Collection services	33	5	34
Empresa de Créditos Santander Consumo Perú S.A.	Peru	100.00%	0.00%		100.00%	100.00%	Finance company	55	13	50
Energias Renovables de Ormonde 30, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Renewable energies	17	0	24
Energias Renovables de Titania, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Renewable energies	2	0	6
Energias Renovables Gladiateur 45, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Renewable energies	16	(1)	23
Energias Renovables Prometeo, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Renewable energies	3	0	7
Esfera Fidelidade S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Services	2	135	124
Evidence Previdência S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Insurance	118	2	107
Eyemobile Tecnologia Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	IT services	0	(1)	0
F1rst Tecnologia e Inovação Ltda.	Brazil	0.00%	89.86%		100.00%	100.00%	IT services	76	9	77
Factum Identity Solutions, S.L.	Spain	0.00%	67.20%		84.00%	—	IT consulting	0	0	0
Factum Information Technologies, S.L.	Spain	0.00%	80.00%		80.00%	—	IT consulting	8	(1)	6
Factum IT Limited	United Kingdom	0.00%	80.00%		100.00%	—	IT consulting	0	0	0
Factum Navarra, S.L. Unipersonal	Spain	0.00%	80.00%		100.00%	—	IT consulting	0	0	0
FIDC Santander Auto Loans I Segmento Financeiro - Responsabilidade Limitada	Brazil	—	(b)		—	—	Securitization	465	2	0
Fideicomiso Empresarial Irrevocable de Administración y Garantía F/3443	Mexico	—	(b)		—	—	Trust company	0	1	0
Financeira El Corte Inglés, Portugal, S.F.C., S.A.	Portugal	0.00%	51.00%		100.00%	100.00%	Finance company	8	1	4
Financiera El Corte Inglés, E.F.C., S.A.	Spain	0.00%	51.00%		51.00%	51.00%	Finance company	248	55	140
Finsantusa, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	1,320	23	1,020
First National Motor plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
First National Tricity Finance Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	6	0	6
FIT Economia de Energia S.A.	Brasil	0.00%	58.41%		65.00%	65.00%	Explotación de energía eléctrica	(2)	(7)	0
Flexliving Valdemarín, S.L.	Spain	0.00%	27.57		27.57%	90.00%	Real estate	14	0	4

226

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Fondo de Titulización PYMES Santander 15	Spain	—	(b)		—	—	Securitization	0	0	0
Fondo de Titulización Santander Financiación 1	Spain	—	(b)		—	—	Securitization	0	0	0
Fondo de Titulización, RMBS Santander 7	Spain	—	(b)		—	—	Securitization	0	0	0
Fondo de Titulización, Santander Consumo 8	Spain	—	(b)		—	—	Securitization	0	0	0
Fondo de Titulización, Santander Consumo 9	Spain	—	(b)		—	—	Securitization	0	0	0
Fondos Santander, S.A. Administradora de Fondos de Inversión (en liquidación) (j)	Uruguay	0.00%	100.00%		100.00%	100.00%	Fund management company	0	0	0
Fortensky Trading, Ltd.	Ireland	0.00%	100.00		100.00%	100.00%	Finance company	0	0	0
Fosse (Master Issuer) Holdings Limited	United Kingdom	—	(b)		—	—	Securitization	0	0	0
Fosse Funding (No.1) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	102	(51)	0
Fosse Master Issuer PLC	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Fosse Trustee (UK) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Freedom Depository Holdings, LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	0	0	0
Freedom Depository, LLC	United States	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0
Fulvia SPV S.r.l.	Italy	—	(b)		—	—	Securitization	0	0	0
Fulvia SPV S.r.l. (2025-1)	Italy	—	(b)		—	—	Securitization	0	0	0
Fundo de Investimento em Direitos Creditórios Atacado - Não Padronizado	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	115	7	110
Fundo de Investimento em Direitos Creditórios Conretorno - Responsabilidade Limitada	Brazil	—	89.86%		100.00	—	Investment fund	19	1	18
Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema VI – Não padronizado	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	367	20	347
Fundo de Investimento em Direitos Creditórios Tellus	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	0	0	0
Gamma, Sociedade Financeira de Titularização de Créditos, S.A.	Portugal	0.00%	99.87%		100.00%	100.00%	Securitization	8	0	8
GC FTPYME Pastor 4, Fondo de Titulización de Activos	Spain	—	(b)		—	—	Securitization	0	0	0
Generación de Energía Villahermosa, S.A.P.I. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Electricity production	6	0	7
Gesban México Servicios Administrativos Globales, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Services	2	0	0
Gesban Santander Servicios Profesionales Contables Limitada	Chile	0.00%	100.00%		100.00%	100.00%	Accounting services	1	0	0
Gesban Servicios Administrativos Globales, S.L.	Spain	99.99%	0.01%		100.00%	100.00%	Services	4	0	1
Gesban UK Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Payments and collection services	2	0	0
Gestión de Inversiones JILT, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Services	15	0	15
Gestora de Procesos S.A. en liquidación (j)	Peru	100.00%	0.00%		100.00%	100.00%	Financial services	(1)	0	0

227

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Getnet Adquirência e Serviços para Meios de Pagamento S.A. - Instituição de Pagamento	Brazil	0.00%	100.00%		100.00%	100.00%	Payment services	434	98	317
Getnet Argentina S.A.U.	Argentine	0.00%	100.00%		100.00%	100.00%	Payment methods	25	(1)	23
Getnet Europe, Entidad de Pago, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Payment services	158	22	137
Getnet Fundo de Investimento em Direitos Creditórios	Brazil	0.00%	89.86%		100.00%	100.00%	Investment fund	9	1	8
Getnet Merchant Solutions UK Ltd	United Kingdom	0.00%	100.00%		100.00%	100.00%	Financial services	0	0	0
Getnet México Servicios de Adquirencia, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Payments and collection services	154	59	175
Getnet Payments, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	927	135	1,199
Getnet Sociedade de Credito Direto S.A.	Brazil	0.00%	100.00%		100.00%	100.00%	Finance company	14	1	15
Getnet Technology and Operations Brasil Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	IT services	127	(15)	112
Getnet Uruguay S.A.	Uruguay	0.00%	100.00%		100.00%	100.00%	Payment methods	15	(1)	15
GNXT Serviços de Atendimento Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	Telemarketing	4	0	4
Golden Bar (Securitisation) S.r.l.	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2021-1	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2022-1	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2023-2	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2024-1	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2025-1	Italy	—	(b)		—	—	Securitization	0	0	0
Golden Bar Stand Alone 2025-2	Italy	—	(b)		—	—	Securitization	0	0	0
Grafite New Energy, S.r.l.	Italy	0.00%	49.00%		70.00%	70.00%	Renewable energies	1	0	1
Gravity Cloud Technology, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	IT services	34	0	33
Grupo Empresarial Santander, S.L.	Spain	99.62%	0.38%		100.00%	100.00%	Holding company	5,259	403	2,879
Grupo Financiero Santander México, S.A. de C.V.	Mexico	100.00%	0.00%		100.00%	100.00%	Holding company	4,961	1,096	5,860
Hipototta No. 13	Portugal	—	(b)		—	—	Securitization	0	0	0
Hipototta No. 14	Portugal	—	(b)		—	—	Securitization	0	0	0
Hipototta No. 4 plc (j)	Ireland	—	(b)		—	—	Securitization	0	0	0
Hipototta No. 5 plc (j)	Ireland	—	(b)		—	—	Securitization	0	0	0
Holbah Santander, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	797	84	870
Holmes Funding Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	215	(79)	0
Holmes Holdings Limited	United Kingdom	—	(b)		—	—	Securitization	0	0	0
Holmes Master Issuer plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	1	0	0
Holmes Trustees Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Securitization	0	0	0

228

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Hyundai Capital Bank Europe GmbH	Germany	0.00%	51.00%		51.00%	51.00%	Banking	1,125	16	558
Hyundai Fundo de Investimento em Direitos Creditórios	Brazil	0.00%	44.93%		100.00%	100.00%	Investment fund	266	48	141
Ibérica de Compras Corporativas, S.L.	Spain	97.17%	2.82%		100.00%	100.00%	E-commerce	29	(2)	6
Innohub, S.A.P.I. de C.V. (j)	Mexico	0.00%	62.01%		69.54%	69.54%	IT services	0	0	0
Insurance Funding Solutions Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Inversiones Capital Global, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	102	6	107
Inversiones Marítimas del Mediterráneo, S.A., en liquidación (c) (j)	Spain	0.00%	100.00%		100.00%	100.00%	Inactive	2	(1)	0
Investment Holdings 1857, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	32	357	33
Isar Valley S.A.	Luxembourg	—	(b)		—	—	Securitization	(3)	0	0
Isla de los Buques, S.A.	Spain	99.98%	0.02%		100.00%	100.00%	Finance company	1	0	1
Klare Corredora de Seguros Limitada	Chile	0.00%	100.00%		100.00%	100.00%	Insurance mediation	(4)	(1)	0
Landcompany 2020, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Real estate management	1,577	(22)	1,609
Laparanza, S.A.	Spain	61.59%	0.00%		61.59%	61.59%	Agricultural holding	29	0	16
Lerma Investments 2018, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	11	0	11
Liquetine, S.L. Unipersonal	Spain	0.00%	70.00%		100.00%	100.00%	Renewable energies	11	0	10
Lynx Financial Crime Tech, S.A.	Spain	0.00%	79.99%		79.99%	79.99%	IT services	54	1	48
MAC No. 1 Limited	United Kingdom	—	(b)		—	—	Inactive	(1)	0	0
Macroscope S.L. Unipersonal	Spain	100.00	0.00%		100.00	—	Consulting services	3	(1)	4
Mascor SPV 2025, S.L.	Spain	0.00%	29.10%		29.10	—	Real estate	8	0	2
Master Red Europa, S.L.	Spain	96.34	0.00%		96.34	96.34%	Cards	1	0	1
Mata Alta, S.L. Unipersonal	Spain	0.00%	61.59%		100.00	100.00%	Agricultural holding	0	0	0
MCE Bank GmbH (d)	Germany	0.00%	90.01%		90.01	90.01%	Banking	168	0	117
MCE Verwaltung GmbH (d)	Germany	0.00%	90.01%		100.00	100.00%	Real estate rental	10	0	9
Mercadotecnia, Ideas y Tecnología, S.A. de C.V.	Mexico	0.00%	70.00%		70.00	70.00%	Payment methods	0	13	45
Merciver, S.L.	Spain	99.90	0.10%		100.00	100.00%	Financial advisory	0	0	0
Midata Service GmbH (d)	Germany	0.00%	90.01%		100.00	100.00%	IT services	0	0	0
Moon GC&P Investments, S.L. Unipersonal	Spain	100.00	0.00%		100.00	100.00%	Holding company	91	(2)	85
Mouro Capital I LP	United Kingdom	0.00%	100.00%		100.00	100.00%	Investment fund	787	311	822
Multiplica SpA	Chile	0.00%	100.00%		100.00	100.00%	Payment services	2	0	2
Murattabat International Business Services	Palestine	0.00%	66.43%		100.00	—	IT consulting	0	0	0

229

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Navegante Américo Vespucio SpA	Chile	0.00%	100.00%		100.00%	100.00%	Real estate	59	(2)	90
Naviera Mirambel, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Finance company	0	0	0
Naviera Trans Gas, A.I.E.	Spain	99.99%	0.01%		100.00%	100.00%	Renting	60	(1)	62
Naviera Transcantábrica, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	Leasing	5	0	4
Naviera Transchem, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Leasing	1	0	1
Navigator Global Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Internet	14	(4)	14
NeoAuto S.A.C.	Peru	0.00%	100.00%		100.00%	100.00%	Vehicles purchased by internet	1	(1)	2
Newcomar, S.L., en liquidación (j)	Spain	40.00%	40.00%		80.00%	80.00%	Real estate	0	0	0
Novimovest – Fundo de Investimento Imobiliário	Portugal	0.00%	78.76%		78.86%	78.74%	Investmen t fund	119	2	96
NW Services CO.	United States	0.00%	100.00%		100.00%	100.00%	E- commerce	7	3	8
One Mobility Management GmbH	Germany	0.00%	46.95%		100.00%	100.00%	Services	0	0	0
Open Bank, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Banking	666	66	630
Open Digital Market, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Commerce	0	0	0
Open Digital Services, S.L.	Spain	99.97%	0.03%		100.00%	100.00%	Services	38	(12)	20
Openbank México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México	Mexico	0.00%	100.00%		100.00%	100.00%	Banking	244	(66)	177
Operadora de Carteras Gamma, S.A.P.I. de C.V.	Mexico	100.00%	0.00%		100.00%	100.00%	Holding company	12	0	6
Optimal Investment Services SA	Switzerland	100.00%	0.00%		100.00%	100.00%	Fund managem ent company	45	0	30

230

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Optimal Multiadvisors Ireland Plc / Optimal Strategic US Equity Ireland Euro Fund (i) (m)	Ireland	0.00%	0.00%		0.00%	0.00%	Fund managem ent company	0	0	0
Optimal Multiadvisors Ireland Plc / Optimal Strategic US Equity Ireland US Dollar Fund (i) (m)	Ireland	0.00%	0.00%		0.00%	0.00%	Fund managem ent company	0	0	0
Paga Después, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Financial services	3	0	3
PagoNxt Emoney, E.D.E., S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Financial services	4	(1)	4
PagoNxt Ltd	United Kingdom	100.00%	0.00%		100.00%	100.00%	Holding company	0	0	0
PagoNxt Merchant Solutions FZ-LLC (j)	Arab United Emirates	0.00%	100.00%		100.00%	100.00%	Financial services	1	0	1
PagoNxt Merchant Solutions India Private Limited (d) (j)	India	0.00%	100.00%		100.00%	100.00%	Financial services	0	0	0
PagoNxt Payments Brasil Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	Financial services	3	0	3
PagoNxt Payments Chile SpA	Chile	0.00%	100.00%		100.00%	100.00%	Services	1	0	1
PagoNxt Payments México, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	IT services	1	1	2
PagoNxt Payments Services, S.L.	Spain	0.00	100.00%		100.00%	100.00%	Services	275	(47)	227
PagoNxt Payments UK Ltd	United Kingdom	0.00%	100.00%		100.00%	100.00%	Payment services	4	(2)	4
PagoNxt Payments, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	IT services	348	(57)	291
PagoNxt US, LLC	United States	0.00%	100.00%		100.00	100.00%	Inactive	0	0	0
PagoNxt, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	1,964	(22)	3,332
Paytec Tecnologia em Pagamentos Ltda.	Brazil	0.00%	100.00%		100.00%	100.00%	Commerce	4	(1)	4
PBE Companies, LLC	United States	0.00%	100.00%		100.00%	100.00%	Real estate	104	(4)	101

231

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Pereda Gestión, S.A.	Spain	99.99%	0.01%		100.00%	100.00%	Securities brokerage	52	42	4
Phoenix S.A.	Uruguay	0.00%	100.00%		100.00%	100.00%	Payment methods	4	1	7
Pinle SPV 2024, S.L.	Spain	0.00%	27.57%		27.57%	0.00%	Real estate	5	0	1
Pony S.A.	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
Pony S.A., Compartment German Auto Loans 2023-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
Pony S.A., Compartment German Auto Loans 2024-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
Pony S.A., Compartment German Auto Loans 2025-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
Portal Universia Argentina S.A.	Argentine	0.00%	75.75%		75.75%	75.75%	Internet	0	0	0
Portal Universia Portugal, Prestação de Serviços de Informática, S.A.	Portugal	0.00%	100.00%		100.00%	100.00%	Internet	0	0	0
Precato IV Fundo de Investimento em Direitos Creditórios - Não Padronizados	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	45	8	41
Prime 16 – Fundo de Investimentos Imobiliário	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	4	0	4
PT Trans Skills Employer Services	Indonesia	0.00%	66.43%		100.00%	—	Consulting services	0	0	0
Pulse Client Experts Ltda.	Brazil	0.00%	89.86%		100.00%	100.00%	Telemarke ting	18	2	18
Punta Lima, LLC	United States	0.00%	100.00%		100.00%	100.00%	Leasing	0	1	0
Redoto SPV 2025, S.L.	Spain	0.00%	30.60%		30.60%	—	Real estate	46	0	14
Repton 2023-1 Limited	United Kingdom	—	(b)		—	—	Securitizati on	1	1	0
Retailcompany 2021, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	298	(15)	293
Retop S.A. (f)	Uruguay	100.00%	0.00%		100.00%	100.00%	Finance company	39	(1)	62

232

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Return Capital Gestão de Ativos e Participações S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Collection services	(32)	90	52
Rojo Entretenimento S.A.	Brazil	0.00%	85.01%		94.60%	94.60%	Real estate	25	2	23
SAFO Alternative Lending, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Finance company	39	1	43
SAI Alternative Investments México, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Consulting services	1	(1)	1
SAI Lux Carry SCSp	Luxembour g	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	0	0	0
Sainte Julie Fundo de Investimento em Direitos Creditórios Não-Padronizados Responsabilidade Limitada	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	81	30	100
SALCO, Servicios de Seguridad Santander, S.A.	Spain	99.99%	0.01%		100.00%	100.00%	Safety	2	1	1
SAM Argentina Sociedad Gerente de Fondos Comunes de Inversión S.A.	Argentine	0.00%	100.00%		100.00%	100.00%	Investmen t fund managem ent	2	0	2
SAM Asset Management, S.A. de C.V., Sociedad Operadora de Fondos de Inversión	Mexico	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	14	43	193
SAM Inversiones Argentina S.A.	Argentine	0.00%	100.00%		100.00%	100.00%	Pension fund managem ent company	0	0	1
SAM Investment Holdings, S.L.	Spain	92.37%	7.63%		100.00%	100.00%	Holding company	1,274	194	1,450
San Pietro Solar PV, S.r.l.	Italy	0.00%	56.00%		80.00%	80.00%	Renewable energies	18	(1)	19
San Preca Federal I Fundo de Investimento em Direitos Creditórios Não-Padronizados	Brazil	0.00%	86.59%		96.36%	50.00%	Investmen t fund	8	8	14
SANB Promotora de Vendas e Cobrança S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Finance company	1	5	6
Sancap Investimentos e Participações S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Holding company	94	110	164
Santander (CF Trustee Property Nominee) Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander (CF Trustee) Limited (d)	United Kingdom	—	(b)		—	—	Inactive	0	0	0

233

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander (Luxembourg) Issuer S.à r.l.	Luxembourg	100.00%	0.00%		100.00%	—	Securitizati on	0	0	0
Santander (UK) Group Pension Schemes Trustees Limited (d)	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Alternative Investments, S.G.I.I.C., S.A. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	21	(6)	40
Santander AM Global Working Capital Fund I	Luxembourg	100.00%	0.00%		100.00%	100.00%	Investmen t fund	70	3	71
Santander Asesorías Financieras Limitada	Chile	0.00%	67.45%		100.00%	100.00%	Financial advisory	11	4	11
Santander Asset Finance Opportunities	Luxembourg	100.00%	0.00%		100.00%	100.00%	Investmen t fund	192	11	191
Santander Asset Finance plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Leasing	96	86	166
Santander Asset Management - SGOIC, S.A.	Portugal	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	6	4	9
Santander Asset Management Chile S.A.	Chile	0.00%	100.00%		100.00%	100.00%	Securities investmen t	0	0	0
Santander Asset Management Gerente de Fondos Comunes de Inversión S.A.	Argentine	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	6	20	3
Santander Asset Management Luxembourg, S.A.	Luxembourg	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	5	1	0
Santander Asset Management S.A. Administradora General de Fondos	Chile	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	(3)	18	132
Santander Asset Management UK Holdings Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Holding company	218	74	186
Santander Asset Management UK Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Managem ent of funds and portfolios	30	6	129
Santander Asset Management, S.A., SGIIC Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Fund managem ent company	227	101	277
Santander Auto Lease Titling Ltd.	United States	0.00%	100.00%		100.00%	100.00%	Leasing	8	(15)	0
Santander Back- Offices Globales Mayoristas, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Services	5	6	1

234

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Banca de Inversión Colombia, S.A.S.	Colombia	100.00%	0.00%		100.00%	100.00%	Advisory services	1	3	2
Santander Bank Polska S.A.	Poland	58.70%	0.00%		58.70%	62.20%	Banking	6,308	1,590	4,051
Santander Bank, National Association	United States	0.00%	100.00%		100.00%	100.00%	Banking	10,871	1,183	12,035
Santander Brasil Administradora de Consórcio Ltda.	Brazil	0.00%	89.86%		100.00%	100.00%	Services	70	83	138
Santander Brasil Gestão de Recursos Ltda.	Brazil	0.08%	99.92%		100.00%	100.00%	Securities investmen t	387	45	423
Santander Capital Holdings LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	851	53	904
Santander Capital Structuring, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00	Holding company	5	0	0
Santander Capitalização S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Insurance	(47)	101	48
Santander Cards Ireland Limited (n)	Ireland	0.00%	100.00%		100.00%	100.00%	Cards	(8)	0	0
Santander Cards Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	96	0	96
Santander Cards UK Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	145	(15)	121
Santander Chile Holding S.A.	Chile	22.11%	77.75%		99.86%	99.86%	Holding company	1,565	355	1,862
Santander Commercial Mortgage Securities LLC	United States	0.00%	100.00%		100.00%	—	Finance company	0	0	0
Santander Compara Holding, S.L.	Spain	99.97%	0.03%		100.00%	100.00%	Holding company	12	0	12
Santander Consulting (Beijing) Co., Ltd.	China	0.00%	100.00%		100.00%	100.00%	Advisory services	10	0	4
Santander Consumer (UK) plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	938	(109)	298
Santander Consumer Auto Receivables Funding 2018-L3 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	117	(1)	0

235

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Consumer Auto Receivables Funding 2022-B1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(56)	17	0
Santander Consumer Auto Receivables Funding 2022-B2 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(64)	22	0
Santander Consumer Auto Receivables Funding 2022-B3 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(103)	66	0
Santander Consumer Auto Receivables Funding 2022-B4 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(58)	30	0
Santander Consumer Auto Receivables Funding 2023-B1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(48)	53	0
Santander Consumer Auto Receivables Funding 2023-B2 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(44)	22	0
Santander Consumer Auto Receivables Funding 2023-B3 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(40)	20	0
Santander Consumer Auto Receivables Funding 2023-B4 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(46)	23	0
Santander Consumer Auto Receivables Funding 2023-B5 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2023-B6 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2024-B2 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2024-B3 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2025-B1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2025-L1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	0	(14)	0
Santander Consumer Auto Receivables Funding 2025-L2 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2025-L3 LLC	United States	0.00%	100.00%		100.00%	—	Inactive	0	0	0
Santander Consumer Auto Receivables Funding 2025-L4 LLC	United States	0.00%	100.00%		100.00%	—	Inactive	0	0	0

236

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Consumer Bank	Canada	0.00%	100.00%		100.00%	—	Banking	140	3	167
Santander Consumer Bank AG	Germany	0.00%	100.00%		100.00%	100.00%	Banking	3,588	187	5,345
Santander Consumer Bank AS	Norway	0.00%	100.00%		100.00%	100.00%	Banking	1,912	183	2,141
Santander Consumer Bank GmbH	Austria	0.00%	100.00%		100.00%	100.00%	Banking	584	39	363
Santander Consumer Bank S.A.	Poland	0.00%	100.00%		100.00%	100.00%	Banking	988	93	940
Santander Consumer Bank S.A.	Peru	100.00%	0.00%		100.00%	—	Banking	187	25	160
Santander Consumer Bank S.p.A.	Italy	0.00%	100.00%		100.00%	100.00%	Banking	970	68	603
Santander Consumer Credit Services Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	1	(1)	0
Santander Consumer Finance Global Services, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	IT	6	4	5
Santander Consumer Finance Limitada	Chile	49.00%	34.24%		100.00%	100.00%	Finance company	120	27	65
Santander Consumer Finance México, S.A. de C.V., S.O.F.O.M., E.R., Grupo Financiero Santander México	Mexico	0.00%	99.98%		100.00%	100.00%	Inactive	2	0	2
Santander Consumer Finance Oy	Finland	0.00%	100.00%		100.00%	100.00%	Finance company	488	20	159
Santander Consumer Finance Schweiz AG	Switzerland	0.00%	100.00%		100.00%	100.00%	Leasing	61	(13)	60
Santander Consumer Finance, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Banking	9,109	612	10,039
Santander Consumer Financial Solutions Sp. z o.o.	Poland	0.00%	100.00%		100.00%	100.00%	Leasing	(3)	1	7
Santander Consumer Holding Austria GmbH	Austria	0.00%	100.00%		100.00%	100.00%	Holding company	364	0	518
Santander Consumer Holding GmbH	Germany	0.00%	100.00%		100.00%	100.00%	Holding company	5,564	83	6,077
Santander Consumer Lease Receivables 1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(20)	3	0
Santander Consumer Leasing GmbH	Germany	0.00%	100.00%		100.00%	100.00%	Leasing	77	104	158

237

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Consumer Leasing S.A.	France	0.00%	100.00%		100.00%	100.00%	Renting	3	0	3
Santander Consumer Mobility Services, S.A.	Spain	0.00%	100.00%		100.00%	100.00%	Renting	8	(2)	8
Santander Consumer Multirent Sp. z o.o.	Poland	0.00%	100.00%		100.00%	100.00%	Leasing	42	9	36
Santander Consumer Operations Services GmbH	Germany	0.00%	100.00%		100.00%	100.00%	Services	16	0	18
Santander Consumer Receivables 11 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	618	283	0
Santander Consumer Receivables 15 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(8)	75	0
Santander Consumer Receivables 16 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(6)	130	0
Santander Consumer Receivables 20 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	0	(254)	0
Santander Consumer Receivables 21 LLC	United States	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Consumer Receivables 7 LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	726	164	0
Santander Consumer Receivables Funding LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	10	3	0
Santander Consumer Renting S.r.l.	Italy	0.00%	100.00%		100.00%	100.00%	Renting	12	(5)	18
Santander Consumer Renting, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Renting	47	2	41
Santander Consumer S.A.	Argentine	0.00%	99.82%		100.00%	100.00%	Finance company	15	(3)	13
Santander Consumer Services GmbH	Austria	0.00%	100.00%		100.00%	100.00%	Services	0	0	0
Santander Consumer Services, S.A.	Portugal	0.00%	100.00%		100.00%	100.00%	Finance company	13	1	6
Santander Consumer Spain Auto 2019-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0

238

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Consumer Spain Auto 2020-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Spain Auto 2021-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Spain Auto 2022-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Spain Auto 2023-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Spain Auto 2024-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Spain Auto 2025-1, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumer Technology Services GmbH	Germany	0.00%	100.00%		100.00%	100.00%	IT services	31	1	22
Santander Consumer USA Holdings Inc.	United States	0.00%	100.00%		100.00%	100.00%	Holding company	3,079	589	4,580
Santander Consumer USA Inc.	United States	0.00%	100.00%		100.00%	100.00%	Finance company	4,922	590	5,512
Santander Consumo 4, F.T.	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumo 5, F.T.	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumo 6, F.T.	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Consumo 7, F.T.	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander Corredora de Seguros Limitada	Chile	0.00%	67.21%		100.00%	100.00%	Insurance mediation	19	3	14
Santander Corredores de Bolsa Limitada	Chile	—	83.24%		100.00	100.00	Securities company	58	3	51
Santander Corretora de Câmbio e Valores Mobiliários S.A.	Brazil	—	89.86%		100.00	100.00	Securities company	143	28	154
Santander Corretora de Seguros, Investimentos e Serviços S.A.	Brazil	—	89.86%		100.00	100.00	Insurance mediation	665	325	887
Santander Customer Voice, S.A.	Spain	99.50	0.50%		100.00	100.00	Services	9	(10)	0

239

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander de Titulización, S.G.F.T., S.A.	Spain	81.00	19.00%		100.00	100.00	Fund managem ent company	5	5	2
Santander Distribuidora de Títulos e Valores Mobiliários S.A.	Brazil	—	89.86%		100.00	100.00	Securities company	75	11	77
Santander Drive Auto Receivables LLC	United States	—	100.00%		100.00	100.00	Finance company	0	0	0
Santander Drive Auto Receivables Trust 2022-2	United States	—	(b)		—	—	Securitizati on	(25)	33	0
Santander Drive Auto Receivables Trust 2022-3	United States	—	(b)		—	—	Securitizati on	(41)	26	0
Santander Drive Auto Receivables Trust 2022-4	United States	—	(b)		—	—	Securitizati on	(72)	36	0
Santander Drive Auto Receivables Trust 2022-5	United States	—	(b)		—	—	Securitizati on	(102)	37	0
Santander Drive Auto Receivables Trust 2022-6	United States	—	(b)		—	—	Securitizati on	(96)	40	0
Santander Drive Auto Receivables Trust 2022-7	United States	—	(b)		—	—	Securitizati on	(45)	24	0
Santander Drive Auto Receivables Trust 2023-1	United States	—	(b)		—	—	Securitizati on	(24)	38	0
Santander Drive Auto Receivables Trust 2023-2	United States	—	(b)		—	—	Securitizati on	(47)	56	0
Santander Drive Auto Receivables Trust 2023-3	United States	—	(b)		—	—	Securitizati on	(74)	65	0
Santander Drive Auto Receivables Trust 2023-4	United States	—	(b)		—	—	Securitizati on	(78)	53	0
Santander Drive Auto Receivables Trust 2023-5	United States	—	(b)		—	—	Securitizati on	(74)	54	0
Santander Drive Auto Receivables Trust 2023-6	United States	—	(b)		—	—	Securitizati on	(62)	47	0
Santander Drive Auto Receivables Trust 2024-1	United States	—	(b)		—	—	Securitizati on	(99)	68	0
Santander Drive Auto Receivables Trust 2024-2	United States	—	(b)		—	—	Securitizati on	(149)	103	0

240

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Drive Auto Receivables Trust 2024-3	United States	—	(b)		—	—	Securitizati on	(182)	127	0
Santander Drive Auto Receivables Trust 2024-4	United States	—	(b)		—	—	Securitizati on	(207)	146	0
Santander Drive Auto Receivables Trust 2024-5	United States	—	(b)		—	—	Securitizati on	(182)	119	0
Santander Drive Auto Receivables Trust 2025-1	United States	—	(b)		—	—	Securitizati on	0	(116)	0
Santander Drive Auto Receivables Trust 2025-2	United States	—	(b)		—	—	Securitizati on	0	(134)	0
Santander Drive Auto Receivables Trust 2025-3	United States	—	(b)		—	—	Securitizati on	0	(186)	0
Santander Drive Auto Receivables Trust 2025-4	United States	—	(b)		—	—	Securitizati on	0	(218)	0
Santander Empresa Administradora de Fondos Colectivos S.A.	Peru	99%	1.00%		100%	100%	Investmen t company	1	(1)	0
Santander Equity Investments Limited	United Kingdom	0%	100.00%		100%	100%	Finance company	94	5	34
Santander España Servicios Legales, S.L.	Spain	99.97%	0.03%		100.00%	100.00%	Services	9	0	8
Santander Estates Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Real estate	7	0	7
Santander European Hospitality Opportunities	Luxembour g	100.00%	0.00%		100.00%	100.00	Investmen t fund	33	0	30
Santander F24 S.A.	Poland	0.00%	58.70%		100.00%	100.00%	Finance company	3	0	2
Santander Facility Management España, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Real estate	786	0	786
Santander Factoring S.A.	Chile	0.00%	99.86%		100.00%	100.00%	Factoring	9	0	9
Santander Factoring Sp. z o.o.	Poland	0.00%	58.70%		100.00%	100.00%	Financial services	78	11	1
Santander Factoring y Confirming, S.A. Unipersonal, E.F.C.	Spain	100.00%	0.00%		100.00%	100.00%	Factoring	223	47	126

241

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander FI Hedge Strategies	Ireland	0.00%	89.86%		100.00%	100.00%	Investmen t fund	421	110	478
Santander Finance 2012-1 LLC	United States	0.00%	100.00%		100.00%	100.00%	Financial services	3	0	3
Santander Financial Exchanges Limited (j)	United Kingdom	100.00%	0.00%		100.00%	100.00	Inactive	0	0	0
Santander Financial Services plc	United Kingdom	0.00%	100.00%		100.00%	100.00	Banking	350	27	443
Santander Financiamientos S.A.	Peru	100.00%	0.00%		100.00%	100.00	Finance company	34	0	34
Santander Financing S.A.S.	Colombia	100.00%	0.00%		100.00%	100.00%	Financial advisory	3	0	3
Santander Finanse Sp. z o.o.	Poland	0.00%	58.70%		100.00%	100.00%	Financial services	64	12	18
Santander Fundo de Investimento Amazonas Multimercado Crédito Privado Investimento no Exterior (o)	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	440	64	453
Santander Fundo de Investimento Diamantina Multimercado Crédito Privado Investimento no Exterior (h)	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	776	142	824
Santander Fundo de Investimento Guarujá Multimercado Crédito Privado Investimento no Exterior	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	150	14	148
Santander Gestión de Recaudación y Cobranzas Ltda.	Chile	0.00%	99.86%		100.00%	100.00%	Financial services	8	1	9
Santander Global Cards & Digital Solutions Brasil S.A.	Brazil	0.00%	100.00%		100.00%	100.00%	IT consulting	85	4	93
Santander Global Cards & Digital Solutions, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	IT services	222	1	222
Santander Global Consumer Finance Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	7	0	7
Santander Global Facilities, S.A. de C.V.	Mexico	100.00%	0.00%		100.00%	100.00%	Services	167	8	174
Santander Global Services S.A. (j)	Uruguay	0.00%	100.00%		100.00%	100.00%	Services	0	0	0
Santander Global Services, S.L.	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	7	1	7
Santander Global Technology and Operations Brasil Ltda.	Brazil	0.00%	100.00%		100.00%	100.00	IT services	26	0	18
Santander Global Technology and Operations Chile Limitada	Chile	0.00%	100.00%		100.00%	100.00%	IT services	5	1	6

242

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Global Technology and Operations, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00	IT services	694	15	668
Santander Green Investment, S.L.	Spain	99.97%	0.03%		100.00%	100.00	Holding company	139	1	135
Santander Group Properties, S.L. Unipersonal	Spain	100.00	0.00%		100.00	100.00	Holding company	1,100	5	1,077
Santander Guarantee Company (j)	United Kingdom	—	100.00%		100.00	100.00	Inactive	0	0	0
Santander Hera Renda Fixa Fundo Incentivado de Investimento em Infraestrutura Responsabilidade Limitada	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	2,779	212	2,688
Santander Hermes Multimercado Crédito Privado Infraestructura Fundo de Investimento	Brazil	0.00%	89.86%		100.00%	100.00%	Investmen t fund	169	9	160
Santander Hipotecario 2 Fondo de Titulización de Activos	Spain	0.00%	(b)		0.00%	0.00%	Securitizati on	0	0	0
Santander Hipotecario 3 Fondo de Titulización de Activos	Spain	0.00%	(b)		0.00%	0.00%	Securitizati on	0	0	0
Santander Holding Imobiliária S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Real estate	64	6	63
Santander Holding Internacional, S.A.	Spain	99.95%	0.05%		100.00%	100.00%	Holding company	4,271	96	2,506
Santander Holdings USA, Inc.	United States	100.00%	0.00%		100.00%	100.00%	Holding company	13,865	1,399	14,425
Santander Inclusión Financiera, S.A. de C.V., S.O.F.O.M., E.R., Grupo Financiero Santander México	Mexico	0.00%	99.98%		100.00%	100.00%	Finance company	8	2	9
Santander Insurance Agency, U.S., LLC	United States	0.00%	100.00%		100.00%	100.00%	Insurance mediation	1	0	1
Santander Insurance Services UK Limited	United Kingdom	100.00%	0.00%		100.00%	100.00	Wealth managem ent	827	(588)	543
Santander Insurance, S.L.	Spain	100.00%	0.00%		100.00%	100.00	Holding company	2,433	478	2,440
Santander Intermediación Correduría de Seguros, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Insurance mediation	25	5	18
Santander International Products, Plc. (l)	Ireland	99.99%	0.01%		100.00%	100.00%	Finance company	1	0	0

243

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander International Wealth Management México, S. de R.L. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Advisory services	3	(2)	2
Santander International Wealth Solutions LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	0	0	0
Santander Inversiones S.A.	Chile	5.12%	94.88%		100.00%	100.00%	Holding company	1,574	279	1,051
Santander Investment Chile Limitada	Chile	16.12%	83.88%		100.00%	100.00%	Finance company	305	11	308
Santander Investment, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Banking	1,316	429	245
Santander Investments GP 1 S.à.r.l.	Luxembour g	0.00%	100.00%		100.00%	100.00	Fund managem ent company	1	0	1
Santander Inwestycje Sp. z o.o.	Poland	0.00%	58.70%		100.00%	100.00%	Securities company	0	0	0
Santander ISA Managers Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Managem ent of funds and portfolios	45	6	6
Santander Lease, S.A., E.F.C.	Spain	100.00%	0.00%		100.00%	100.00%	Leasing	56	3	51
Santander Leasing AB	Sweden	0.00%	100.00%		100.00%	100.00%	Leasing and renting	13	2	22
Santander Leasing B.V.	Netherlands	0.00%	100.00%		100.00%	100.00%	Renting	13	0	21
Santander Leasing S.A.	Poland	0.00%	58.70%		100.00%	100.00%	Leasing	210	13	35
Santander Leasing S.A. Arrendamento Mercantil	Brazil	0.00%	89.86%		100.00%	100.00	Leasing	1,458	129	1,426
Santander Leasing, LLC	United States	0.00%	100.00%		100.00%	100.00%	Leasing	(2)	(10)	0
Santander Lending Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Mortgage credit company	278	13	291
Santander Mediación Operador de Banca- Seguros Vinculado, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Insurance mediation	52	1	3
Santander Merchant S.A.	Argentine	5.10%	94.90%		100.00%	100.00%	Finance company	2	1	2

244

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Mortgage Asset Depositor LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	0	0	0
Santander Mortgage Asset Receivable Trust 2025-CES1	United States	—	(b)		—	—	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM1	United States	—	(b)		—	—	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM2	United States	—	(b)		—	—	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM3	United States	—	(b)		—	—	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM4	United States	—	(b)		—	—	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM5	United States	0.00%	(b)		0.00%	0.00%	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2025-NQM6	United States	0.00%	(b)		0.00%	0.00%	Securitizati on	0	0	0
Santander Mortgage Asset Receivable Trust 2026-NQM1	United States	0.00%	(b)		0.00%	0.00%	Inactive	0	0	0
Santander Mortgage Holdings Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Holding company	(2)	2	0
Santander New Business, S.A.	Spain	99.00%	1.00%		100.00%	100.00%	Trade intermedia ry	3	0	2
Santander Paraty Qif PLC	Ireland	0.00%	89.86%		100.00%	100.00%	Investmen t company	421	110	478
Santander Pensiones, S.A., E.G.F.P.	Spain	0.00%	100.00%		100.00%	100.00	Pension fund managem ent company	57	17	152
Santander Prime Auto Issuance Notes 2018- A Designated Activity Company (j)	Ireland	—	(b)		—	—	Inactive	0	0	0
Santander Prime Auto Issuance Notes 2018- B Designated Activity Company (j)	Ireland	—	(b)		—	—	Inactive	0	0	0
Santander Prime Auto Issuance Notes 2018-C Designated Activity Company (j)	Ireland	—	(b)		—	—	Inactive	0	0	0
Santander Prime Auto Issuance Notes 2018- D Designated Activity Company (j)	Ireland	—	(b)		—	—	Inactive	0	0	0

245

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Prime Auto Issuance Notes 2018-E Designated Activity Company (j)	Ireland	—	(b)		—	—	Inactive	0	0	0
Santander Private Banking S.p.A. in Liquidazione (j)	Italy	100.00%	0.00%		100.00%	100.00%	Finance company	14	0	8
Santander Private Banking UK Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Holding company	296	174	399
Santander Private Real Estate Advisory, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Real estate	20	6	26
Santander Real Estate Debt 1 sub-fund	Luxembourg	100.00%	0.00%		100.00%	100.00%	Investmen t fund	103	6	100
Santander Real Estate Equity I, F.C.R.	Spain	100.00%	0.00%		100.00%	100.00%	Venture capital fund	19	0	19
Santander Real Estate, S.A.	Spain	100.00%	0.00%		100.00%	100.00%	Inactive	1	0	1
Santander Retail Auto Lease Funding LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	0	0	0
Santander RMBS 6, Fondo de Titulización	Spain	—	(b)		—	—	Securitizati on	0	0	0
Santander S.A. Sociedad Securitizadora	Chile	0.00%	67.25%		100.00%	100.00%	Fund managem ent company	1	0	1
Santander SBAC II Renda Fixa Curto Prazo - Classe de Investimento em Cotas de Fundo de Investimento Financeiro Responsabilidade Limitada	Brazil	0.00%	89.86%		100.00%	—	Investmen t fund	1,750	242	1,770
Santander Secretariat Services Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Santander Securities LLC	United States	0.00%	100.00%		100.00%	100.00%	Securities company	25	6	31
Santander Seguros y Reaseguros, Compañía Aseguradora, S.A.	Spain	0.00%	100.00%		100.00%	100.00%	Insurance	676	164	914
Santander Services Solutions, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Payment services	15	(2)	14
Santander Servicios Corporativos, S.A. de C.V.	Mexico	0.00%	99.98%		100.00%	100.00%	Services	14	0	15

246

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Santander Servicos Digitais Brasil Ltda.	Brazil	0.00%	100.00%		100.00%	0.00%	IT services	23	2	23
Santander Sociedade de Crédito, Financiamento e Investimento S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Finance company	289	441	655
Santander Technology USA, LLC	United States	0.00	100.00%		100.00%	100.00%	IT services	47	0	47
Santander Tecnología Argentina S.A.	Argentine	0.00%	99.83%		100.00%	100.00%	IT services	7	6	10
Santander Tecnología México, S.A. de C.V.	Mexico	0.00%	99.98%		100.00%	100.00%	IT services	52	0	52
Santander Totta Seguros, Companhia de Seguros de Vida, S.A.	Portugal	0.00	100.00%		100.00%	100.00%	Insurance	99	27	246
Santander Towarzystwo Funduszy Inwestycyjnych S.A.	Poland	50.00%	29.35%		100.00%	100.00%	Fund managem ent company	4	33	172
Santander Trade Services Limited	Hong-Kong	—	100.00%		100.00%	100.00%	Inactive	24	1	16
Santander Trust S.A.	Argentine	—	100.00%		100.00%	100.00%	Services	0	0	0
Santander UK Group Holdings plc	United Kingdom	77.67%	22.33%		100.00%	100.00%	Holding company	15,277	192	19,046
Santander UK Investments	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	114	(2)	114
Santander UK Operations Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Finance company	7	0	0
Santander UK plc	United Kingdom	0.00%	100.00%		100.00%	100.00%	Banking	12,746	2,167	15,039
Santander UK Technology Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	IT services	25	0	6
Santander US Capital Markets LLC	United States	0.00%	100.00%		100.00%	100.00%	Securities investmen t	904	53	957
Santander Valores S.A.	Argentine	5.10%	94.73%		100.00%	100.00%	Securities company	30	11	42
Santusa Holding, S.L.	Spain	69.76%	30.24%		100.00%	100.00%	Holding company	10,589	495	6,525

247

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
SBNA Auto Lease Funding LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	(58)	(87)	0
SBNA Auto Lease Trust 2023-A	United States	—	(b)		—	—	Securitizati on	(31)	(23)	0
SBNA Auto Lease Trust 2024-A	United States	—	(b)		—	—	Securitizati on	(18)	(26)	0
SBNA Auto Lease Trust 2024-B	United States	—	(b)		—	—	Securitizati on	(12)	(30)	0
SBNA Auto Lease Trust 2024-C	United States	—	(b)		—	—	Securitizati on	4	(8)	0
SBNA Auto Lease Trust 2025-A	United States	—	(b)		—	—	Securitizati on	0	0	0
SBNA Auto Lease Trust 2025-B	United States	—	(b)		—	—	Inactive	0	0	0
SBNA Auto Receivables Funding LLC	United States	0.00%	100.00%		100.00%	100.00%	Finance company	2	3	4
SBNA Auto Receivables Grantor Trust 2025-SF1	United States	—	(b)		—	—	Inactive	0	0	0
SBNA Auto Receivables Trust 2025-SF1	United States	—	(b)		—	—	Inactive	0	0	0
SBNA Investor LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	795	119	914
SC Austria Auto Finance 2020-1 Designated Activity Company	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SC Austria Consumer Loan 2021 Designated Activity Company	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SC Austria S.à r.l.	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Austria S.à r.l., Compartment Consumer 2025-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Canada Asset Securitization Trust	Canada	—	(b)		—	—	Securitizati on	2	4	0
SC Germany Auto 2019-1 UG (haftungsbeschränkt) (j)	Germany	—	(b)		—	—	Securitizati on	0	0	0

248

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
SC Germany S.A.	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2020-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2021-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2022-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2023-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2024-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2024-2	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2025-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer 2025-2	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Consumer Private 2023-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Leasing 2023-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Leasing 2025-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Germany S.A., Compartment Mobility 2020-1	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Mobility AB	Sweden	0.00%	100.00%		100.00%	100.00%	Renting	0	0	0
SC Mobility AS	Norway	0.00%	100.00%		100.00%	100.00%	Renting	32	0	33
SC Nordics S.à r.l.	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SC Nordics S.à r.l. , Compartment Rahoituspalvelut 2025	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0

249

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
SC Poland Consumer 23-1 Designated Activity Company	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Ajoneuvohallinto IX Limited (j)	Ireland	—	(b)		—	—	Securitizati on	—	—	—
SCF Ajoneuvohallinto X Limited	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Ajoneuvohallinto XI Limited	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Ajoneuvohallinto XII Limited	Irlanda	—	(b)		—	—	Titulizació n	0	0	0
SCF Ajoneuvohallinto XIII Limited	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Eastside Locks GP Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Real estate managem ent	0	0	0
SCF Rahoituspalvelut IX DAC (j)	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Rahoituspalvelut X DAC	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SCF Rahoituspalvelut XI Designated Activity Company	Ireland	—	(b)		—	—	Securitizati on	(15)	0	0
SCF Rahoituspalvelut XII DAC	Ireland	—	(b)		—	—	Securitizati on	(1)	0	0
SCF Rahoituspalvelut XIII DAC	Ireland	—	(b)		—	—	Securitizati on	3	0	0
SCM Poland Auto 2019-1 DAC	Ireland	—	(b)		—	—	Securitizati on	0	0	0
SDMX Superdigital, S.A. de C.V., Institución de Fondos de Pago Electrónico	Mexico	0.00%	100.00%		100.00%	100.00%	Payment platform	1	(1)	0
Secucor Finance 2021-1, DAC (j)	Ireland	—	(b)		—	—	Securitizati on	0	0	0
Secucor Finance 2025-1 Designated Activity Company	Ireland	—	(b)		—	—	Securitizati on	0	0	0
Services and Promotions Delaware Corporation	United States	0.00%	100.00%		100.00%	100.00%	Holding company	125	0	198
Services and Promotions Miami LLC	United States	0.00%	100.00%		100.00%	100.00%	Real estate	126	0	126

250

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Servicios de Cobranza, Recuperación y Seguimiento, S.A. de C.V.	Mexico	0.00%	100.00%		100.00%	100.00%	Finance company	38	0	40
Servicios Inmobiliarios Residencial en Venta JV2, S.L.	Spain	0.00%	27.57%		27.57%	90.00%	Real estate	10	0	3
Sheppards Moneybrokers Limited	United Kingdom	0.00%	100.00%		100.00%	100.00%	Inactive	0	0	0
Shiloh III Wind Project, LLC	United States	0.00%	100.00%		100.00%	100.00%	Renewable energies	327	5	333
Silk Finance No. 5	Portugal	—	(b)		—	—	Securitizati on	25	(5)	0
Silk Finance No. 6	Portugal	—	(b)		—	—	Securitizati on	0	8	0
Sociedad Integral de Valoraciones Automatizadas, S.A. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Appraisals	2	0	1
Sociedad Operadora de Tarjetas de Pago Santander Getnet Chile S.A.	Chile	0.00%	67.13%		100.00%	100.00%	Payments and collection services	1	47	32
Socur S.A. (f)	Uruguay	100.00%	0.00%		100.00%	100.00%	Finance company	69	19	58
Solution 4Fleet Consultoria Empresarial S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Vehicle rental	1	0	1
Sovereign Community Development Company	United States	0.00%	100.00%		100.00%	100.00%	Holding company	42	1	43
Sovereign Delaware Investment Corporation	United States	0.00%	100.00%		100.00%	100.00%	Holding company	146	5	151
Sovereign Lease Holdings, LLC	United States	0.00%	100.00%		100.00%	100.00%	Financial services	228	5	233
Sovereign REIT Holdings, Inc.	United States	0.00%	100.00%		100.00%	100.00%	Holding company	8,060	268	8,328
SPIRE SA Compartment 2025-148	Luxembourg	—	(b)		—	—	Securitizati on	0	0	0
SSA Swiss Advisors AG	Switzerland	0.00%	100.00%		100.00%	100.00%	Wealth managem ent	2	0	4
Stellantis Consumer Financial Services Polska Sp. z o.o.	Poland	0.00%	50.00%		100.00%	100.00%	Finance company	5	2	1

251

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Stellantis Financial Services Belux SA	Belgium	0.00%	50.00%		100.00%	100.00%	Finance company	101	11	57
Stellantis Financial Services España, E.F.C., S.A.	Spain	0.00%	50.00%		50.00%	50.00%	Finance company	401	(21)	190
Stellantis Financial Services Italia S.p.A.	Italy	0.00%	50.00%		50.00%	50.00%	Banking	807	112	293
Stellantis Financial Services Nederland B.V.	Netherlands	0.00%	50.00%		100.00%	100.00%	Finance company	80	15	39
Stellantis Financial Services Polska Sp. z o.o.	Poland	0.00%	50.00%		50.00%	50.00%	Finance company	74	13	17
Stellantis Renting Italia S.p.A.	Italy	0.00%	50.00%		100.00%	100.00%	Renting	11	5	3
Sterrebeeck B.V.	Netherlands	100.00%	0.00%		100.00%	100.00%	Holding company	6,373	515	10,860
Suleyado 2003, S.L. Unipersonal	Spain	0.00%	100.00%		100.00%	100.00%	Securities investmen t	34	0	31
Superdigital Holding Company, S.L.	Spain	0.00%	100.00%		100.00%	100.00%	Holding company	28	(4)	24
Superdigital Logística S.A.	Brazil	0.00%	100.00%		100.00%	100.00%	Payment services	6	(1)	5
Suzuki Servicios Financieros, S.L.	Spain	0.00%	51.00%		51.00%	51.00%	Intermedia tion	16	2	8
Swesant SA	Switzerland	0.00%	100.00%		100.00%	100.00%	Holding company	323	(3)	0
Tabasco Energía España, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Holding company	7	0	7
Taxos Luz, S.L. Unipersonal	Spain	0.00%	70.00%		100.00%	100.00%	Renewable energies	3	0	11
Teatinos Siglo XXI Inversiones S.A.	Chile	50.00%	50.00%		100.00%	100.00%	Holding company	1,521	333	2,167
Terras Fundo de Investimento nas Cadeias Produtivas do Agronegocio - Fiagro - Resp Limitada	Brazil	0.00%	89.86%		100.00%	0.00%	Investmen t fund	2	0	1
The Best Specialty Coffee, S.L. Unipersonal	Spain	100.00%	0.00%		100.00%	100.00%	Restaurant services	3	0	3

252

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
TIMFin S.p.A.	Italy	0.00%	51.00%		51.00%	51.00%	Finance company	63	4	38
Titularizadora Colombiana S.A. - Universalidad TIV V9	Colombia	—	(b)		—	—	Securitizati on	0	0	0
Tonopah Solar I, LLC	United States	0.00%	100.00%		100.00%	100.00%	Holding company	5	0	5
Tools Soluções e Serviços Compartilhados Ltda.	Brazil	0.00%	89.86%		100.00%	100.00%	Services	31	4	31
Tornquist Asesores de Seguros S.A. (j)	Argentine	0.00%	99.99%		99.99%	99.99%	Inactive	0	0	0
Toro Corretora de Títulos e Valores Mobiliários S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Securities company	62	(1)	55
Toro Investimentos S.A.	Brazil	0.00%	89.86%		100.00%	100.00%	Securities company	43	(2)	36
Totta (Ireland), PLC	Ireland	0.00%	99.87%		100.00%	100.00%	Finance company	451	11	450
Totta Urbe - Empresa de Administração e Construções, S.A.	Portugal	0.00%	99.87%		100.00%	100.00	Real estate	88	1	89
Trainera Venture Finance I, F.C.R.-PYME	Spain	99.00%	0.00%		99.00%	99.00%	Venture capital fund	21	2	20
Trans Skills Employment Services - Sole Proprietorship LLC	Arab United Emirates	0.00%	66.43%		100.00%	100.00%	Human resources services	0	1	2
Trans Skills Employment Services Malaysia SDN. BHD.	Malaysia	0.00%	66.43%		100.00%	—	Services	0	0	0
Trans Skills Employment Services Vietnam Company Limited	Vietnam	0.00%	66.43%		100.00%	0.00%	Consulting services	0	0	0
Trans Skills General Supplies Egypt LLC	Egypt	0.00%	66.43%		100.00%	—	Consulting services	0	0	0
Trans Skills Information Technology LLC	Saudi Arabia	0.00%	66.43%		100.00%	100.00%	Inactive	0	0	0
Trans Skills Investment in Commercial Enterprises & Management Co. LLC	Arab United Emirates	0.00%	66.43%		100.00%	100.00%	Holding company	1	0	7
Trans Skills Services SPC	Oman	0.00%	66.43%		100.00%	—%	Consulting	0	0	0

253

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Trans Skills South Africa (Pty) Limited	Republic of South Africa	0.00%	66.43%		100.00%	100.00%	Inactive	0	0	0
Trans Skills Technology Services LLC	Arab United Emirates	0.00%	66.43%		100.00%	100.00%	IT services	0	(3)	0
Transolver Finance EFC, S.A.	Spain	0.00%	51.00%		51.00%	51.00%	Leasing	76	6	17
Transskills Employer Services Private Limited	India	0.00%	66.43%		100.00%	100.00%	Consulting services	0	0	0
Tresmares Capital Corporate S.L.	Spain	89.90%	0.00%		89.90%	—	Holding company	2	2	21
Tresmares Capital Deutschland GmbH	Germany	0.00%	89.90%		100.00%	—	Finance company	0	0	0
Tresmares Capital UK Limited	United Kingdom	0.00%	89.90%		100.00%	—	Fund managem ent company	1	1	1
Tresmares Direct Lending, S.G.E.I.C, S.A.	Spain	0.00%	89.90%		100.00%	—	Fund managem ent company	3	3	2
Tresmares Growth Fund II, S.C.R., S.A.	Spain	40.00%	0.00%	40.00	40.00%	40.00%	Holding company	72	6	39
Tresmares Growth Fund III, S.C.R., S.A.	Spain	40.00%	0.00%	40.00	40.00%	40.00%	Holding company	55	4	30
Tresmares Growth Fund Santander, S.C.R., S.A.	Spain	100.00%	0.00%	100.00	100.00%	100.00%	Holding company	139	(3)	131
Tresmares Private Equity, S.G.E.I.C, S.A.	Spain	0.00%	89.90%	100.00	—	—	Fund managem ent company	1	4	1
Tresmares Santander Direct Lending, SICC, S.A.	Spain	99.67%	0.00%	99.67	99.67%	99.67%	Fund managem ent company	1,419	69	1,410
TS HR & Payroll Services Morocco SARL AU	Morocco	0.00%	66.43%	100.00	100.00%	—	Consultin g services	0	0	0
TVG-Trappgroup Versicherungsvermitt lungs-GmbH (d)	Germany	0.00%	90.01%	100.00	100.00%	100.00%	Insurance brokerage	0	0	2
Universia Brasil S.A.	Brazil	0.00%	100.00%	100.00	100.00%	100.00%	Internet	0	0	0
Universia Chile S.A.	Chile	0.00%	86.84%	86.84	86.84%	86.84%	Internet	1	0	0
Universia Colombia S.A.S.	Colombia	0.00%	100.00%	100.00	100.00%	100.00%	Internet	0	0	0
Universia España Red de Universidades, S.A.	Spain	0.00%	89.43%	89.43	89.43%	89.43%	Internet	3	0	2
Universia Holding, S.L.	Spain	100.00%	0.00%	100.00	100.00%	100.00%	Holding company	18	0	18
Universia México, S.A. de C.V.	Mexico	0.00%	100.00%	100.00	100.00%	100.00%	Internet	1	0	1
Universia Perú, S.A.	Peru	0.00%	99.73%		99.73%	99.64%	Internet	0	0	0

254

Subsidiaries of Banco Santander, S.A. 1
		% of ownership held by Banco Santander			Percentage of voting power (k)			EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Capital + reserves	Net results	Carrying amount
Universia Uruguay, S.A.	Uruguay	0.00%	100.00%	100.00	100.00%	100.00%	Internet	0	0	0
Uro Property Holdings, S.A. (e)	Spain	0.00%	0.00%	—	99.99%	99.99%	Real estate investme nt	—	—	—
VERT-11 Companhia Securitizadora de Créditos Financeiros	Brazil	—	(b)	—	—	—	Securitiza tion	0	0	0
Wallcesa, S.A.	Spain	100.00%	0.00%	100.00	100.00%	100.00%	Financial services	(914)	17	0
WIM Servicios Corporativos, S.A. de C.V.	Mexico	0.00%	100.00%	100.00%	100.00%	100.00%	Advisory services	1	0	0
WTW Shipping Designated Activity Company	Ireland	100.00%	0.00%	100.00%	100.00%	100.00%	Leasing	20	0	9

a. Amount according to the provisional books of each company as of the date of publication of these annexes, generally referring to 31 December 2025

without considering, where appropriate, interim dividends that have been made during the year. In the book value (net provision cost), the percentage

of ownership of the Group has been applied to the figure of each of the holding companies, without considering the impairment of goodwill made in

the consolidation process. The data for foreign companies are converted into euros at the exchange rate at the end of the year.

b. Companies over which effective control is maintained.

c. Data as at 31 December 2024, latest available accounts.

d. Data as at 31 March 2025, latest accounts available.

e. Accounting merged company, Pending registration.

f. Data as at 30 September 2025, last accounts available.

g. Data as at 30 April 2025, last accounts available.

h. Data as at 31 July 2025, last accounts available.

i. Companies in liquidation. Pending registration.

j. Company in liquidation as at 31 December 2025.

k. Pursuant to Article 3 of Royal Decree 1159/ 2010, of 17 September, approving the rules for the preparation of consolidated annual accounts, in order to

determine the voting rights, voting rights held directly by the parent company have been added to those held by companies controlled by the parent

company or by other persons acting in their own name but on behalf of a Group company. For these purposes, the number of votes corresponding to

the parent company, in relation to the companies indirectly dependent on it, is that corresponding to the dependent company that directly participates

in the share capital of the latter.

l. Company resident for tax purposes in Spain.

m. Data as at 30 June 2021, latest available accounts.

n. Company resident for tax purposes in the United Kingdom.

o. Data as at 28 February 2025, latest available accounts.

(1) Companies issuing preference shares are listed in Annex III, together with other relevant information.

255

Appendix II

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
Administrador Financiero de Transantiago S.A.	Chile	0.00%	13.43%		20.00%	20.00%	Payments and collection services	Associated	59,000,000	8,000,000	2,000,000
Adprotel Strand, S.L. (consolidado)	Spain	0.00%	38.20%		38.20%	38.20	Real estate development	Associated	693	622	26
Aegon Santander Portugal Não Vida - Companhia de Seguros, S.A.	Portugal	0.00%	49.00%		49.00%	49.00%	Insurance	Joint ventures	84	9	21
Aegon Santander Portugal Vida - Companhia de Seguros Vida, S.A.	Portugal	0.00%	49.00%		49.00%	49.00%	Insurance	Joint ventures	153	22	19
Aeroplan - Sociedade Construtora de Aeroportos, Lda. (e)	Portugal	0.00%	19.97%		20.00%	20.00%	Inactive	—	0	0	0
Agri Tech Investments Argentina S.A.U.	Argentine	0.00%	50.00%		50.00%	0.00%	Financial services	—	10	6	1
Aguas de Fuensanta, S.A. (e) (k)	Spain	36.78%	0.00%		36.78%	36.78%	Food	—	—	—	—
AHLC - Promoção Imobiliária, Lda.	Portugal	0.00%	35.00%		35.00%	0.00%	Real estate development	Joint ventures	—	0	—
Alcoaxarquía, S.L.	Spain	0.00%	16.00%		40.00%	—	Food	—	25	6	2
Alma UK Holdings Ltd (consolidado) (b)	United Kingdom	30.00%	0.00%		30.00%	30.00	Holding company	Joint ventures	3	2	4
Apolo Vault 1, S.L.	Spain	0.00%	25.00%		25.00%	25.00	Renewable energies	Joint ventures	0	0	0
Aranguren Comercial de Embalaje, S.L.	Spain	0.00%	9.96%		24.90%	—	Industrial products	—	38	11	2
Arneplant, S.L.	Spain	0.00%	11.36%		28.41%	—	Footwear and textiles	—	46	22	2
Asesoría Informática Gallega, S.L.	Spain	0.00%	12.54%		31.34%	—	IT services	—	4	0	2
Atitlan Agro I, S.C.R., S.A. (b) (n)	Spain	42.54%	0.00%		0.00%	0.00%	Venture capital company	—	123	114	(5)
Attijariwafa Bank Société Anonyme (consolidado) (b)	Morocco	0.00%	5.10%		5.10%	5.10%	Banking	—	67,801	4,942	887
AutoFi Inc. (b)	United States	9.50%	9.40%		4.99%	4.99%	E-commerce	—	19	19	(7)
Autopistas del Sol S.A. (b)	Argentine	0.00%	14.17%		14.17%	14.17%	Highway concession	—	232	191	(54)
Avanath Affordable Housing IV LLC (b)	United States	0.00%	7.27%		7.27%	7.27%	Investment company	—	411	405	(35)
Avanzare Innovación Tecnológica, S.L.	Spain	0.00%	12.66%		31.64%	0.00%	Technology	—	43	19	5
Axle 2023-1 Ltd	United Kingdom	0.00%	(h)		0.00%	—	Securitization	Joint ventures	689	2	(5)
Banco RCI Brasil S.A.	Brazil	0.00%	35.85%		39.89%	39.89%	Banking	Joint ventures	2,231	141	54
Banco S3 Caceis México, S.A., Institución de Banca Múltiple	Mexico	0.00%	50.00%		50.00%	50.00%	Banking	Joint ventures	245	112	15
Bank of Beijing Consumer Finance Company	China	0.00%	20.00%		20.00%	20.00%	Finance company	Associated	1,904	156	21
Bank of Shanghai Co., Ltd. (consolidado) (b)	China	6.54%	0.00%		6.54%	6.54%	Banking	—	392,042	28,022	2,863
Biomas – Serviços Ambientais, Restauração e Carbono S.A.	Brazil	0.00%	14.98%		16.67%	16.67%	Consulting services	Associated	7	9	(6)
Bizum, S.L.	Spain	20.92%	0.00%		20.92%	20.92%	Payment services	Associated	29	11	2
Campo Grande Empreendimentos Ltda. (k) (e)	Brazil	0.00%	22.75%		25.32%	25.32%	Inactive	—	0	0	0
CaptureNow Limited (q)	United Kingdom	0.00%	22.22%		22.22%	—	Software	—	1	0	0
CCPT - ComprarCasa, Rede Serviços Imobiliários, S.A.	Portugal	0.00%	49.98%		49.98%	49.98%	Real estate services	Joint ventures	0	0	0

256

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
Centro de Compensación Automatizado S.A.	Chile	0.00%	22.38%		33.33%	33.33%	Payments and collection services	Associated	21	12	6
Centro para el Desarrollo, Investigación y Aplicación de Nuevas Tecnologías, S.A. (l)	Spain	0.00%	49.00%		49.00%	49.00%	Technology	Associated	3	3	0
Cicrosa Hidraúlica, S.L.	Spain	0.00%	13.20%		33.00%	0.00%	Industrial supplies	—	19	12	3
CIP S.A.	Brazil	0.00%	15.74%		17.52%	17.52%	Financial services	Associated	335	188	99
CNP Santander Insurance Europe Designated Activity Company	Ireland	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	1,475	229	56
CNP Santander Insurance Life Designated Activity Company	Ireland	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	798	63	44
CNP Santander Insurance Services Ireland Limited	Ireland	0.00%	49.00%		49.00%	49.00%	Services	Associated	16	0	0
Companhia Promotora UCI	Brazil	0.00%	25.00%		25.00%	25.00%	Financial services	Joint ventures	0	0	0
Compañia Española de Financiación de Desarrollo, Cofides, S.A., SME (b)	Spain	20.18%	0.00%		20.18%	20.17%	Finance company	—	244	213	25
Compañía Española de Seguros de Crédito a la Exportación, S.A., Compañía de Seguros y Reaseguros (consolidado) (b)	Spain	23.33%	0.55%		23.88%	23.88%	Credit insurance	—	1,432	570	64
Compañía Española de Viviendas en Alquiler, S.A. (consolidado)	Spain	24.07%	0.00%		24.07%	24.07%	Real estate	Associated	626	416	23
Compañía para los Desarrollos Inmobiliarios de la Ciudad de Hispalis, S.L., en liquidación (d) (e)	Spain	21.98%	0.00%		21.98%	21.98%	Real estate development	—	38	(325)	0
Connecting Visions Ecosystems, S.L.	Spain	29.96%	0.00%		29.96%	37.56%	Consulting services	Joint ventures	2	1	0
Construtora Tenda S/A (b)	Brazil	4.92%	4.05%		9.43%	0.00%	Real estate	—	828	147	16
Corkfoc Cortiças, S.A. (c)	Portugal	0.00%	27.54%		27.58%	27.58%	Cork industry	—	3	20	0
CSD Central de Serviços de Registro e Depósito Aos Mercados Financeiro e de Capitais S.A.	Brazil	0.00%	16.12%		17.94%	20.00%	Financial services	Associated	43	42	0
Decus Real Estate, S.L.	Spain	0.00%	30.00%		30.00%	30.00%	Real estate	Joint ventures	88	76	0
Delos Financial Technologies, Inc. (b)	United States	0.00%	22.84%		22.84%	0.00%	Finance company	—	2	3	(1)
DoRes Securitisation S.r.l	Italy	—	(h)		—	—	Securitization	Joint ventures	0	0	0
Ebora 220, S.L.	Spain	0.00%	44.00%		50.00%	0.00%	Renewable energies	Joint ventures	2	2	0
Ebora Evacuación, S.L.	Spain	0.00%	50.00%		50.00%	0.00%	Renewable energies	Joint ventures	1	1	0
Elaia Agro, S.L. (b)	Spain	49.99%	0.00%		49.99%	49.99%	Consulting services	Associated	5	4	0
Ethias Lease N.V.	Belgium	0.00%	50.00%		50.00%	50.00%	Leasing	Associated	76	9	(7)
Euro Automatic Cash Entidad de Pago, S.L.	Spain	50.00%	0.00%		50.00%	50.00%	Payment services	Associated	42	21	1
European Hospitality Opportunities S.à r.l. (b)	Luxembourg	0.00%	49.00%		49.00%	49.00%	Holding company	Joint ventures	55	16	0
Evacuación Liquesun, S.L.	Spain	0.00%	35.00%		50.00%	50.00%	Electricity production	Joint ventures	1	1	0
Evolve SPV S.r.l.	Italy	—	(h)		—	—	Securitization	Joint ventures	55	0	0
Exam Papers Plus Ltd	United Kingdom	0.00%	25.00%		25.00%	0.00%	Commerce	Associated	6	3	2
Federal Reserve Bank of Boston (b)	United States	—	21.38		21.38	21.09	Banking	—	186,079	1,496	83
Fondo de Titulización de Activos UCI 14	Spain	—	(h)		—	—	Securitization	Joint ventures	163	0	0

257

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
Fondo de Titulización de Activos UCI 15	Spain	—	(h)		—	—	Securitization	Joint ventures	207	0	0
Fondo de Titulización de Activos UCI 16	Spain	—	(h)		—	—	Securitization	Joint ventures	288	0	0
Fondo de Titulización de Activos UCI 17	Spain	—	(h)		—	—	Securitization	Joint ventures	245	0	0
Fondo de Titulización, RMBS Green Prado XI	Spain	—	(h)		—	—	Securitization	Joint ventures	372	0	0
Fondo de Titulización, RMBS Prado IX	Spain	—	(h)		—	—	Securitization	Joint ventures	341	0	0
Fondo de Titulización, RMBS Prado VIII	Spain	—	(h)		—	—	Securitization	Joint ventures	291	0	0
Fondo de Titulización, RMBS Prado X	Spain	—	(h)		—	—	Securitization	Joint ventures	392	0	0
Forest Power Aranda, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	55.00%	Renewable energies	Joint ventures	2	1	0
Forest Power Cantabria, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Electricity production	Joint ventures	0	0	0
Forest Power Delta, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Gas production	Joint ventures	0	0	0
Forest Power Epsilon, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Chemical products production	Joint ventures	0	0	0
Forest Power Gamma, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Chemical products production	Joint ventures	0	0	0
Forest Power Kappa, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Gas production	Joint ventures	0	0	0
Forest Power Lambda, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Chemical products production	Joint ventures	0	0	0
Forest Power Omicron, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Chemical products production	Joint ventures	0	0	0
Forest Power Zeta, S.L. Unipersonal	Spain	0.00%	55.00%		55.00%	0.00%	Chemical products production	Joint ventures	0	0	0
Forest Power, S.L.	Spain	0.00%	55.00%		55.00%	55.00%	Renewable energies	Joint ventures	1	1	0
Forgepoint Capital International Management Limited	United Kingdom	50.00%	0.00%		50.00%	50.00%	Consulting services	Joint ventures	1	1	(1)
Fortune Auto Finance Co., Ltd	China	0.00%	50.00%		50.00%	50.00%	Finance company	Joint ventures	2,100	443	20
FrauDfense, S.L.	Spain	33.33%	0.00%		33.33%	33.33%	IT services	Joint ventures	3	5	(2)
Fremman limited (consolidado) (b)	United Kingdom	32.99%	0.00%		4.99%	4.99%	Consulting services	Associated	10	6	1
Fundo de Investimento em Direitos Creditórios Multisegmentos NPL Ipanema X Responsabilidade Limitada	Brazil	0.00%	44.93%		50.00%	0.00%	Investment fund	Joint ventures	20	20	1
Gestamp Real Estate Assets 1, S.L. (k)	Spain	0.00%	43.89%		43.89%	0.00%	Real estate management	—	—	—	—
Gestamp Real Estate Bizkaia, S.L. (k)	Spain	0.00%	24.92%		24.92%	0.00%	Real estate management	—	—	—	—
Gestamp Real Estate Investment 2, S.L. (k)	Spain	—	37.41%		37.41%	—	Real estate management	—	—	—	—
Gestamp Real Estate Management 3, S.L. (k)	Spain	0.00%	36.19%		36.19%	0.00%	Real estate management	—	—	—	—
Gestora de Inteligência de Crédito S.A.	Brazil	0.00%	13.98%		16.00%	16.00%	Collection services	Associated	190	52	(4)
Gire S.A.	Argentine	0.00%	58.23%		58.33%	58.33%	Payments and collection services	Associated	122	77	(4)

258

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
Glenrowan Solar Holdings Pty Ltd	Australia	49.00%	0.00%		49.00%	49.00%	Holding company	Joint ventures	139	52	(3)
Global Esmirna, S.L. (en liquidación) (e) (l)	Spain	0.00%	15.00%		37.51%	0.00%	Services	—	26	(1)	(16)
HCUK Auto Funding 2017-2 Ltd	United Kingdom	0.00%	(h)		0.00%	0.00%	Securitization	Joint ventures	459	(2)	0
HCUK Auto Funding 2022-1 Limited (m)	United Kingdom	—	(h)		—	—	Securitization	Joint ventures	917	2	(4)
HCUK Auto Funding 2025-1 Ltd	United Kingdom	0.00%	(h)		0.00%	0.00%	Securitization	Joint ventures	232	0	0
Healthy Neighborhoods Equity Fund I LP (b)	United States	0.00%	22.37%		22.37%	22.37%	Real estate	—	8	8	—
Hyundai Capital UK Limited	United Kingdom	—	50.01%		50.01%	50.01%	Finance company	Joint ventures	5,643	442	75
Hyundai Corretora de Seguros Ltda.	Brazil	—	44.93%		50.00%	50.00%	Insurance mediation	Joint ventures	2	1	0
Imperial Holding S.C.A. (e) (i)	Luxembourg	—	36.36%		36.36%	36.36%	Securities investment	—	0	(113)	0
Imperial Management S.à r.l. (b) (e)	Luxembourg	—	40.20%		40.20%	40.20%	Holding company	—	0	0	0
Invensa Tradeco UK Limited	United Kingdom	25.00%	—		25.00%	4.99%	Holding company	Associated	9	13	(6)
Inverlur Aguilas I, S.L.	Spain	—	50.00%		50.00%	50.00%	Real estate	Joint ventures	0	0	0
Inverlur Aguilas II, S.L.	Spain	—	50.00%		50.00%	50.00%	Real estate	Joint ventures	1	1	0
Inversiones ZS América Dos Ltda.	Chile	—	49.00%		49.00%	49.00%	Real estate and property investment	Associated	252	186	58
Inversiones ZS América SpA	Chile	—	49.00%		49.00%	49.00%	Real estate and property investment	Associated	339	339	58
Klar Holdings Limited (consolidado) (b)	Cayman Islands	—	7.35%		7.35%	—	Holding company	—	491	17	(40)
LB Oprent, S.A.	Spain	40.00%	0.00%		40.00%	40.00%	Industrial machinery rental	Associated	6	2	1
Logitek Software Ltd (k)	United Kingdom	0.00%	20.27%		20.27%	0.00%	Software	Joint ventures	—	—	—
Mapfre Santander Portugal - Companhia de Seguros, S.A.	Portugal	0.00%	49.99%		49.99%	49.99%	Insurance	Associated	22	8	1
Massachusetts Business Development Corp. (consolidado) (b)	United States	0.00%	21.61%		21.61%	21.61%	Finance company	—	49	15	1
MB Capital Fund IV, LLC (b)	United States	0.00%	21.51%		21.51%	21.51%	Finance company	—	5	5	1
Merlin Properties, SOCIMI, S.A. (consolidado) (b)	Spain	20.08%	4.63%		24.68%	24.90%	Real estate investment	Associated	13,459	7,318	284
Merlion Aviation One Designated Activity Company	Ireland	—	(p)		—	—	Renting	—	215	17	0
Metrovacesa, S.A. (consolidado) (b)	Spain	31.94%	17.46%		49.43%	49.47%	Real estate development	Associated	2,414	1,581	16
Nera Agro Holding, S.L. (b)	Spain	50.00	0.00%		50.00	—	Holding company	Joint ventures	2	4	(3)
Nera Paraguay S.A.	Paraguay	—	50.00%		50.00	—	Financial services	—	0	0	0
Nera Uruguay S.A.	Uruguay	0.00%	50.00%		50.00%	—	Financial services	—	0	0	0
Ocyener 2008, S.L.	Spain	0.00%	45.00%		45.00%	45.00%	Holding company	Associated	18	18	0
Operadora de Activos Beta, S.A. de C.V.	Mexico	49.99%	0.00%		49.99%	49.99%	Finance company	Associated	0	0	0
Payever GmbH	Germany	0.00%	10.00%		10.00%	10.00%	Software	Associated	5	4	0

259

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
Phoenix C1 Aviation Designated Activity Company (e)	Ireland	—	(p)		—	—	Renting	—	0	(17)	17
Play Digital S.A.	Argentine	0.00%	13.49%		13.52%	14.21%	Payment platform	Associated	31	6	1
Pluxee Beneficios Brasil S.A.	Brazil	0.00%	17.97%		20.00%	20.00%	Services	Associated	1,304	400	97
POLFUND - Fundusz Poręczeń Kredytowych S.A.	Poland	0.00%	29.35%		50.00%	50.00%	Management	Associated	34	24	1
Portland SPV S.r.l.	Italy	—	(h)		—	—	Securitization	Joint ventures	106	0	0
Prodesa Medioambiente, S.L.	Spain	0.00%	9.80%		24.50%	0.00%	Agricultural projects	—	39	5	0
Promontoria Manzana, S.A. (consolidado) (b)	Spain	20.00%	0.00%		20.00%	20.00%	Holding company	Associated	558	117	(38)
Proteos Biotech, S.L.	Spain	0.00%	12.00%		30.00%	0.00%	Pharmaceutica l	—	17	7	2
Redbanc S.A.	Chile	0.00%	22.44%		33.43%	33.43%	Services	Associated	28	13	3
Redsys Servicios de Procesamiento, S.L. (consolidado)	Spain	24.90%	0.06%		24.96%	24.96%	Cards	Associated	134	63	10
Resurgence, S.L.	Spain	0.00%	40.00%		40.00%	0.00%	Real estate development	Joint ventures	8	—	—
Retama Real Estate, S.A. Unipersonal	Spain	—	50.00%		50.00%	50.00%	Real estate	Joint ventures	14	(55)	(2)
Rías Redbanc S.A.	Uruguay	0.00%	25.00%		25.00%	25.00%	Services	—	5	1	0
RMBS Belém No.2	Portugal	—	(h)		—	—	Securitization	Joint ventures	170	0	0
Roc Aviation One Designated Activity Company	Ireland	0.00%	(p)		0.00%	0.00%	Renting	—	213	(10)	(15)
Roc Shipping One Designated Activity Company	Ireland	0.00%	(p)		0.00%	0.00%	Renting	—	82	3	(1)
RP Royal Distribution, S.L.	Spain	—	23.73%		23.73%	—	Food	Associated	27	12	6
S3 Caceis Brasil Distribuidora de Títulos e Valores Mobiliários S.A.	Brazil	0.00%	50.00%		50.00%	50.00%	Securities company	Joint ventures	283	101	41
S3 Caceis Brasil Participações S.A.	Brazil	0.00%	50.00%		50.00%	50.00%	Holding company	Joint ventures	233	106	40
S3 CACEIS Colombia S.A. Sociedad Fiduciaria	Colombia	0.00%	50.00%		50.00%	50.00%	Finance company	Joint ventures	13	10	1
Sancus Green Investments II, S.C.R., S.A. (b)	Spain	—	33.02%		33.02	33.02	Venture capital company	—	48	48	0
Santander Allianz Towarzystwo Ubezpieczeń na Życie S.A.	Poland	0.00%	28.76%		49.00%	49.00%	Insurance	Associated	240	32	45
Santander Allianz Towarzystwo Ubezpieczeń S.A.	Poland	0.00%	28.76%		49.00%	49.00%	Insurance	Associated	86	38	10
Santander Assurance Solutions, S.A.	Spain	0.00%	66.67%		66.67%	66.67%	Insurance mediation	Joint ventures	18	8	1
Santander Auto S.A.	Brazil	0.00%	44.93%		50.00%	50.00%	Insurance	Associated	107	6	11
Santander Caceis Latam Holding 1, S.L.	Spain	0.00%	50.00%		50.00%	50.00%	Holding company	Joint ventures	850	753	96
Santander Caceis Latam Holding 2, S.L.	Spain	0.00%	50.00%		50.00%	50.00%	Holding company	Joint ventures	3	3	0
Santander Generales Seguros y Reaseguros, S.A.	Spain	—	49.00%		49.00%	49.00%	Insurance	Joint ventures	839	143	65
Santander Mapfre Hipoteca Inversa, E.F.C., S.A.	Spain	—	50.00%		50.00%	50.00%	Finance company	Joint ventures	31	13	(4)
Santander Mapfre Seguros y Reaseguros, S.A.	Spain	—	49.99%		49.99%	49.99%	Insurance	Associated	240	89	4
Santander Vida Seguros y Reaseguros, S.A.	Spain	—	49.00%		49.00%	49.00%	Insurance	Joint ventures	1,010	291	78
Seaya Holdco, S.L. (consolidado)	Spain	24.99%	0.00%		24.99%	24.99%	Holding company	Associated	30	25	2
Servicios de Infraestructura de Mercado OTC S.A	Chile	0.00%	8.38%		12.48%	12.48%	Services	Associated	34	16	0

260

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
SIBS-SGPS, S.A. (consolidado) (b)	Portugal	0.00%	15.54%		16.55%	15.56%	Management of portfolios	—	596	278	57
SIG RCRS A/B MF 2023 Venture LLC	United States	0.00%	20.00%		20.00%	20.00%	Finance company	—	4,520	3,842	668
Siguler Guff SBIC Fund LP (b)	United States	0.00%	20.00%		20.00%	20.00	Investment company	—	48	47	4
Sistema de Tarjetas y Medios de Pago, S.A. (b)	Spain	20.61%	0.00%		20.61%	20.61%	Payment methods	Associated	468	6	0
Sociedad Conjunta para la Emisión y Gestión de Medios de Pago, E.F.C., S.A.	Spain	45.70%	0.00%		45.70%	45.70%	Payment services	Joint ventures	73	37	(1)
Sociedad de Garantía Recíproca de Santander, S.G.R. (b)	Spain	24.91%	0.22%		25.13%	25.17%	Financial services	—	18	10	0
Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria, S.A. (b)	Spain	22.21%	0.00%		22.21%	22.21%	Financial services	—	12,637	(4,744)	(2,826)
Sociedad Interbancaria de Depósitos de Valores S.A.	Chile	0.00%	19.66%		29.29%	29.29%	Securities deposits	Associated	11	9	2
Sociedad Operadora de la Cámara de Compensación de Pagos de Alto Valor S.A.	Chile	0.00%	9.21%		13.72%	0.00%	Services	Associated	11	8	1
Solar Maritime Designated Activity Company (b)	Ireland	—	(h)		—	—	Leasing	Joint ventures	119	7	(1)
STELLANTIS Insurance Europe Limited	Malta	0.00%	50.00%		50.00%	50.00%	Insurance	Joint ventures	230	61	35
STELLANTIS Life Insurance Europe Limited	Malta	0.00%	50.00%		50.00%	50.00%	Insurance	Joint ventures	93	1	14
Stephens Ranch Wind Energy Holdco LLC (consolidado) (b)	United States	0.00%	15.10%		15.10%	15.80	Renewable energies	—	176	149	(7)
Tecnologia Bancária S.A.	Brazil	0.00%	17.05%		19.81%	18.98%	ATMs	Associated	484	149	4
Tonopah Solar Energy Holdings I, LLC (k)	United States	0.00%	26.80%		26.80%	26.80%	Holding company	Joint ventures	—	—	—
Transbank S.A.	Chile	0.00%	16.78%		25.00%	25.00%	Cards	Associated	1,545	139	19
U.C.I., S.A.	Spain	50.00%	0.00%		50.00%	50.00%	Holding company	Joint ventures	750	399	(3)
UCI Greece Credit and Loan Receivables Servicing Company Single Member Societe Anonyme	Greece	0.00%	50.00%		50.00%	50.00%	Financial services	Joint ventures	2	1	0
UCI Holding Brasil Ltda.	Brazil	0.00%	50.00%		50.00%	50.00%	Holding company	Joint ventures	0	(1)	0
UCI Mediação de Seguros, Unipessoal Lda.	Portugal	0.00%	50.00%		50.00%	50.00%	Insurance mediation	Joint ventures	0	0	0
UCI Servicios para Profesionales Inmobiliarios, S.A. Unipersonal	Spain	0.00%	50.00%		50.00%	50.00%	Real estate services	Joint ventures	1	0	0
Uncapped Limited (o)	United Kingdom	0.00%	29.14%		29.14%	—	Finance company	—	98	21	(1)
Unicre-Instituição Financeira de Crédito, S.A.	Portugal	0.00%	21.83%		21.86%	21.86%	Finance company	—	531	129	20
Unión de Créditos Inmobiliarios, S.A. Unipersonal, EFC	Spain	0.00%	50.00%		50.00%	50.00%	Mortgage lending company	Joint ventures	9,255	756	(72)
Valorhold, S.L.	Spain	0.00%	16.00%		39.99%	0.00%	Holding company	—	191	133	7
VCFS Germany GmbH	Germany	0.00%	50.00%		50.00%	50.00%	Marketing	Joint ventures	1	1	0
Venda de Veículos Fundo de Investimento em Direitos Creditórios	Brazil	0.00%	35.85%		39.89%	39.89%	Securitization	Joint ventures	584	528	55
Volvo Car Financial Services UK Limited	United Kingdom	0.00%	50.01%		50.01%	50.01%	Leasing	Joint ventures	3,465	187	47
Waycarbon Soluções Ambientais e Projetos de Carbono S.A.	Brazil	68.75%	0.00%		50.00%	100.00%	Consulting services	Associated	10	5	1
Webmotors S.A.	Brazil	0.00%	26.96%		30.00%	30.00%	Services	Associated	131	67	36

261

Societies of which Grupo Santander owns more than 5% (g) , entities associated with Grupo Santander and jointly controlled entities
		% of ownership held by Banco Santander			Percentage of voting power (f)				EUR million (a)
Company	Location	Direct	Indirect		Year 2025	Year 2024	Activity	Type of company	Asset	Capital + reserves	Net results
WWSO II LLP	United Kingdom	0.00%	94.00%		94.00%	0.00%	Real estate investment	Joint ventures	84	28	0
Zurich Santander Brasil Seguros e Previdência S.A.	Brazil	0.00%	48.79%		48.79%	48.79	Insurance	Associated	19,589	262	215
Zurich Santander Holding (Spain), S.L. Unipersonal	Spain	0.00%	49.00%		49.00%	49.00%	Holding company	Associated	1,025	936	311
Zurich Santander Holding Dos (Spain), S.L. Unipersonal	Spain	0.00%	49.00%		49.00%	49.00%	Holding company	Associated	384	382	178
Zurich Santander Insurance América, S.L.	Spain	0.00%	49.00%		49.00%	49.00%	Holding company	Associated	1,504	1,450	426
Zurich Santander Seguros Argentina S.A. (j)	Argentine	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	90	45	12
Zurich Santander Seguros de Vida Chile S.A.	Chile	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	235	40	36
Zurich Santander Seguros Generales Chile S.A.	Chile	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	235	53	20
Zurich Santander Seguros México, S.A.	Mexico	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	2,421	50	189
Zurich Santander Seguros Uruguay S.A.	Uruguay	0.00%	49.00%		49.00%	49.00%	Insurance	Associated	56	20	14

a. Amount according to the provisional books at the date of publication of these annexes of each company, generally referring to 31 December 2025, except

where otherwise indicated due to the fact that the annual accounts are pending formulation. The data for foreign companies are converted into euros at

the exchange rate at the end of the year.

b. Data as at 31 December 2024, latest available accounts.

c. Data as at 31 December 2019, latest available accounts.

d. Data as at 30 November 2021, latest available accounts.

e. Company in liquidation as at 31 December 2025.

f. Pursuant to Article 3 of Royal Decree 1159/ 2010, of 17 September, approving the rules for the preparation of consolidated annual accounts, in order to

determine the voting rights, voting rights held directly by the parent company have been added to those held by companies controlled by the parent

company or by other persons acting in their own name but on behalf of a group company. For these purposes, the number of votes corresponding to the

parent company, in relation to the companies indirectly dependent on it, is that corresponding to the dependent company that directly participates in the

share capital of the latter.

g. Excluding the Group companies listed in Appendix I, as well as those which are of negligible interest with respect to the true and fair view that the

consolidated financial statements must give (in accordance with articles 48 of the Commercial Code and 260 of the Spanish Companies Act).

h. Companies over which joint control is maintained.

i. Data as at 31 October 2024, latest available accounts.

j. Data as at 30 June 2025, latest available accounts.

k. Company with no financial information available.

l. Data as 31 December 2023, latest available account.

m. Data as at 30 September 2025, latest available accounts.

n. Investment managed discretionally by a manager outside the Santander Group, the voting rights not being, in this case, decisive in determining control of

the entity.

o. Data as 30 April 2025, latest available accounts.

p. Company over which effective control has been lost.

q. Data as 31 January 2025, latest available accounts.

262

Appendix III

Issuing subsidiaries of shares and preference shares
		% of ownership held by Banco Santander			EUR million (a)
Company	Location	Direct	Indirect	Activity	Capital	Reserves	Cost of preferred	Net results
Emisora Santander España, S.A. Unipersonal (c)	Spain	—	—	Finance company	—	—	—	—
Santander UK (Structured Solutions) Limited	United Kingdom	0.00%	100.00%	Finance company	0	0	0	0
Santander Global Issuances B.V. (b)	Netherlands	100.00%	0.00%	Finance company	0	0	0	0
Sovereign Real Estate Investment Trust	United States	0.00%	100.00%	Finance company	4,751	(3,383)	82	9

a. Amount according to the books of each interim company as at 31 December 2025, converted into euro (in the case of foreign companies) at the year-

end exchange rate.

b. Company with tax residence in Spain.

c. Accounting merged company. Pending registration.

263

Appendix IV

Notifications of acquisitions and disposals of

investments in 2025

(Article 155 of the Capital Companies Law and

Article 105 of the Securities Market Law)

Regarding compliance with Article 125 of the

Securities Market Law, no notifications required under

said article were made during financial year 2025.

Regarding the information required under Article 155

of the Capital Companies Law, concerning holdings in

which Santander Group owns more than 10% of the

share capital of another company, and any subsequent

acquisitions exceeding 5% of the share capital, see

Annexes I, II and III.

264

Appendix V

List of Transactions subject to the Special Regime

for Mergers, Divisions, Assets Contributions,

Exchange of Securities and corporate domicile

change of a European Company or a European

Cooperative Society from one Member State to

another Member State of the European Union in

which the company has acted as an Acquiring

Entity or Partner

In compliance with the disclosure obligations set out

in Article 86 of Law 27/2014, of 27 November, on

Corporate Income Tax (the “CIT Law”), the following

information is provided in relation to transactions

subject to the special tax regime for mergers, spin-

offs, contributions of assets, exchanges of shares and

transfers of registered office of a European Company

or a European Cooperative Society from one Member

State to another within the European Union, as

provided for in Chapter VII of Title VII of the CIT Law, in

which BANCO SANTANDER, S.A. participated during

the 2025 financial year:

I. Pursuant to the provisions of Article 86(1) of

the CIT Law, it is hereby reported that BANCO

SANTANDER, S.A. participated as the

acquiring company in the following

transaction, which was registered with the

Mercantile Registry on 28 January 2026:

– Merger by absorption of EMISORA

SANTANDER ESPAÑA, S.A.U., URO PROPERTY

HOLDINGS, S.A., BLECNO INVESTMENTS,

S.L.U. and ELEVATE TECH PLATFORMS, S.L.U.

(the absorbed companies) by BANCO

SANTANDER, S.A. (the absorbing company),

which held all of the share capital of the

absorbed entities. This transaction

constitutes a merger within the meaning of

Article 76.1(c) of the CIT Law. The

information required under Article 86(1) of

the CIT Law is included in these financial

statements.

II. Pursuant to the provisions of Article 86(2) of

the CIT Law, it is hereby reported that BANCO

SANTANDER, S.A. participated as a

shareholder in the following transactions:

– Reverse merger whereby WAYCARBON

SOLUÇÕES AMBIENTAIS E PROJETOS DE

CARBONO S.A. (a Brazilian company)

absorbed its parent company, MUNDUSPAR

PARTICIPAÇÕES S.A. (a Brazilian company).

This transaction constitutes a merger within

the meaning of Article 76.1(a) of the CIT Law.

BANCO SANTANDER, S.A. held 80% of the

share capital and voting rights of

MUNDUSPAR PARTICIPAÇÕES S.A. Following

the transaction, it holds 68.749% of the

share capital and 49.9% of the voting rights

of WAYCARBON SOLUÇÕES AMBIENTAIS E

PROJETOS DE CARBONO S.A. The carrying

amount of the shares delivered in

MUNDUSPAR PARTICIPAÇÕES S.A. was EUR

36,344,382, while their tax value amounted

to EUR 73,814,747. The amount at which

BANCO SANTANDER, S.A. has recognised the

new investment in WAYCARBON SOLUÇÕES

AMBIENTAIS E PROJETOS DE CARBONO S.A.

is EUR 36,344,382.

– Exchange of shares, regulated in Articles

76.5 and 80 of the CIT Law, whereby SAM

INVESTMENT HOLDINGS, S.L. acquired a

100% interest in the share capital and voting

rights of the Spanish entity SANTANDER

PRIVATE BANKING GESTIÓN, S.A., S.G.I.I.C.

(single shareholder company). This

transaction is executed as a contribution

from shareholders, recognised in account

118 “Contribution from

shareholders” (included under heading 11

“Reserves and other equity instruments”in

the chart of accounts of the Spanish General

Chart of Accounts, approved by Royal Decree

1514/2007, of 16 November). It consisted of

a non-cash contribution made by BANCO

SANTANDER, S.A. of the shares in

SANTANDER PRIVATE BANKING GESTIÓN,

S.A., S.G.I.I.C. (single shareholder company),

which was subject to obtaining the non-

objection of the CNMV. The carrying amount

at which BANCO SANTANDER, S.A. had

recognised the shares delivered in

SANTANDER PRIVATE BANKING GESTIÓN,

S.A., S.G.I.I.C. was EUR 35,460,052, while

their tax value amounted to EUR 25,950,993.

The amount at which BANCO SANTANDER,

S.A. has recognised the shares received in

SAM INVESTMENT HOLDINGS, S.L. is EUR

79,318,507.

265

– Non-cash contribution of real estate assets

owned by BLECNO INVESTMENTS, S.L.U. and

BANCO SANTANDER, S.A. to

RETAILCOMPANY 2021, S.L.U. This

transaction constitutes a non-cash

contribution within the meaning of Article 87

of the CIT Law and did not qualify for the

special tax regime provided for in Article 77.1

thereof. The net value of the real estate

assets contributed by both companies

amounted to EUR 10,532,070. The amount at

which BANCO SANTANDER, S.A. has

recognised the shares received in

RETAILCOMPANY 2021, S.L.U. is EUR

10,532,070 (see Note 1.i).

III. In compliance with the provisions of Article

86(3) of the CIT Law, it is hereby stated that

the disclosures required under paragraphs 1

and 2 of Article 86, relating to transactions

subject to the special tax regime for mergers,

spin-offs, contributions of assets, exchanges

of shares and transfers of registered office of

a European Company or a European

Cooperative Society from one Member State

to another within the European Union, as

provided for in Chapter VII of Title VII of the

CIT Law, in which BANCO SANTANDER, S.A.

participated as acquiring company or

shareholder in prior financial years, are

included in the first annual financial

statements approved by the acquiring

entities following each of the

aforementioned transactions.

266

Appendix VI

Information regarding to the merger by

absorption between Banco Santander, S.A.

(absorbing company) and Uro Property Holdings,

S.A., Blecno Investments, S.L.U. (absorbed

companies), according to Article 86.1 of Law

27/2014 of the Corporate Tax Act.

a) Fiscal year in which the transferor entity acquired

the transferred assets that are subject to

depreciation.

There are no depreciable assets in Emisora Santander

España, S.A.U. and Elevate Tech Platforms, S.L.U. The

assets subject to depreciation in Uro Property

Holdings, S.A. and Blecno Investments, S.L.U. are

those recorded under the “investment property” line

item in their merger balance sheets (see Note 1.i),

acquired in 2007 and 2015, respectively.

b) Latest balance sheet closed by the transferor

entities.

The latest balance sheets of the transferor entities can

be found in Note 1.i.

c) List of acquired assets that have been incorporated

in the accounting books at a value different from

that at which they were recorded in the transferor

entity prior to the transaction, stating both values, as

well as the valuation adjustments made in the

accounting books of the two entities.

Below is the detail of those asset line items of the

transferor entity´s balance sheet that have been

recognized at a different carrying amount in the

acquiring entity:

Amounts in million of euros:

Financial Statement Line	Book value Elevate Tech Platforms, S.L.U.	Merged adjustment value	Book value Banco Santander
Investments in subsidiaries, joint ventures and associates	1	0,1	0,9

Amounts in million of euros:

Financial Statement Line	Book value Blecno Investments, S.L.U.	Merged adjustment value	Book value Banco Santander
Real state investments	224	(40)	184

d) List of tax benefits enjoyed by the transferring

entity, for which the acquiring entity must assume

compliance with certain requirements.

There are no tax benefits in the transferring entity for

which Banco Santander, S.A. must assume compliance

with certain requirements.

267

Appendix VII

Agent network - Collaborating agents, Agents empowered at 31 of December 2023.

FRANCISCO JOSE GARCIA MORA

CASTOR INVERYSER SL

SOLEDAD LAMBERTO GARCIA

SERVICIOS BANCARIOS OLULA DEL

RIO SL

SERVICIOS BANCARIOS BERJA SL

ANTONIO CEREZUELA RUIZ

SERVICIOS BANCARIOS CANTORIA

S.L.

GRUPO ALMARES 2015 SL

SERGIO MUÑOZ RAMIREZ

MARIA DEL MAR CARRETERO

FERNANDEZ

MARIA DE LOS ANGELES ESCUDERO

ORTEGA

FRANCISCA MARQUEZ CONTRERAS

JOSE ANTONIO ESCUDERO ORTEGA

ROSA MARIA RIVERO ACEDO

JUAN JERONIMO TIMERMANS

NUÑEZ

JUAN RAMON BENITEZ GOMEZ

MANUEL BARRIGA DORADO

SEFIAL 2021 SL

ZAMBRAMONG SOCIEDAD

LIMITADA

DOMINA SIDON SL

MULTIALGAIDA SERVICIOS

FINANCIEROS SL.

MARIA LUISA PEREZ GUILLEN

CRISTINA NADALES PEREZ

MDBEATO SL

SEBASTIAN PAVON CAMPOY

CARRASBER SL

JUAN DAVID PEREZ VALENZUELA

JUAN MANUEL PEREZ PRADO

BERCAMLU S.L.

JULUM FINANZAS SLU

J&M INVERSION Y FINANCIACION

EMPRESARIAL S.L.U.

JUCAR ASESORES S.L.

ASESORAMIENTO Y COACHING

FINANCIERO S.L.

IPEVA INVERSIONES FINANCIERAS

SLU

EFEROR ASOCIADOS SLU

GUERRERO FINANCIAL STRATEGIES

S.L.

SIMO CONSULTORIA SL

ASESORAMIENTO FINANCIERO

ALGASA SLU

RAFAEL JESUS VILLARREAL ARIZA

EGAMAR ASESORES SLU

ASESORAMIENTO FINANCIERO Y

ANALISIS DE MERCADOS SLU

MARTA CASTRO HIDALGO

GESTIONES MORENO E HIJOS S.L.

NATALIA FERNANDEZ SANCHEZ

SERVICIOS FINANCIEROS PEDRO

ABAD SOCIEDAD LIMITADA

JOSE MARIN PEREZ

MANUEL SALGADO KAITTANI

ASESORAMIENTO FINANCIERO

BERNARDO RODRIGUEZ ASBER

FINANCE SL.

NEOBAN SL

MARIA DE ARANZAZU DOMEZAIN

GRANADOS

ARESBAN SERVICIOS MERCANTILES

S.L

EMILIO SANCHEZ ALCARAZ

ALVARO FABREGAS SANTAMARIA

AMS GESTION GLOBAL SL

FANDILA GARCIA ZAMORA

PEDRO ANGEL LUPIAÑEZ

RODRIGUEZ

ANTONIO MARIN VALIENTE

JUAN CARLOS GOMEZ GARCIA

HOPE FINANCE SL

MARIA ISABEL RAMIREZ

RODRIGUEZ

268

AM SERVICIOS FINANCIEROS SL

ONUBA FINANCIEROS SL

JOSE MANUEL GUEVARA GONZALEZ

SERVICIOS FINANCIEROS DEL

CONDADO S.L.U.

ASESORIA GESTION GLOBAL S.L.

ANA MARIA DIAZ SANTANA

NURIA MONTERO GONZALEZ

MELODI MARIA DOMINGUEZ

ZAHINO

JUAN PEDRO BENITEZ GARCIA

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S.L.

MARIA THAIS ROMERO NAVARRETE

MARCOTE ASESORES SL

GLORIA MOLINA RIVALLO

JUAN ANGEL ALCAZAR VERGARA

BEATRIZ BLANES RUIZ

RUBEN LOPEZ CARMONA

ARANCHA LOPEZ SANTOS

SONIA ARNAO VILLANUEVA

SANDRA ORTEGA QUILON

MARIA PAZ CULEBRAS RAMOS

JESSICA MARIA SEGADOR RISCO

EVA COZAR CAÑADAS

MARIA JOSE PACHECO GALLEGO

EMPRESA GESTORA JUAN JOSE

MUÑOZ S.L.

JOSE JUAN SANCHEZ SORIANO

PAULA MARTINEZ GARCIA

CARLOS ARCAS CHECA

FELIPE CHILLARON CASTILLO

MONICA CANO CANO

CARLOS MORENO LOPEZ

SOLORZANO

EVA LEON BELINCHON

FRANCISCO DAVID SAIZ CANO

LUCIA PEREZ CUELLAR

DAVID MOYA LUCAS

AROA GOMEZ LOZANO

JESUS GABALDON MARTINEZ

HECTOR CANO SAZ

ESTHER PEIRO ORTEGA

ANA CRISTINA MUÑOZ ALVAREZ

GISELA MENENDEZ CALVO

PATRICIA MONTERO DURAN

MARIA TERESA OLMEDA PICAZO

DAVID JIMENEZ MARTINEZ

PEDRO JESUS ROLDAN PRIETO

NURIA AMO LETON

ANA MARIA RODRIGUEZ VARGAS

JAVIER MONGE LOPEZ

ALVARO MAGRO SANZ

MERCEDES LOPEZ MAYORAL

JOSE DEL OLMO LOZANO

CRISTINA GOMEZ GUTIERREZ

ANTONIO SANCHEZ ARGUELLES

SILVIA BRAOJOS SANCHEZ

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ANA MARIA RODRIGUEZ MORENO

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ALFONSO ILLAN GARCIA-ROJAS

MARIA LOPEZ MARTINEZ

MIGUEL ANGEL GARCIA RODRIGUEZ

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MIGUEL MORENO ALONSO

MARIA LUISA SANGUINO

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MARIA TERESA PACHECO SANCHEZ

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ALEJANDRO SANCHEZ BERMUDEZ

ANA MARIA LOPEZ MARTINEZ

ELENA PARDO MARMOL

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ENRIQUE SATURNINO MORENO

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FERNANDO DONET ALBEROLA

MARIA JOSE CABALLERO GRAU

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MARIA TERESA BROCH RUBERT

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SAMAI FINANZAS SL

VANESSA SORO GINER

ROSA MARIA BLAY PASCUAL

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MIGUEL GARCIA ABAD

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BURMA AGENTES FINANCIEROS S.L.

MONICA CARRANZA S.L.U.

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GESTION FINANCIERA MALACITANA

2007 SL

RC 2007 FINANCIEROS S.L.

ESTEPONA FINANCIEROS SL

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BOPECON INVERSIONES SL

CHARUMA S.L.

TREZAVILLA SLU

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BUSINESS AND PERSONAL SERVICE

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GONZALEZ Y NAVES S.L.

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GESTION INVERGARA S.L.

MARTI FORTUNY PLANAS

FINANZAS SAN ANDRES S.L.

ALEXANDRE UTSET BADIELLA

MATARO ASESORES LEGALES Y

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AA FF NV FINANCERA 2018 SL

GRUP BBR GESTIO PRIVADA SL

AGENCIA FINANCIERA ULLOA S.L.

SERCOM ASFICO AGENTES

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SERVIBAN OURENSE SL

INTERMEDIACION FINANCIERA RIAS

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LASTRAS AGENTE FINANCIERO SLP

FINANZAS NUEVA ERA S.L.

ZONA 4 SERVICIOS FINANCIEROS

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SISMOINT SL.

OFISFIN SL

ALESA CAPITAL SL

AGENTES XIRIVELLA SL

HOTRARESCON S.L.

VIMAGARMA A.F. SL

AYALA MARTINEZ MELERO SLL

RAUL PABLO OLMO

MARIA ELENA TREMPS ALDEA

INVERS TERRA FERMA SL

FINANCERES ARO S.L.

FRANQUICIES FINANCERES LLEIDA

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INVERSIONS RIBAGORÇA SL

SAVINGS ELX 2014 S

ASEMAR FINANCIERA SL

GESTIONES FINANCIERAS FERRER Y

GARCIA 2015 SL

SEMAGERA S.L.L.

BANEST BLANES SL

TRAMYGEST FINANCIERA S.L.

AA FF OLESA 2019 SL

ANPADU INVERSIONES S.L.

EMA VILATORRADA 2007 S.L.

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Directors’ report

Banco Santander, S.A.

1. Introduction

Banco Santander, S.A. ('the Bank' or 'Banco Santander')

is a Spanish bank, incorporated as a sociedad anónima in

Spain and is the parent company of Grupo Santander or

Santander. Banco Santander, S.A. operates under the

commercial name Santander.

Banco Santander operates through a branch network

distributed in Spain and abroad.

On 7 June 2017, Banco Santander acquired the entire

share capital of Banco Popular Español, S.A.U. (‘Banco

Popular’) in an auction in connection with a resolution

plan adopted by the European Single Resolution Board

(the European banking resolution authority) and

executed by the FROB (the Spanish banking resolution

authority) following a determination by the European

Central Bank that Banco Popular was failing or likely to

fail, in accordance with Regulation (EU) 806/2014

establishing a framework for the recovery and resolution

of credit institutions and investment firms. On 24 April

2018, Banco Santander announced that the boards of

directors of Banco Santander, S.A. and Banco Popular

Español, S.A.U. had agreed to an absorption of Banco

Popular by Banco Santander. The legal absorption was

effective on 28 September 2018.

The directors’ report has been prepared based on the

accounting and Management records of Banco

Santander, S.A.

The financial information included in this directors’

report has been prepared in conformity with the Bank of

Spain Circular 4/2017 of 27 November on Public and

Reserved Financial Information Regulations and

Financial Statements Forms, and subsequent

modifications.

2. Situation of Banco Santander

Santander is a Retail and Consumer global powerhouse

and one of the largest banks in the eurozone. At 2025

year end, we had EUR 1,867,515 million in assets,

ranking first in the euro zone by market capitalization in

the eurozone EUR 147,921 million as of 31 December

2025.

The Santander Way.

Our Purpose is to help people and businesses prosper.

Our Aim is to be the best open financial services

platform, by acting responsibly and earning the lasting

loyalty of our stakeholders by being Simple, Personal

and Fair in all we do.

Thanks to the advantages provided by our network

effect, our geographic and business diversification and

our scale, over the past four years we have succeeded in

surpassing our record results year after year through our

global business model and ONE Transformation. This has

enabled us to operate more efficiently through the

operational leverage delivered by our transformation

strategy.

Within the Group, we  engage in a wide range of typical

banking activities, operations and services in order to

meet all our customers' needs. We do not merely meet

our legal and regulatory obligations but we also aim to

exceed the expectations of our stakeholders: employees,

customers, shareholders and communities. In detail:

We are committed to continuously improving the

experience of the 198,403 employees who are part of

Santander. Our goal is to attract and retain the best

talent by offering an attractive value proposition that

prioritizes personal growth, an inspiring culture and

working conditions that ensure the health and well-

being of our people through initiatives that help improve

work-life balance. Furthermore, we promote an

environment that prioritizes inclusion, where all voices

are valued and individuals feel safe and free to express

their identity, ideas and opinions.

We continue to use our listening channel, Your Voice, to

periodically assess the engagement and experience of

our professionals, which once again showed excellent

results in 2025.

283

Customer focus is an essential part our strategy. We are

a Retail and Consumer global powerhouse with 180

million customers. We continue building a digital bank

with branches to be the number one bank for our

customers. By listening to our customers' needs, we are

boosting Santander's position as their trusted financial

partner.

We continue to change and adapt to our customers'

evolving needs to offer the best products, an agile and

frictionless customer experience for daily needs and

competitive prices.

Throughout 2025, we undertook significant initiatives to

transform customer experience and strengthen our

value proposition. This was reflected in our customer

growth rates and Net Promoter Score (NPS)

improvement where we are one of the top three banks in

nine of our markets.

In addition, in the digital space, we enhanced self-service

capabilities and user experiences, by incorporating AI to

simplify and streamline processes and remove

operational burdens from our employees, enabling them

to focus on advising customers while delivering a more

personalized service.

At year end, we had 7,124 branches, including traditional

ones and other specialized centres for businesses,

private banking, universities and other customer

segments.

These physical spaces have evolved to integrate

traditional services with digital facilities. With this

approach, we continue to expand our Work Café branch

concept, through which we seek to establish

collaborative spaces, which enable native digital

customers to have a better experience and integrate

their financial transactions into their daily lives.

At the same time, customer interactions continued their

structural shift towards digital and remote services with

high user experience standards. As at 31 December

2025, we had more than 63 million digital customers

(6% more than in 2024) and 70% of our products

services are now digitally available (up from 62% in

2024).

At Santander, we appreciate the value of the human

connection that our branch network provides and are

mindful of our most vulnerable customers' needs,

responding with tailored offers, thereby increasing

customer loyalty and improving customer experience.

We are committed to creating products and services

tailored to our customers’ needs. We have adapted our

branches, products, services and channels to ensure

universal physical and digital access for people with

disabilities and older adults. In the countries where we

operate, we offer value propositions specifically aimed

at senior customers. For example, we provide tailored

products for retirees in Mexico and Argentina, services

such as SuperLinha Senior in Portugal to support older

people with limited digital skills, and third-party access

initiatives in the UK to assist older individuals who

require carers. In Spain, we provide customers in limited

access (or sparsely populated) areas access to credit and

help combat social exclusion in communities with less

than 10,000 inhabitants, maintaining our Correos Cash

agreement to provide access to cash in areas that might

otherwise have been left unattended with a non-digital

solution through rural letter carriers. In Argentina, we

have financial inclusion branches and remote agents

operating in vulnerable communities. In Uruguay, mobile

branches have been deployed across the country since

2020 to reach areas with low levels of financial

inclusion.

Additionally, within our financial inclusion programmes,

we continue to expand initiatives such as our

microfinance programmes in Latin America (Prospera in

Brazil and Colombia, Tuiio in Mexico and Surgir in Peru).

We also complement our support for financial inclusion

with financial education programmes and financial

health solutions for customers. In Spain, for example,

Santander participates in the Social Housing Fund, which

facilitates rental access for low-income individuals and

families, and we have initiatives to support groups facing

difficulties in accessing credit. In the US, we provide

loans to small businesses operating in low- and

moderate-income communities.

Thanks to all our efforts in financial inclusion, we have

achieved our goal of reaching 5 million people who

benefited from one of our financial inclusion initiatives

over the 2023–2025 period.

We also support our communities. The Group has

continued to develop programmes in the communities

where it operates to help address existing social needs.

Our support for communities focuses on education,

employability and entrepreneurship, and is

complemented by the provision of targeted financial

education and assistance for vulnerable individuals.

Moreover, we have a strong track record of backing

cultural and other social initiatives.

For our shareholders, we delivered solid financial results

in the year and met all our targets we had set for 2025.

Grupo Santander is diversified in three geographies well

balanced between mature and emerging markets, and

operates mainly in 10 core units, where it has significant

market shares. Our activities are organized under five

global businesses: Retail & Commercial Banking, Digital

Consumer Bank, Corporate & Investment Banking,

Wealth Management & Insurance and Payments.

284

3. Financial performance

3.1 Economic outlook:

In 2025, Santander operated in an environment

characterized by gradual reductions in interest rates by

the majority of central banks, as a result of declining

inflation. This occurred in a context marked by

continuing geopolitical and trade tensions. However,

despite some slowdown, the world’s major economies

maintained a good rate of economic growth. In turn,

labour markets were resilient, with unemployment rates

remaining low in more than half of the countries in

which Santander operates.

Our core regions' economies performed as follows:

Eurozone (GDP in 2025: +1.5%). The economy resisted

tariff hikes imposed by the US, as the services sector

compensated weaker manufacturing. Household

consumption improved and, after a weak start to the

year, investment showed signs of recovery in the second

half, particularly investment in intangibles. Performance

was mixed by country, with most of the momentum

coming from Ireland, which grew by more than 10%,

compared to Germany, among others, whose economy

only increased 0.4%. Inflation fell within the European

Central Bank’s (ECB) target, which led to reductions in

interest rates to 2% in June, a level estimated to be

within the neutral range for the economy.

Spain (GDP in 2025: +2.8%). Spain recorded growth well

above that of the eurozone driven by domestic demand.

Household consumption remained robust, supported by

strong job creation and population growth resulting

from immigration. The investment component grew the

most in the year, especially in equipment. On the other

hand, foreign trade hindered growth: goods exports rose

slightly and services exports moderated while imports

grew well above. Inflation ended the year at 2.9%, with

service prices accelerating at the end of the year and

growing above 3.5%.  

To complete the information with the performance

indicators of the rest of geographies where the Group is

present, see the Consolidated Directors’ Report.

3.2 Balance sheet and results:

Banco Santander, S.A. is the Parent Bank of a financial

group that operates in different countries through

different businesses therefore its financial statements

not only reflect its commercial activity in Spain, but also

the activity derived from being the head of the Group.

This last aspect makes it difficult to analyse its evolution

without distinguishing the results obtained from the

commercial activity from those more directly related to

its holding nature.

In 2025, commercial activity remained solid, supported

by strong new customer acquisition during the year,

improved customer engagement and higher digital

adoption, with 78% of our products and services digitally

available. We also increased our market share in

payrolls, pensions and Bizum registrations.

With regard to the statement of financial position, as at

31 December 2025 the Bank’s total assets amounted to

€836,783 million, representing an increase of 5.28%

compared with the previous financial year.

Loans and advances to customers stood at EUR 354,675

million at year-end, representing an increase of 8.90%

compared with the previous year, driven by growth in

consumer lending, corporate loans and wholesale

banking.

Customer deposits stood at EUR 437,657 million at

year-end, reflecting an increase of 12.01% compared

with the previous financial year. Demand deposits rose

by 5.14%, while time deposits increased by 25.16%,

showing growth in both individual and corporate

customers.

Net interest income amounted to EUR 6,502 million in

2025, 5.97% lower than in the previous financial year,

negatively impacted by interest rate developments. This

was partially offset by the strong pace of activity, which

led to growth in the loan and customer deposit balance

sheet, as well as by the increase in the portfolio of debt

securities.

Income from equity instruments totalled EUR 6,691

million in 2025. This line includes dividends received

from the Group’s subsidiaries.

Net fee and commission income increased by 7.35%

compared with 2024, reaching EUR 3,140 million, with

growth in investment fund fees standing out.

Net gains on financial transactions (including exchange

differences) amounted to a profit of EUR 873 million,

compared with EUR 918 million in the previous financial

year, reflecting higher market results in wholesale

banking.

General administrative expenses (personnel expenses

and other administrative expenses) amounted to EUR

5,419 million, an increase of 2.38%, with increases

arising from inflation and the collective labour

285

agreement mitigated by efficiency measures in the retail

banking business.

Net impairment losses on financial assets amounted to

EUR 1,162 million in 2025, representing 0.26% of

financial assets at fair value through other

comprehensive income plus financial assets at amortised

cost.

Impairment of investments in joint ventures or

associates and of non-financial assets totalled EUR

1,485 million in 2025, while losses on non-current

assets held for sale amounted to EUR 34 million.

Distribution proposal of the Bank’s profit

The board applied the current shareholder remuneration

policy to the 2025 results. This policy sets a target to

distribute approximately 50% of the Group's net

reported profit (excluding non-cash, non-capital ratios

impact items) split almost evenly between cash

dividends and share buybacks.

Additionally, on 5 February 2025, Banco Santander

signalled its objective to allocate up to EUR 10 billion to

share buybacks in relation to the 2025 and 2026 results,

as well as expected capital excess. As part of this target,

on 5 May 2025 Banco Santander announced its intention

to distribute approximately 50% of the capital that will

be released upon completion of the sale of its 49% stake

in Santander Bank Polska S.A., through a share buyback

of approximately EUR 3.2 billion in early 2026 and that,

as a result, it could exceed the EUR 10 billion target.

Upon announcing the agreements to acquire TSB and

Webster on 1 July 2025 and 3 February 2026

respectively, Banco Santander confirmed its goal to

distribute at least EUR 10 billion in share buybacks with

regard to the 2025 and 2026 results and excess capital.

Interim remuneration.

On 30 July 2025, the board resolved to execute the First

2025 Buyback Programme worth up to EUR 1,700

million (equivalent to approximately 25% of the Group's

net reported profit in H1’25).

On 30 September 2025, the board resolved to pay an

interim cash dividend against the 2025 results of 11.5

euro cents per share entitled to the dividend (equivalent

to approximately 25% of the Group's net reported profit

in H1’25), which was paid from 3 November 2025.

Final remuneration.

Under the 2025 shareholder remuneration policy:

On 3 February 2026, the board of directors resolved to

implement the Second 2025 Buyback Programme worth

up to EUR 5,030 million and for which the required

regulatory authorization had been obtained. The

programme started on 4 February 2026. Under the

shareholder remuneration policy in relation to the 2025

results, 1,830 million euros of the Second Buyback

Programme correspond to c. 25% of the Group’s

underlying profit for the second half of 2025. The

remaining amount corresponds to an extraordinary

buyback of 3,200 million euros, equivalent to

approximately 50% of the CET1 capital generated in

January 2026 following completion of the sale of 49% of

Santander Bank Polska to Erste Group. 

On 24 February 2026, the board of directors resolved to

submit to the 2026 AGM the approval of a final cash

dividend in the gross amount of 12.5 euro cents per

share entitled to dividend. Subject to AGM approval, the

dividend will be payable from 5 May 2026.

Once these actions are completed, total shareholder

remuneration in relation to the 2025 results will be EUR

7,050 million (approximately 50% of the Group's 2025

net reported profit, excluding non-cash, non-capital

ratios impact items), split almost evenly between cash

dividends (EUR 3,520 million) and share buybacks (EUR

3,530 million). We have estimated these amounts on the

assumption that, as a result of the partial execution of

the Second 2025 Buyback Programme, the number of

outstanding shares entitled to receive the final cash

dividend will be 14,568,470,446. Therefore, the final

amount may be higher if fewer shares than planned are

acquired in the Second 2025 Buyback Programme;

otherwise, it will be lower.

See more information in section 9.2 Dividends and

shareholder remuneration.

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4. Trend information

This directors' report contains prospective information

on the directors’ plans, forecasts and estimates, which

are based on what they consider to be reasonable

hypotheses. Readers of this report should take into

account that such prospective information must not be

considered a guarantee of our future performance as the

plans, forecasts and estimates are subject to numerous

risks and uncertainties, our future performance may not

match initial expectations. These risks and uncertainties

are described in note 50 of the financial statements.

We expect a mixed performance in 2026, depending on

the region or country. A slight economic slowdown is

expected in Brazil and the UK, while the US, the

eurozone and Mexico are expected to recover

moderately. The global outlook is uncertain due to

geopolitical and trade tensions. Inflation is expected to

continue to slow in most countries, converging towards

the central banks' targets, although it is likely to do so at

different rates between regions. Central banks such as

the Fed are expected to complete their rate-cutting cycle

in 2026. Significant changes in the unemployment rates

are not expected, with most labour markets remaining

resilient. 

Our macroeconomic forecast for 2026 by country/

region is as follows:

Eurozone

The eurozone is expected to experience a cyclical

recovery in 2026, supported by the ECB's interest rate

cuts since mid-2024 and fiscal policy initiatives,

particularly increased spending on infrastructure and

defence in Germany. Inflation is expected to remain in

line with the ECB’s 2% target, underpinned by wage

moderation, leading to a gradual reduction in service

inflation, which was more persistent in 2025. In the

medium term, the euro area faces the challenge of

achieving sustainable economic growth, through policies

that boost the domestic market, regulatory

simplification and the strengthening of capital markets.

Spain

We expect economic growth to remain dynamic,

although at a slightly lower rate than in 2025. Domestic

demand will continue to be a main driver, supported by

strong household consumption, while investment, the

sector that grew the most in 2025, will benefit from the

allocation of European funds before August 2026.

Growth in external demand is expected continue to slow

as imports, boosted by strong domestic demand, are

expected to outpace exports. We expect job creation to

continue, with the unemployment rate declining further

towards 10%, despite the rise in active population.

Inflation is expected to gradually converge towards the

ECB's target, as the services sector is proving to be

sticky.

See more information in the Consolidated Directors’

Report.

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5. Sustainability information

This Statement of Non-Financial Disclosures of Banco

Santander, S.A., which is part of the Individual Directors'

Report, contains the non-financial disclosures set out in

the Consolidated Directors' Report of Grupo Santander

together with other material, pertinent, useful and

comparative information on Banco Santander, S.A. that is

appropriate to aid the an understanding of the trends,

results, status and impact of the activities of Banco

Santander, S.A., including information on matters of the

environment, society, human rights, the fight against

corruption and bribery, and personnel.

When drawing up the non-financial information

contained in this Statement of Non-Financial

Disclosures, we considered the double materiality

assessment that the Group conducts, based on the

Corporate Sustainability Reporting Directive (CSRD).

General information

Banco Santander, S.A.’s purpose is to help people and

businesses prosper. Our five sustainability pillars are:

1. Help our customers in meeting their goals in their

transition to a low-carbon economy while also

managing climate-related risks and impacts.

2. Help our employees develop by promoting an

inclusive culture and learning and providing fair

working conditions.

3. Contribute to the economic, financial and social

development of our communities, with a special

focus on education, employability and

entrepreneurship.

4. Be a trusted partner to our customers, with products

and services that adapt to their needs, while applying

responsible practices, supporting their financial

inclusion, and protecting their information.

5. Act responsibly through a strong culture, governance

and conduct.

The Group's board of directors is responsible, among

other things, for approving the sustainability agenda and

setting the sustainability strategy.

The responsible banking, sustainability and cultural

committee (RBSCC) assists, among other matters, in the

development and implementation of the Group's

sustainability strategy and responsible business policies,

in support of the board of directors, through monitoring,

supervision and evaluation of these.

Additionally, other committees analyse specific

sustainability matters. The audit committee is

responsible for overseeing and assessing the financial

and non-financial reporting process, as well as the

internal control systems. The Group has implemented an

Internal Control System that complies with the most

demanding international standards.

The main internal regulations that support the

integration of ESG criteria into our business model are:

Responsible banking framework

Establishes responsible banking as a strategic issue for

Santander and is directly applicable in all local units.

Corporate financial, management and sustainability

accounting and reporting framework

Sets out the principles, guidelines and actions to prepare

accounting, financial and management information, as

well as sustainability information, that must be applied

to all the Group's entities as a fundamental element for

their good governance.

Responsible banking policy and sustainability

Describes our sustainability principles, objectives and

strategy to generate long-term value for our

stakeholders, including the protection of human rights.

Responsible banking model

Establishes the roles and responsibilities of the first,

second and third line of defence for all sustainability

activities to progress the sustainability agenda, embed

ESG standards and achieve our objectives.

In addition to these rules, which apply to all the Group’s

units and businesses, we have policies on responsible

employee practice, responsible customer practice,

donations, and business conduct.

With regard to risk management, the identification of

non-financial risks associated with our activity is a

priority for Banco Santander. The bank has implemented

processes for their identification, analysis and

assessment in those transactions subject to the Bank’s

policies and to external commitments such as the

Equator Principles, an initiative to which Banco

Santander has been a signatory since 2009.

In Spain, we are a member of Forética, the Spanish

Association of Sustainable Growth, and Fundación

SERES. 

In 2025, we maintained our position in MSCI (AA) and

Leadership level in CDP (score changing from A to A-).

We scored 9.9 points in Sustainalytics, improving to

‘Negligible Risk’ category, and remained in the C+

category in the bi-annual ISS assessment.

Information on environmental matters

Strategy

Santander's climate strategy is based on three

fundamental pillars:

1) Supporting our customers in their transition goals. We

are making headway with our target of raising or

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facilitating EUR 220 billion in green finance between

2019 and 2030, after having achieved our EUR 120

billion target eighteen months early. By year end this

figure reached a total of EUR 174 billion. We offer our

customers guidance, advice and specific solutions, as

well as a wide range of products to invest in according to

their sustainability preferences. Additionally, in March

2025, we reached our target of EUR 100 billion in assets

under management (AUM) in socially responsible

investment (SRI) nine months early. By year end this

figure reached a total of EUR 129.9 billion.

2) Embedding ESG in risk management. We embed

climate, environmental and social aspects in risk

management from a regulatory and control perspective,

including a materiality assessment that feeds into our

double materiality assessment and sustainability

strategy.

3) Aiming to align our activity with the Paris Agreement

Goals. We work aiming to align our portfolio with the

Paris Agreement goals to help limit global warming. We

either set sector portfolio alignment targets or portfolios

under monitoring. We closed 2025 with six targets in

five sectors, additional portfolios under monitoring and

an alignment approach for our asset management

activity. The management of these targets and portfolios

under monitoring, in line with the rest of the IROs, is

carried out in accordance with local law and regulation in

the markets where we operate. Their update and

evolution reflect the present and expected performance

of the economies and customers we serve. In our own

operations we continue to reduce our impact on the

environment by implementing efficiency measures,

achieving in 2025 our target of 100% renewable

electricity in our main markets.

Our 2025 highlights are:

– Grupo Santander has been a leader in renewable

energy financing for more than 10 years. In 2025, we

were among the top banks in number of transactions

and value of business globally, with 100 transactions

closed and a market share of 5.6% according to

Infralogic. In Retail & Commercial Banking in Spain,

sustainable finance value and services offering 

includes green and social loans, sustainability-linked

loans, public programmes such as ICO Green

Recovery and Resilience Mechanism (preferential

financing for renewables, energy efficiency, electric

transport, circular economy or social housing) or

agreements with MDBs (EIB, EIF). We have also

expanded our non-financial ESG services: carbon

footprint offsetting tools, sustainability reporting

guide, advisory for decarbonize real estate assets,

new partnerships to support customers monetizing

energy saving certificates (CAEs), and new ESG

advisory service for SMEs. For individuals, we offer

UPLs for sustainable purposes (vehicles, retrofitting

works, among others) at a discount rate and an

energy efficiency simulator.

– Santander in Spain embedded sustainability culture

across its commercial networks through dedicated

training and sustainability ambassadors.

– Santander Consumer Finance (SCF) continued

increasing electric vehicle lending, with a market

share in Europe of 10% (above the total Auto market

share off 8%).

– In 2025,  97% of the cards we purchased at Group

level were manufactured with sustainable materials

(recycled PVC/PLA) and we continued to make

progress in offering solutions to our customers to

calculate their carbon footprint based on the

payments they make with their cards, as well as

initiatives to offset it. Santander España offers its

customers the option to deposit expired or damaged

cards at an ATM, triggering a recycling process

through which the cards are transformed into urban

street furniture benches. Since its launch in 2023,

Santander has donated 167 benches made from

recycled cards to various public institutions in cities

such as Valencia, Malaga, Seville, Santander and

Astorga. In 2025, Santander España delivered these

benches to the municipalities of Paiporta, Catarroja

and Aldaia, demonstrating its commitment to the

recovery of areas affected by flooding caused by the

DANA weather event.

Climate risk management

Managing climate and environmental risk factors is

fundamental to strengthening the resilience of our

strategy and business model to climate change.

To improve resilience, we embed climate and

environmental risk factors in the phases of the risk

management cycle where we analyse our own facilities

and customer financing. We also include the risks

associated with these factors in our policies, procedures,

tools, metrics, governance and culture.

We embed climate and environmental factors in risk

management based on defined climate scenarios and

time horizons and though a process that covers

identification, planning, assessment, monitoring,

mitigation and reporting.

Paris Agreement alignment

Our 2025 highlights are:

– We continue working to align our key portfolios; we

also disclosed emissions for our mortgages and

commercial real estate portfolios in Portugal, in

addition to those of Spain and the UK.

– We continued managing our own operations' scope 1

and 2 emissions', with reductions plans and

offsetting remaining ones; and we kept our offices

and buildings in our core markets free of single-use

plastics to meet our target.

We continue working towards our ambition of net zero

carbon emissions by 2050 by progressively setting

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specific actions regarding the footprint of our own

operations and to support our customers in their climate

objectives, prioritising the high-emitting sectors - which

also bear high and very high transition risk according to

our climate heatmap. We also focus on energy security

and affordability.

We set targets for the wholesale segment in the power

generation, thermal coal, oil & gas, steel and on the

automotive sector from two perspectives: auto

manufacturing (wholesale segment) and auto lending

(consumer loans for the purchase of passenger cars in

Europe).

We update our strategy and targets to incorporate the

latest scientific insights and changes in local regulation.

During 2025, Santander updated its climate alignment

targets. We wanted to ensure these remain credible and

consistent, while reflecting the real pace of transition

across the economies in which the Group operates. Five

years after establishing our first targets (all the details

described on the following pages), this update refined

the scope, metrics and scenarios to reflect better our role

as a facilitator of the transition, as well as how external

factors (especially public policy) determine the pace of

the transition.

In addition to alignment targets, we monitor other

climate-relevant portfolios such as the  commercial real

estate (CRE) and mortgages in Spain. Santander España

has been monitoring financed emissions in residential

mortgages since 2021 and in CRE since 2022.

As at December 2024, our residential mortgage

portfolio, which amounts to EUR 59.37 billion, had an

emissions intensity of 21.03 kgCO₂e/m² and a PCAF

score of 4.0. Our CRE portfolio, with a scope of EUR 7.18 

bn, had an emissions intensity of 21.58 kgCO₂e/m² and a

PCAF Score of 4.1.

In Spain, the national energy and renovation plans,

together with the revision of energy performance

certificates (EPCs), aim to boost private investment in

the energy refurbishment of buildings. In this context,

Santander Spain supports its residential and commercial

customers through preferential financing (including EIB,

EIF, InvestEU, EIB and MRR Verde lines), loans for energy

refurbishment, support for homeowners’ associations,

simulation tools and specialist advice (such as

agreements with CBRE and CAE management), while

maintaining an active dialogue agenda with national and

European authorities to promote reliable data,

centralised registries and support mechanisms that

ensure a just transition.

Regarding our own operations, we publicly report data

on our direct and indirect emissions (scopes 1, 2 and 3),

as well as other climate-relevant metrics such as energy

consumption. In 2025 for the first time, Grupo Santander

has achieved 100% renewable electricity.

Collaboration and global engagement

Initiatives with other companies and governments can

help us share best practices and accelerate progress.

Santander Group takes part in various organisations,

alliances and working groups; we collaborate with

international and local stakeholders (sector associations,

think tanks, universities, peers and others) to advance

global and corporate objectives, in line with SDG 17

(Partnerships for the Goals).

We also work with leading organisations to strengthen

the role of banks in managing climate change and

nature, such as the World Economic Forum, UNEP FI, the

Banking Environment Initiative, the Partnership for

Carbon Accounting Financials (PCAF), the TNFD Forum,

the Energy Efficiency Financing Coalition and Carbon

Measures. In Spain, we advocate for public policy that

supports climate transition (MITECO, MIVAU, Energy

Efficiency Coalition, or other European bodies) and our

financial institution’s role as enablers.

Information on social and employee-related

matters

We attract and retain the best talent by:

I. offering an attractive employee value

proposition that offers real opportunities to

grow and harness potential; innovative ways of

working; projects that inspire; and a shared

culture;

II. providing optimal conditions that safeguard

employee health and well-being, with fair and

competitive remuneration and initiatives that

afford a better work-life balance; and

III. promoting an inclusive and meritocratic culture

where everyone feels valued.

In Spain we were recognized as best bank to work in

Spain by Top Employers Institute, being the 3rd company

at national level.

Talent and skills development

As at 31 December 2025, Banco Santander had 34,142

employees in Spain, of which 46% are women and 54%

are men. 99.4% of contracts are permanent, the gender

pay gap at the end of 2025 was 26%, and pay equity

remains below 1%, achieving our 2025 target two years

early. In Spain, the percentage of employees with some

type of disability stands at 1.7%.

Attracting talent

Our talent attraction strategy focuses on positioning

ourselves as an employer of choice. In 2025, we

welcomed 27,872 new employees to the Group.

We launched several automation and artificial intelligence

projects as part of our talent attraction and selection. They

aim to boost operational efficiency and optimize the

candidate experience, while reducing human bias and

basing pre-screening primarily on skills and experience.

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We also launched new editions of three global graduate

programmes through which over 330 early-career

professionals joined our global businesses: Corporate &

Investment Banking, Wealth Management & Insurance,

and Retail & Commercial Banking.  

These initiatives seek to attract and develop talent globally,

highlight the Group’s digital transformation, foster entry

into the labour market through internship and first-

employment programmes for graduates, and strengthen

our employee value proposition.

Talent management

We offer programmes and experiences for our

employees’ personal and career development:

• Development programmes adapted to

different levels and businesses within the

organization.

• Temporary and permanent domestic and

international mobility and functional

experiences.

• Training based on lifelong learning.

Developing talent potential

Our review model enables us to delve deep into the

skills, expertise and aspirations of some 110,756

employees. It also means we can draw up personal

development plans based on each person’s needs.

We developed a leadership profile and a common

leadership assessment methodology to foster

transformational and collaborative leadership that aligns

with our strategy; and to gain deep, objective and

comparable knowledge of our leaders. This also enables

us to support their development and make key decisions

for the Group.

Mobility matters

Our global international mobility policy, which the

human resources committee approved (by decision of

the Group board), is an essential employee development

tool, with the objective of contributing to the 

development of talent in the Group; strengthen

succession plans; attract external talent; encourage a

global mentality; facilitate international movement to

satisfy business needs; and share — in a transparent

manner — mobility standards with our workforce.

Learning and development

At Santander, developing our people’s capabilities is key

to executing our strategy and accelerating the

transformation of Grupo Santander. Our global learning

and development policy establishes  the framework

governing all our actions in this area. Our goal is to

ensure that all employees are future-ready by providing

access to high-quality, relevant and personalised

learning experiences, while fostering a culture of

accountability and continuous learning.

During 2025, our digital learning ecosystem, Dojo,

continued to grow at a global level. That year 176,010

employees accessed our global learning systems, with

content aligned to their profiles, roles and development

needs. Powered by artificial intelligence, Dojo enables

each employee to progress at their own pace in

developing critical skills, promoting individual growth,

and supporting the Group’s strategic priorities.

Global learning community for leaders

The aim of Elevate is to equip our senior directors with

the means to lead their teams and achieve their strategic

objectives.

Its fully digital format enables directors to sign up to

development programmes that are organized into

Learning Paths (People, Tech, Strategy and Change) that

address the critical skills needed to lead the Group’s

transformation.

Future-ready talent

In 2025, 170,360 employees received training in

technology, banking, human and other key skills, which

are essential for a sustainable, diverse and high-

performing organization.

In line with our global learning strategy, we aim to

maintain a balance between scalability and adaptation

to the specific needs of each profile and market. We

embed common frameworks with adaptable solutions,

foster a culture of continuous learning, and promote the

translation of acquired knowledge into real impact.

Mandatory training and promotion of sustainability and

responsible banking

Mandatory training continues to prove a key lever for

strengthening our corporate culture and ensuring

regulatory compliance in every market. In 2025, our

employees completed training in 13 topics that the

global compliance committee approved, including

sustainability, code of conduct, cybersecurity, financial

crime prevention, data protection, and inclusion. Each

subsidiary supplemented this training with content

tailored to local legislation and business needs. In Spain,

we count with certificates in Sustainability (intermediate

or advanced level), specific training in sustainable

finance, ESG investment trends, or sector-focused ESG

risk analysis. As well, there is a specific site available in

the employee portal with further sustainability-related

training. In addition, training is provided on serving

vulnerable groups and on digital accessibility.

We also continue to make progress in sustainability-

related training. Our Retail & Commercial Banking teams

took part in sustainable finance learning pathways that

country-specific modules complemented. Moreover,

employees completed training on the practical

integration of ESG standards in their day to day. The

Board of Directors received specific training on recent

regulatory developments in sustainability, including the

implementation of the Corporate Sustainability

³ Adherence to global policies is monitored in 18 of the countries with the largest number of employees, which  account for 98.5% of  Santander’s Group

workforce.

⁴ In total 9,834 unique employees (4.8% of Santander's total workforce) exercised their right to parental or family care leave in 2025. By gender, this accounted

for 5.92% of our women employees and 3.62%  of our male employees.

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Reporting Directive (CSRD) and the European Banking

Authority (EBA) guidelines on the management of ESG

risks.

We will continue to invest in developing our employees’

skills, curiosity and growth so they can lead Santander’s

transformation and contribute to a more responsible,

sustainable and future-ready organization.

Working conditions

Employee health and well-being

Our support for  employees’ health is embedded in our

culture and corporate strategy, under which our people

and senior managers work together to protect and

promote each other’s health, safety and well-being.

Based on our strategy, we:

• implemented safety and prevention systems;

• launched proactive initiatives to boost the

overall well-being of employees;

• fostered a safe and supportive working

environment when it comes to health; and

• offered flexible work alternatives to enhance

work-life balance.

Our General health, safety and well-being policy aims to

promote a healthy lifestyle and create long-term value

for employees and society. It applies to all our

subsidiaries and follows local laws in the markets where

we operate to the letter.

a) Occupational health

The sector-level collective agreements that we sign up

to consider employee health and occupational risk

prevention.

We offer regular medical check-ups and tests after

extended absences in every market where we operate.

We also work with local public health authorities,

employees’ legal representatives and occupational risk

insurers. Employees in our main countries are covered

under occupational health and safety systems and

policies in compliance with local risk prevention

standards and best practices. 3

We revised our occupational risk prevention plans with

employees' councils through:

• regular assessments of risk factors and

preventative measures to handle or mitigate

them;

• prevention through design in new workspaces

and tools;

• procedures regarding safe and quality working

conditions and certifications;

• emergency and evacuation plans to protect

employees, customers, suppliers and visitors to

our facilities, including emergency response;

first aid training;

• measures to detect and minimize risk due to

postural hygiene;

• accident investigation to avoid reoccurrence;

and active participation of employee accident

prevention delegates in health and safety

committees

b) Well-being

We aim to raise awareness about health and well-being

through our global BeHealthy programme, which

celebrated its ninth year in 2025.

In 2025, we updated this programme to align it with best

practices in health and well-being; and with the concept

of circular health. The programme is now structured

around four pillars: physical, mental, social and financial

well-being. Over 50,000 employees took part in local

BeHealthy initiatives across the Group during the year.

In 2025, Santander Spain assumed the Presidency of the

Fundamentales Alliance, promoting mental health and

psychological safety in the workplace through cross-

company collaboration and the strengthening of

inclusive and responsible leadership

c) Work-life balance

Santander promotes employee work-life balance.

Employees across all companies are entitled to parental,

adoption and newborn care leave, and leave to care for

family members is also widely available. In 2025, 8,208

employees took paternity, maternity or adoption leave

and 1,778 took other family care-related leave. 4

In recent years, in line with digital transformation and

societal change, Santander has maintained policies and

arrangements that support flexi-work for its employees.

Currently, a high percentage of corporate centre

employees can now adapt their working hours and

location to fit with their personal circumstances. This

includes working remotely or adjusting their entry and

exit times. These measures are continuously reviewed at

team level, taking into account customer needs,

productivity, and employee engagement and experience.

d) Social protection

At Santander we offer our employees protection against

a loss of income due to sickness, accidents at work,

acquired disability and paternal leave.

⁵ These rules are monitored in 18 countries, which account for 98% of employees in locations where  trade union representation may exist in accordance with

local rules (by company, location or individual membership). In those countries except for the UK, where data on trade union membership cannot be disclosed,

65% of our employees have union representation.

⁶ Other remuneration that complements our employees’ salary: benefits, pensions, other fixed pay, incentives, and short or long-term variable remuneration.

292

Our employees have public or private protection for loss

of income due to sickness or acquired disability

according to local regulation. On top of public health

services, we offer additional private cover in our core

markets, under which employees usually receive full pay

during periods of sickness.

Because employee care and respect for their rights are

important to Santander, 98% of our workforce have a

permanent contract. In every market, employees have

coverage against loss of income due to unemployment,

in compliance with applicable local laws and regulations.

Our employees have appropriate pay protection in the

event of an occupational accident. In Spain and other

countries, we supplement the financial benefit they

receive up to their entire salary in situations of

temporary disability.

The Group has a minimum standard in each unit of fully

paid parental leave. All employees are entitled to a

minimum of 14 and up to 52 weeks of paid maternity or

adoption leave for the primary caregiver. The secondary

caregiver is generally entitled to a minimum of 4 weeks

of fully paid paternity or adoption leave. As a result of

these inclusion measures and flexible return-to-work

arrangements, 74% of women continue working at

Santander 12 months after returning from birth,

adoption or pregnancy-related leave.

Our employees have retirement coverage through public

or private pension schemes in every market where we

operate. Santander supplements this with defined

contribution pension plans for our employees in our core

markets.

e) Collective bargaining and social dialogue

Santander promotes respect for the rights of employees.

including freedom of association and the right to

collective bargaining. Our Responsible banking and

sustainability policy considers forming or joining unions

and other representative bodies a basic right of workers,

in accordance with Article 10 of our General Code of

Conduct.

We also encourage respect for freedom of association,

trade unions, collective bargaining and protection for

employees’ representatives under the laws of each

market where we operate 5. At 2025 year end, 129,875 

employees worked at premises or in companies with

union representation.

We continued to promote and comply with the

International Labour Organization’s Fundamental

Conventions and have a European business council that

meets regularly — Group senior managers and

employees’ legal representatives in Italy, Poland,

Portugal, Spain, the UK and other European countries

attend. At the meeting held in May 2025, participants

shared information on the Group’s economic and

financial situation, outlook and overall results in the

European Union, as well as other current topics related

to sustainability, compliance, cybersecurity and artificial

intelligence.

We also remained in constant dialogue with employees’

legal representatives in bilateral and special committee

meetings in our markets where all parties could discuss

reporting, queries and negotiations about working

conditions and employee benefits. We reached key

agreements in our core markets in 2025, including

committees on occupational health and safety,

monitoring of gender balance plans in alignment with

local regulations,, control of pension plans, training,

updates to collective bargaining agreements, and also

other bilateral meetings with union representatives. 

Notable outcomes of collective bargaining include the

signing of equality plans, such as the equality plan for

Santander Global Technology and Operations, and the

Group equality plan that applies to 15 companies in

Spain.  Moreover, the collective procedures carried out

during the year were conducted by consensus with

employees’ legal representatives.

Remuneration and corporate benefits

a) Appropriate remuneration

Our remuneration framework combines fixed and

variable pay schemes based on the performance of

employees and the Group.

Our remuneration and performance policies, as well as

our General Code of Conduct, forbid differential

treatment that is not based on a review of performance

and corporate behaviours. It also promotes appropriate

pay.

Specifically, the remuneration policy lays the

foundations for non-discriminatory practices (related to

performance and internal consistency), as well as the

principles, processes and criteria for granting fixed and

variable remuneration to create long-term value through

risk management.

To set pay, we strictly abide by the practices, regulations

and collective agreements in force in each market where

we operate.

All Santander employees receive a salary equal to or

higher than the legally established minimum in each of

our markets and we comply with all local legislations

and applicable collective agreements. Almost all

employees (96%) receive other forms of remuneration 6

that supplement their salary.  This demonstrates our

pledge to provide fair, competitive remuneration and the

appropriate combination of fixed and variable pay.

⁷ Climate targets account for 2% of executive directors’ total remuneration, while sustainability targets account for 7%.

⁸ Measured with the EPG - equal pay gap ratio, which compares the average remuneration between men and women who perform similar tasks. 2025 result for

the entire Group.

⁹ Employees who did not take part in MyContribution were new hires, employees of joint ventures, and employees in some customer service, debt recovery and

contact centre roles who are subject to similar performance management schemes but with shorter and more continuous cycles due to the nature of their

work. Among employees at year-end, 78,076 women (76% of the total number of women in our workforce at year-end) and 77,165 men (81% of the total

number of men). Due to statistical significance, we don't inform other gender percentages. In 2024, the employees with performance review was 177,081.

¹⁰ Including Group Sr.Executive VP, Executive VP, VP, Director, Manager, Expert and Branch Manager. Joint ventures are not included in this ratio due to their

temporary nature and joint management (they represent only 1.7% of our workforce).

¹¹ At year-end 2024, the Group employed 4,828 people with disabilities, representing 2.3% of the total workforce. As in previous years, we follow local

regulations for the calculation and recognition of employees with disabilities. In most countries, disabilities are recorded at the employee's request with the

support of a certificate issued by social services (e.g. degree and date of disability).

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All our businesses and subsidiaries have short-term

variable remuneration schemes to reflect what we have

accomplished and how, according to Group-wide

quantitative and qualitative goals as well as individual

and team goals, behaviour, leadership, sustainability,

commitment, growth and risk management. These

schemes promote meritocracy, recognize individual and

team contributions, and promote employee growth and

well-being. Our executive directors’ variable pay, which

aligns with our sustainability goals, includes achieving

our sustainability and climate targets as part of its

weighting 7.

In 2025, we paid EUR 13.6 billion in employee wages

and benefits.

Reflecting EU regulation on remuneration and to

manage risk correctly, we identified 1.336 employees

who are subject to a deferred variable pay scheme

because their decisions can have a material impact on

Santander's results. The majority of them are subject to

a deferral policy of a significant portion of their variable

pay (ranging from 40% to 60% depending on their level

of responsibility) for four to five years, which is paid out

at least 50% in shares and the rest in cash, and is subject

to possible reduction (malus) or recovery (clawback).

b) Equal pay

Our remuneration practices promote non-discriminatory

salary management in terms of gender and equivalent

remuneration, especially in cases where employees

perform the same or similar work (equally remunerated

for equal work or work of equal value). 

The gender pay gap between women and men who

perform similar functions remains below 1%, in line with

market remuneration practices and consistent with the

trend observed in recent years 8. In certain units we

continue to review the pay equity  regularly and make

adjustments where necessary.

We also analysed the overall gender pay gap (GPG),

which compares median remuneration for all men and

women, and which stood at 26% in 2025 (up 4.5 pp in

the past three years).

To measure the suitability and acceptance of our

policies, we consult employees across the Group, whose

perceptions of recognition and meritocracy are

consistent with recent levels of employee acceptance

and the competitiveness of our remuneration plans.

c) MyContribution

MyContribution is our global performance management

model.

In the last financial year, 155,249  (78%) 9 of the

employees had their performance reviewed under this

model in 2025.

Inclusive culture

An inclusive culture is an essential pillar of our strategy

and corporate culture, as well as a cross-cutting principle

in the Group’s management.

Through this approach, we promote merit, equal

opportunity and inclusion, driving the best diverse talent

and ensuring compliance with local regulations, in line

with international standards of conduct and responsible

business practices.

Gender

Women account for 52% of our total workforce at Group

level (46% in Spain), a figure that has remained stable. In

2025, 51% of new hires at Group level were women.

40% of Banco Santander’s board of directors are women,

in line with our objective to maintain a balanced

representation between 40% and 60%, which will also

become a legal requirement in some jurisdictions from

2026.

With this approach, we expect to progress gradually and

sustainably towards gender balance, moving closer to

c.40% of our senior leaders being women by 2030 10. In

2025 38.5% of our senior leaders were women and 

61.5% were men.

Persons with disabilities

We strive for the successful inclusion of our 4,854

employees with disabilities in the Group, which

represents in Spain a total of 1.7% 11.

In at least eight of our markets where we operate, and

with over 1,000 employees, legislation requires the

inclusion of people with disabilities. We comply with

these regulations and reinforce them through active

inclusion, accessibility and awareness policies.

Diversity in other groups

¹² LGBTIQ+: Lesbian, gay, bisexual, transgender, intersex, and other identities. In 12 of the countries in which we operate, employees have the right to report their

gender identity,  subject to applicable confidentiality rules and appropriate handling of information.

¹³  Consider race and ethnicity, colour, sex, sexual orientation, gender identity, disability, age, religion, political opinion, national or social origin, among others.

¹⁴ The Universal Declaration of Human Rights, the International Labour Organisation Declaration on Fundamental Principles and Rights at Work, the United

Nations Guiding Principles on Business and Human Rights, the OECD (Organization for Economic Cooperation and Development) Due Diligence Guidance for

Responsible Business Conduct, and others.

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We monitor the representation of ethnic groups in four

of our core markets, where this topic is material and

regulated (United Kingdom, United States, Brazil and

Chile). Employees who identify themselves as part of

these groups account for over 32.2% of the total

workforce, which is consistent with the ethnic and racial

make-up of those markets.

Among employees who have voluntarily chosen to share

information related to their identity or sexual orientation,

2.2% identify as part of the LGTBIQ+ community. 12

Building an increasingly inclusive and engaged

environment

We promote an inclusive working environment that is

free from harassment and discrimination 13 and where

every individual is valued and respected. In 2025, 60,126 

employees completed trainings on harassment

prevention and 87,004 in unconscious bias, which we

updated in line with the Global protocol against

discrimination and the General Code of Conduct, which

provide a common framework for respect, fairness and

ethical behaviour. When we ask our employees whether

they feel they can be themselves at Santander, the

results are consistently high across different groups,

confirming an inclusive environment.

Information on upholding human rights

Santander seeks to respect and protect the human rights

of stakeholders in the operations and countries where it

operates, and these are reflected in management and

governance practices.

• The responsible banking and sustainability

policy approved by the board of directors

incorporates defence of human rights.

• looking after our employees’ health and

promoting decent employment, the

preservation of freedom of association and

collective bargaining and the prohibition of

slavery and child labour.

• protecting our customers’ human rights

through responsible business practices and the

protection of their data.

• assessing the human rights impact on

transactions with customers through

environmental and social (E&S) analysis.

• embedding environmental and social aspects,

including human rights, in our supply chain

management.

• Canal Abierto is a key tool to identify, manage

and resolve potential human rights-related

incidents or violations to protect our customers,

employees, suppliers and the communities we

serve.

The results of the human rights due diligence exercise

informed the 2024 double materiality assessment. This

exercise was carried out in line with international

standards 14, including measures related to labour rights,

customer protection and responsible business conduct in

relevant activities. For more details on our human rights

due diligence, visit the website santander.com/en/our-

approach/policies.

Information on anti-corruption

Grupo Santander is firmly committed to the fight against

financial crime and compliance with financial crime

prevention regulation in every market where we

operate.

Our Group board-approved and unit-ratified  Corporate

financial crime compliance (FCC) framework sets out the

key principles for preventing financial crime, which

underpin these programmes: the anti-money laundering

and terrorism financing prevention programme (CFT);

the sanctions programme; and, since 2023, the anti-

bribery and anti-corruption programme (ABC). This

framework is available to all employees and interested

third parties.

This framework is available to all employees and

interested third parties. Moreover, we use information

channels to raise awareness of the importance of

financial crime compliance. We reach out to all our

stakeholders through annual training programmes,

communications channels (corporate and unit Intranet

sites), awareness campaigns, internal newsletters and

best practices so that they can learn about and

understand their responsibilities across the Group’s

entire operations.

We draw up the policies that build on this framework

(including customer due diligence — CDD — procedures) 

according to domestic and international financial crime

regulation to manage and mitigate the impacts and risks

related to FCC and protect the Group’s integrity in all our

businesses and operations. We constantly review and

update our policies to remain consistent with regulatory

amendments and new and ever-changing external

threats.

Moreover, we have a common oversight methodology

that enables us to verify that all our operations comply

with this framework under the most demanding,

standardized criteria that the centralized and technical

FCC function in our markets endorse. This function also

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plays a crucial role in promoting FCC culture and

awareness to all Grupo Santander employees.

Canal Abierto

Canal Abierto is an anonymous and confidential Grupo

Santander channel to report alleged unethical conduct. It

protects whistleblowers by expressly prohibiting

reprisals or any negative consequence against them.

Every unit in the Group administers its own ethical

channel according to the common standards set out in

the Canal Abierto policy.

In 2025, we received 56 reports in Spain, 11 of which

were from third parties (all of whom from customers).

As in 2024, the Group has not record of any judicial

proceedings initiated by employees or their

representatives in relation to incidents of discrimination

or breaches of fundamental rights, nor of any employee-

related cases referring to serious human rights incidents

that would be considered material to the Group.

All reports submitted on Canal Abierto are handled

appropriately, whether they are found to be

substantiated or not.

Community support

Support for education, employability and

entrepreneurship

Santander has supported education, employability and

entrepreneurship for nearly 30 years.

During this period, we have invested over EUR 2.5 billion

in partnership with more than 1,000  universities and

entities from 13 countries, and helped over  8.3 million

people and organizations.

In 2025 alone, we allocated EUR 102.1 million to

promote education, employability and entrepreneurship,

and helped 4.6 million people and organizations.

This enables us to make headway with our target of

contributing EUR 400 million to community support

initiatives in these three pillars between 2023 and 2026.

So far, we have contributed EUR 311 million between

2023 and 2025.

We sign agreements with prestigious international

higher education institutions to strengthen the university

ecosystem. We provide scholarships and economic

grants to adults so they can access and complete higher

education.

We also encourage lifelong learning through the

acquisition and continuous updating of skills that provide

better professional opportunities. We offer training,

resources and access to benefits for SMEs, startups,

scaleups and entrepreneurial projects to help them grow

and strengthen their businesses.

Other community support actions

We bolster our support for education, employability and

entrepreneurship with financial education and helping

vulnerable people.

On top of direct community action, we cooperate with,

and channel our support through, local non-

governmental organization (NGOs), social charities, and

corporate volunteering. In some cases, cooperation is

through foundations that the bank runs in several

markets, including Argentina, Mexico, Poland, Portugal,

Spain, and the UK.

We target our support to different groups depending on

their needs. Our support for vulnerable people focuses

on sensitive groups (due to gender, disability, age, lack

of digital skills, financial difficulty, and other reasons).

We usually target cultural activities at the general

public, though we also include vulnerable groups to

facilitate their access to events and programmes.

In Spain, we focus on education, employability and

entrepreneurship through Santander Universities

(partnerships with universities, training resources,

grants and scholarships, SOA, Santander X). In 2025,

Santander Spain delivered +1.8k financial education

sessions (+10% YoY, >45k participants) through

Finanzas para Mortales, consolidating our long-lasting

commitment with financial education. We continue

supporting our communities through social investment,

providing technical support and networking to NGOs

(“Red Solidaria”) and corporate volunteering (4k

participations in different programmes including

probono activities, international volunteering with

Fundación Santander -BEST Africa-, Santander Natura (to

preserve environment), solidarity teambuildings and

Finanzas para Mortales. In 2025, we keep contributing to

the recovery of communities affected by DANA storms in

Valencia. SRI funds include our solidarity investment

funds that donate part of their management fee to NGOs

projects in the communities in which we operate.

Meanwhile, Santander Compromiso Solidario fund won,

for the third year in a row, the Expansión-Allfunds award

as 'Best solidarity fund'.

In 2025, Banco Santander invested EUR 61.7 million  in

these initiatives, of which EUR 5.7 million accounted for

social programmes in Spain, helping over 216 thousand

people.

Fundación Banco Santander, which is based in Spain,

works to build a fair, inclusive and sustainable society by

financing and running several cultural, educational,

social and environmental projects.

Subcontracting and suppliers

Our outsourcing and third-party management model and

outsourcing strategy policy (which apply in all our

markets) provide a methodology for our suppliers to

comply with the Group’s minimum standards and with

regulation to avoid risks that stem from substandard

operational resilience, solvency, reputational control and

regulatory compliance.

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Moreover, to promote responsible practices in our

supply chain, we have a supplier ESG certification

methodology that aims to identify the suppliers that

pose the greatest risk in terms of sustainability. This

methodology also helps us determine which controls to

adopt according to the risk identified.

As at 2025 year-end, we had assessed 876 suppliers

identified with ESG risk.

Consumers

At 2025 year end, the Group had 15 million customers in

Spain and 180 million globally.

Our customer conduct risk model promotes

transparency, fairness, and responsibility in all customer

engagement, including product design, pricing,

complaint handling, and financial education, while

preventing over-indebtedness and protecting vulnerable

customers.

This model outlines the governance, key processes and

instruments that enable us to mitigate and manage

customer conduct risk at every stage of our relationship

with them.

Our conduct risk identification and assessment seeks to

proactively identify behaviours or practices that may

lead to regulatory breaches, customer detriment, or

reputational harm. Ensuring fair customer outcomes

takes a coordinated approach that involves the first and

second lines of defence to ensure a comprehensive risk

assessment.

Through the continuous monitoring of risks, indicators

and mitigation tools, the Group ensures early detection

and effective response to situations that may

compromise customer protection.

The Group has strengthened complaints handling

through further monitoring of the customer voice by

analysing complaints and conduct events through key

metrics, enabling early identification of risks and trends

and supporting timely mitigation actions.

The Approval of products and services policy regulates

the product approval process at local and Group level by

defining roles and responsibilities and setting criteria for

product assessment, approval and monitoring, which

builds on the conduct risk with customers management

model. Santander has a well-established, robust and

consistent product governance, that the Group

Compliance team owns and manages. It is an end-to-end

cycle that regulates the approval and monitoring of

products and services, covering their design, sale, and

post-sale stages and ensuring approval of proposals

according to regulatory requirements, ethical principles

and market conduct, both at local and Group level.

Product governance forums are responsible for

implementing this policy when approving products and

services, as well as defining approval requirements and

coordinating validation, which includes monitoring and

reporting to senior management. We only approve

products and services once we have assessed all risks 

have been assessed, and forum members are

unanimously in favour.

Training is key to boosting knowledge to foster

consumer protection. The Compliance function, with the

support of People & Culture, draws up mandatory

refresher training for all employees on managing and

mitigating customer conduct risk.

All units ensure strict compliance with local

requirements; supported by robust training.

Quality and conduct metrics in sales teams’

remuneration

The Group establishes requirements to ensure we link

variable pay to service quality and conduct metrics. This

approach promotes greater awareness and proactive

management of customer relationships, encourages

high levels of transparency, and supports the

identification of appropriate target audiences.

The Group has mechanisms to monitor products and

services throughout their life cycle. These enable us to

detect and manage (as early as possible) potential

deterioration, failures in marketing, and non-compliance

with the terms and conditions under which they were

approved. We analyse and monitor:

• Customer voice: Queries, complaints and

surveys are a key source of information to

identify deficiencies in marketing and customer

engagement, and to draw up improvement

plans; and

• Sales metrics and controls: Monitoring the

percentage of product or service cancellations

shortly after sign-up.

The Customer service and dissatisfaction management

policy outlines the principle of making multiple channels

available to avoid the potential impact of not having

suitable means for customers to convey their issues or

dissatisfaction and to promote the fact that we have

channels that adapt to our customers’ needs and

preferences.

Additionally, customers can escalate complaints through

external channels when they are in place, such as the

Financial Ombudsman, regulatory bodies, and consumer

agencies, if they are not satisfied with how we have

handled the complaint.

Units continue investing in digital channels to speed up

case resolution and help customers self-manage certain

queries. Root-cause analysis and mitigation plans are an

essential component of complaints handling that is

continuously being strengthened.

In 2025, the total number of formal complaints received

was 772,780 from all Group customers.

¹⁵ Spain shows a decrease following the 2024 Supreme Court ruling on mortgage arrangement fees.

¹⁶ For more details, visit our website santander.com/informe-inclusion-financiera.

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Regarding complaints management, we take a proactive

approach to addressing customer issues and complaints,

analysing root causes and applying lessons learned. In

2025, Banco Santander received a total of 82,650

complaints in Spain, a (47)% decrease compared with

2024 15.

Financial health and inclusion

Financial health and inclusion are a priority for Santander

in contributing to social progress and promoting

prosperity and entrepreneurship.

We use the World Bank's Global Findex Database to

calculate the number of unbanked, underbanked and

financially distressed people due to access and financing

issues in the markets where we operate as a retail bank.

In particular, we:

• consider several components of financial

exclusion and aggregate indicators to cover all

our target audiences;

• define an inclusive financial system as one that

maximizes the use of financial products and

services, access and financing;

• measure involuntary financial exclusion

through barriers that people who do not

participate in the formal financial system

perceive; and

• apply a correction factor that matches our

business penetration rate in the markets where

we operate.

Thanks to our financial inclusion efforts, we achieved our

objective of reaching five million people with at least one

financial inclusion measure during the period

2023-2025. This ambition aligns with our market

penetration levels and the gaps identified in our

exclusion analysis. 

Our processes pinpoint the needs of customers facing

financial difficulty so we can develop products and

services and train our teams. 16

In 2025, Santander Spain reached a landmark by

becoming the 1st IBEX-listed company to certify a 360º

accessibility commitment by AENOR, covering physical

and digital channels and ensuring that all our products,

services and relationship channels are accessible for all

our customers, regardless their diverse physical,

sensory, cognitive, or age-related abilities . We have also

reinforced fraud prevention and financial protection for

older customers, including dedicated workshops on

economic abuse and patrimonial fraud.

These processes are consistent with our customer

conduct model, vulnerable customer policy, and

responsible banking and sustainability policy.

In 2025, we updated our Corporate Financial Inclusion

guide to reflect best practice. We also changed how we

monitor and measure progress, differentiating between

financial inclusion and financial health. The updated

guide continues to enable the homogeneous

measurement of access and financing initiatives across

markets and sets out these common definitions:

• Unbanked: People who do not have a bank

account or access to any banking services.

• Underbanked: People who, despite having a

bank account, have difficulty accessing basic

services (e.g. making deposits and

withdrawals) or who source financing

informally.

• People in financial distress: People who earn

less than their country’s legal minimum wage

or who are unable to cover basic living

expenses.

The guide also provides a consistent metrics system for

monitoring and managing access and financing

initiatives. Though we have achieved our ambition, we

will continue working to increase access, improve the

use of financial services, and strengthen our support for

vulnerable individuals and communities.

In 2025, we financially included nearly 1 million people

through access initiatives; and 1 million people through

finance initiatives. In Spain, we focus on guaranteeing

access to basic financial services by waiving fees for

vulnerable customers or thanks to Correos Cash in

remote areas (non-digital solution that covers 100%

national territory) while financing underbanked SMEs

and entrepreneurs or low-income households.

In 2025, we continued to strengthen a common financial

health approach in all the Group’s markets. We define

financial health as individuals’ ability to manage their

finances in a way that enables them to meet short-term

needs while planning for and achieving long-term goals,

generating stability, and reducing the risk of financial

hardship.

Throughout the year, we made headway with identifying

and building on initiatives that help customers’ develop

financial skills. We combined global tools — such as

goal-setting solutions and planning resources within our

banking app in certain countries — with local action,

including tailored financial education content and

practical guidance that align with market-specific needs.

As part of this, we came up with a common financial

health definition and measurement guide that will

enable homogeneous and comparable progress

assessment across markets. Our framework directly

complements our financial education and inclusion

efforts and ensures that individuals not only gain access

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to the financial system but also acquire the knowledge

and tools needed to use it responsibly and effectively.

Tax information

The principles that guide the Group’s tax practices are

consistent with its purpose and aligned with business

strategy. The board of directors approves our tax

strategy and revises it regularly.

The Group’s tax risk management and control, which

draws on our internal control model, sets out the actions

to follow our tax strategy and the principles that

underpin it.

We participate in cooperative compliance initiatives that

tax authorities run. Since 2010, we've adhered to the

Spanish Code of Good Tax Practices and the UK Code of

Practice on Taxation for Banks and, more recently, to the

Portuguese Code of Good Tax Practices in 2022. Since

2015, we have voluntarily submitted an annual tax

transparency report to Spain's tax authority.

The principles of Grupo Santander’s tax strategy must

enable us to make appropriate contributions according

to the value creation in each of the markets where we

operate, as well as to comply with local laws.

In 2025, Banco Santander, S.A. and its Group in Spain

collected and paid EUR 4,183 million in taxes, of which

EUR 2,028 million were own taxes and EUR 2,155

million third party taxes.

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6. Data and Artificial

Intelligence, Technology and the

Fintech Ecosystem

Technological innovation is one of the fundamental

pillars underpinning the Group’s strategy. In an

environment of constant disruption, technology, data

and artificial intelligence (AI) are essential to anticipate

customer needs, drive operational efficiency and

generate new opportunities for sustainable growth. We

continue to evolve from a traditional banking model

towards a digital ecosystem, with the aim of becoming

the best financial services platform.

The adoption of AI, the rollout of a robust and efficient

technological infrastructure, the continuous

strengthening of cybersecurity and collaboration within

the fintech ecosystem act as key levers to enhance

customer experience, promote operational excellence

and simplify the ecosystem, contributing to the creation

of sustainable long-term value.

This approach reinforces our commitment to innovation,

technical excellence and global collaboration, aligned

with the highest standards of security and compliance,

to offer secure and personalized experiences for both

customers and Group professionals.

During 2025, Santander took a decisive step with the

creation of the Global Data and Artificial Intelligence

(Data & AI) function, aimed at extracting maximum value

from data and accelerating transformation by using AI as

a lever. It is a cross-cutting function across all global

businesses and countries, enabling us to scale

capabilities, strengthen collaboration and accelerate the

impact of innovation.

EUR 1,713 million was allocated during the year to

digital transformation activities demonstrating the

Group's firm and ongoing commitment to investment in

technology and innovation.

1. Data and Artificial Intelligence

The global Data and Artificial Intelligence function is

structured around three fundamental pillars: 

• Transform customer experience and operations, by

integrating artificial intelligence  and advanced

automation capabilities into key processes.

• Improve decision-making with reliable data, based

on common standards of quality, traceability, and

governance.

• Accelerate the impact on business, driving the

development of analytical models and scalable

solutions that generate tangible and sustainable

results.

To make this transformation possible, we continued to

implement data governance from its point of origin and

throughout its entire lifecycle, while progressing

towards a unified data architecture. This eliminates silos,

facilitates the efficient and global reutilization of data

and enables the secure scaling of AI capabilities across

the organization.

The rollout of the Data & AI function is structured under

a business-led model: each initiative stems from a

specific business need and is supported by a global

network of Data & AI leaders across businesses and

countries. We have a unique portfolio with more than

1,000 initiatives, prioritizing projects with the greatest

impacts on efficiency, automation and customer

experience thereby focusing development on a limited

set of global, reusable and scalable capabilities. 

This is carried out by multidisciplinary teams working

under agile methodology, combining business, data,

advanced analytics, technology, risk and compliance

capabilities. Our approach ensures that each solution is

designed under criteria covering security, responsibility

and value-creation from the outset, while promoting

technical consistency and reusability across countries.

The Group internally develops strategic capabilities but

also  works with external partners when they provide

speed or specialization, always under strict governance

and data protection standards, within the framework of

a secure and ethical global ecosystem. Specifically, we

develop solutions that incorporate machine learning and

advanced analytics techniques, which contribute directly

to revenue growth and improvements in operational

efficiency. Their application spans areas such as process

simplification, enhanced customer acquisition and

retention, fraud prevention, and the strengthening of the

cards business throughout its entire life  cycle.

The governance of Data and Artificial Intelligence within

the Group is based on a robust global model that

ensures the security, proper lifecycle management and

ethical use of these technologies. This model is included

in the corporate data and AI framework, approved by the

Board of Directors, and is complemented by the AI

management and governance policy, which regulates

the full lifecycle of the Group´s AI use cases.

The governance framework ranges from data quality to

model control and supervision is based on a structure of

three lines of defence that ensures independent

oversight proportionate to the level of risk.

It also incorporates the principles of responsible AI,

which guide the design and delivery of all solutions:

transparency, fairness and reduction of biases,

accountability, privacy and security, as well as

contributing to value creation which guide the design

and operation of solutions. As part of the Group’s firm

300

commitment to the responsible use of AI, we

implemented mandatory training.

We apply these principles across common processes for

identifying, classifying, inventorying and controlling AI

use cases, which makes it possible to assess their

potential impact and establish appropriate controls at

each stage. This approach ensures a centralized view,

comprehensive follow-up and regulatory compliance

across all Group units and countries.

Advances in the use of data and artificial intelligence

require the development of new capabilities and a

profound cultural shift. To this end, the Group promotes

a global talent strategy that combines the strengthening

of internal capabilities, the attraction of specialized

profiles and the consolidation of a culture based on

controlled experimentation, rigorous analysis and the

responsible use of technology.

In 2025, we completed the formation of the Data & AI

team, strengthening the second line of defence and the

function’s operating model with end-to-end execution

capabilities. In addition, we improved upskilling and

reskilling programmes on AI, data science and data

governance and we integrated specialized profiles in

data engineering, advanced analytics and AI operations,

driving the execution of key initiatives.

Furthermore, a structured AI training programme was

launched to foster adoption and maximize the value

derived from employees’ use of these tools.

In 2025, we significantly accelerated the adoption of AI

among our employees, driving improvements in

productivity, operational efficiency and service quality.

Implementation was carried out safely and

progressively, prioritizing use cases with tangible

impacts and guaranteeing data protection and

traceability of the models at all times. The most

important applications were the following: 

• AI Assistants: approximately 30,000 employees

are using advanced AI tools and over 7,000 active agents

have improved document writing, information analysis

and automation of lower value-added tasks.

• Intelligent automation: the Group has built

more than 100 agents for processes automation and

trained more than 800 engineers in automation tools,

resulting in faster, more reliable and scalable operations.

• Software lifecycle: more than 30 use cases (for

example, functional testing, documentation and code

maintenance) have been delivered, used by over 6,000

developers through coding agents to reduce delivery

times and improve software quality.

• Customer service: the Group is moving towards

a new generation of experiences based on

conversational AI. The first AI-based voice solutions are

currently in the testing phase and represent a significant

leap from traditional systems, designed to enable  faster

and more efficient interactions.

Looking ahead to the next stages, the Group will

accelerate its comprehensive AI strategy to transform

the financial services of the future in a secure and

responsible manner. The objective is to scale

capabilities, differentiate ourselves and capture value by

combining in-house development, strategic partnerships

and investment.

Research and experimentation capabilities will be

strengthened by intensifying the exploration of

emerging technologies, the early validation of use cases

and the monitoring of global trends. In addition,

partnerships with leading technology companies will

continue to establish co-design and deploy high-impact

solutions, combining their scale with the Group’s

business expertise, data assets and regulatory

experience.

The Group will expand collaboration with specialized

startups and will continue with its investment strategy,

with more than 20 deals completed to date, to

accelerate capabilities, incorporate differentiated

innovation and reduce time to market.

In parallel, we will move forward with the creation of

our own AI Studio to develop, train and adapt models

based on specific data and needs, thereby strengthening

technological autonomy and personalization.

All of this will be underpinned by a global network of

academic partnerships to foster cutting-edge research,

talent development and the generation of advanced

knowledge in AI and data. Through this approach, we

will consolidate the responsible adoption of AI on the

basis of evidence, impact and sustainable value creation.

2. Technological infrastructure

Santander has migrated more than 97% of its

technological infrastructure to the cloud, with the aim of

boosting standardization, maximizing scalability and

strengthening service availability. It has also accelerated

the deployment of next-generation infrastructure based

on the on-premise private cloud, supported by an

architecture with greater capacity, resilience and

efficiency. All of this contributes to reducing energy

consumption and advancing the Group's sustainability

goals achieving an estimated reduction in its carbon

footprint of 49.5 tonnes of CO₂.

The Group has a network of paired, high-quality data

processing centres (CPDs), interconnected through a

redundant communications system and distributed in

strategic locations to support and ensure the continuity

of the Group's activity.

These centres combine traditional IT systems with on-

premise private cloud capabilities, enabling the

integration of technological management across

business areas, accelerating digitalization and achieving

significant efficiencies through the standardization and

simplification of operations.

301

3. Cybersecurity

Cybersecurity remains one of the Group’s priorities.

During 2025, we faced a dynamic and increasingly

sophisticated threat landscape, including more

ransomware attacks, intensified hacktivism and supply

chain threats, together with the growing use  of social

engineering and AI techniques by attackers.

To face these challenges, Santander has continued to

evolve its defences in line with the cybersecurity

strategy, centred on three pillars:

• Shift-left. The principles of security by design

were strengthened, incorporating risk management and

the definition of security architectures from the early

stages of each initiative. Among the most important

advances were: i) the strengthening of controls related

to critical environments and identification of people who

interact with our banks' systems; ii) the strengthening of

security controls to mitigate risks associated with supply

chains; and iii) the consolidation of the Cyber Pro culture,

that reinforces employee training, with special attention

to groups with the greatest exposure to risk.

• Increased cyber defence. Santander continued

to harness the potential of AI and automation to

strengthen threat prevention, detection and response.

We implemented new solutions that improved threat

detection and response times. Likewise, we significantly

increased the early detection of online scams and fraud

by analysing user behaviour in real time, enabling us to

distinguish legitimate from fraudulent activities.

• Operational resilience. The Group strengthened

its capacity to anticipate, resist and recover from

potential cyber scenarios, strengthening response

preparedness and continuity of essential services.

Among the main improvements are the global expansion

of the Cyber Emergency Response Team, which is

permanently operational and the expansion of resilience

and recovery tests in line with the DORA Regulation.

The Santander Fusion Centre, which integrates the

Cybersecurity and IT Monitoring teams, performs

detection, monitoring and response functions to

operational failures and cybersecurity events for Group

entities.

Information systems are reviewed regularly through

internal and external audits. The Group identifies IT

assets, systems and information (including those

managed by third parties) and periodically assesses the

associated risks and protection levels. Additionally, it has

a permanent testing ecosystem, including (vulnerability

analysis, penetration testing, red teaming exercises and

cyberattack simulations) which enable potential

weaknesses to be identified and proactively mitigated,

prioritizing remediation according to criticality and

potential impacts on the business.

Independent entities review and certify critical

cybersecurity processes. Certifications include ISO

27001:2022 and ISO 27017, SSAE 18 and Payment Card

Industry Data Security Standard (PCI DSS) 4.0, which are

reviewed and updated regularly, incorporating new

processes and controls every year.

4. Fintech ecosystem

Santander actively participates in the fintech ecosystem

across all global businesses and countries in which it

operates, and with all the global units.

As part of our efforts to foster and channel innovation

while improving customer experience and efficiency, we

partner with technology companies.

Through our Fintech Station programme, we work with

startups and scale-ups in pilot programmes and

implement or co-create new products and services with

them.

In 2025, Santander Fintech Station worked on eight

proofs of concept (PoC) and also collaborated on the

implementation of six production initiatives. The Group

also provided banking services to these fintech

companies, such as advice on financing rounds, buying

and selling processes and IPOs.

We are an active investor in the fintech sector,

sometimes directly, through our programme focused on

investments in startups with high strategic value for the

Group or through funds promoted by the Group, such as

Mouro Capital, a global venture capital fund that invests

in fintechs, and has already launched a second fund. To

date, the programme focused on investments in

strategically valuable startups has invested directly in

more than 20 companies globally, and Mouro has a

portfolio of more than 40 investments in technology

companies across Europe, North America and South

America.

These investments, together with commercial

collaboration with participating companies, continue to

be a key tool for driving innovation within the Group.

Santander works with companies in these portfolios, for

example with Colektia, an AI solution for automated

recovery services in Latin America; Elliptic, in blockchain

analytics and regulatory compliance for digital assets;

and Drive Revel, to provide a flexible, digital vehicle

leasing offering in Spain.

In addition, the Group invests in the field of cybersecurity

through Forgepoint Capital International, a venture

capital manager that is raising its first fund outside the

US and which, with the Group’s support, has already

made six investments.

See more information in the Consolidated Directors’

Report.

302

7. Customer service and

customer defence

Customer Service Annual Report

In accordance with article 17 of order ECO / 734/2004 of

March 11 of the Ministry of Economy on the

departments and services of Customer Service and the

Customer Ombudsman of Financial Institutions, the

directors’ report summarizes the Annual Report to be

presented by the holder of the Service on the Board of

Directors in March 2026.

Customer service and customer defence service

In compliance with Law 44/2002 on Measures for the

Reform of the Financial System of the 734/2004 Order of

the Ministry of Economy on Departments and Services of

Customer Service and the Customer Ombudsman of

Financial Institutions and in accordance with Article 37

Of the Regulations of the Customer Claims and Attention

and Defence Service in Grupo Santander, below is a

summary of the activity developed by the said Service

during 2025, in relation to the management of

complaints and claims.

This complaints and customer service unit handled

complaints from 18 Group companies in Spain during

2025, following the integration of Santander Private

Banking Gestión SGIIC into Santander Asset

Management on 17 November 2025.

Global evolution of complaints and claims received by

Banco Santander in 2024

In 2025, 95,298 claims were accepted in the complaint

and customer service department. Of these, 181 came

through the Customer Ombudsman, 1,464 through the

Bank of Spain, 137 through the National Securities

Market Commission (CNMV) and 112 through the

General Directorate of Insurance and Pension Funds

(DGSFP).

Analysis of claims by affected products

The following is the classification of complaints received

in 2025 according to the type of product:

Number of complaints	2025	2024
Assets	40,564	120,627
Liabilities	10,085	10,968
Services	16,569	13,871
Insurances	1,369	1,237
Funds and Plans	849	702
Payment methods	20,953	15,676
Securities / Capital Markets / Treasury	1,048	1,031
Others	3,861	2,264
	95,298	166,376

Resolution of claims and complaints

As of 31 December 2025, 94,600 claims had been

resolved, of which 18,237 came from files received in

2024. This figure represents 81% of the claims and

complaints received in the year.

The average resolution time in 2025 was 76 calendar

days. 81% of the complaints and claims resolved have

required a processing time of more than 15 calendar

days.

In 36% of cases, the resolutions have been favourable to

customers.

Entities

The following are the companies adhering to the

Regulation of the Customer Service of Complaints, Care

and Defence of Grupo Santander and their corresponding

number of complaints and claims received.

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Entities	Admitted to processing	Non-admitted to processing
BANCO SANTANDER, S.A.	75,702	19,197
SANTANDER CONSUMER FINANCE, S.A.	12,644	3,395
OPEN BANK, S.A.	4,547	344
SANTANDER SEGUROS Y REASEGUROS CÍA. ASEGURADORA,SA	1,226	655
SANTANDER PENSIONES, S.A., E.G.F.P.	473	108
GETNET EUROPE, EP, SL	352	42
SANTANDER ASSET MANAGEMENT, S.A., S.G.I.I.C.	196	59
ALTAMIRA SANTANDER REAL ESTATE, S.A.	90	68
SANTANDER FACTORING Y CONFIRMING, S.A., E.F.C.	40	5
SANTANDER LEASE, S.A., E.F.C.	7	2
EURO AUTOMATIC CASH	9	2
TRANSOLVER FINANCE, E.F.C., S.A.	9	1
SANTANDER PRIVATE BANKING GESTIÓN, S.A., S.G.I.I.C	3	4
PAGONXT EMONEY, EDE, SL	—	—
SANTANDER REAL ESTATE, S.A.	—	—
SANTANDER INTERMEDIACIÓN CORREIDURÍA DE SEGUROS, S.A.	—	—
SANTANDER INVESTMENT, S.A.	—	—
SANTANDER ALTERNATIVE INVESTMENTS, SGIICV	—	—
BANCO DE ALBACETE, SA	—	—
Total	95,298	23,882

The network of branches and the different channels of

relationship solve, in the first instance, the requests,

disconformities or incidents that the clients

communicate to Banco Santander, trying to avoid that

they become complaints to other instances.

8. Risk management, solvency

and capital

See notes 50 and 1.e) on risk and capital to the Bank

Annual Accounts. See more information in the

Consolidated Directors’ Report.

9. Other relevant information

9.1 Treasury shares:

See note 30 to the Bank Annual Accounts.

The acquisition of treasury shares was last authorized at

our 2023 AGM, for five years and subject to these

provisions:

• The treasury shares held cannot exceed 10% of

Banco Santander's share capital at any time, which

is the legal limit set under Spain’s Corporate

Enterprises Act. 

• The acquisition price may not be lower than the par

value of the shares, nor exceed by more than 3%

the highest of the last independent purchase or the

highest independent offer at that time at the

trading venue where the purchase is made.

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• The purpose of acquiring treasury shares will be

discretionary treasury share management, the

execution of share buyback programmes, the

delivery of these shares under the framework of

the employee and director remuneration policy or

any other purpose that the board deems pertinent

at any given time.

On 26 February 2024, the board updated the current

treasury shares policy, which dictates that Banco

Santander may carry out treasury share transactions for

these purposes:

• Provide liquidity or the supply of securities in the

market for Banco Santander shares, which gives this

market depth and minimizes any potential temporary

imbalances in supply and demand.

• Take advantage, for the benefit of all shareholders, of

weakness in the share price due to its medium-term

outlook.

• Meet Grupo Santander's obligations to deliver shares

to our employees and directors.

• Serve any other purpose authorized by the board

within the legal limits and those set at the general

meeting.

Among other things, the policy also provides for:

• The principles to uphold in treasury share trades,

which include protecting financial markets' integrity

and prohibiting market manipulation and insider

trading.

• The operational criteria for carrying out treasury share

trades, unless in exceptional circumstances as per the

policy or carried out through mechanisms, such as

buyback programmes, with regulation of their own.

These criteria include rules on: 

• Responsibility for execution of these trades, which

falls on the Investments and Holdings department,

which is kept separate from the rest of Banco

Santander.

• Venues. Trades must generally be carried out in

regulated markets and in the multilateral trading

facilities stipulated in the policy.

• Volume limits. Trades must generally not exceed

15% of the average daily trading volume for Banco

Santander shares in the previous 30 sessions on the

relevant trading venue.

• Price limits. In general, (a) buy orders should not

exceed by more than 3% the highest of (i) the price

of the last independent transaction prior to the

relevant acquisition or (ii) the highest independent

bid at that time on the trading venue where the

purchase is made; and (b) sell orders should not be

lower than the lowest of the price of the last trade in

the market by independent parties and the lowest

sell order price in the order book.

• Time limits, including a black-out period that applies

(a) during the 15 calendar days prior to the

publication of quarterly financial information and (b)

if Banco Santander has decided to delay the

disclosure of inside information according to market

abuse regulations, until such information is

disclosed. In the case of buyback programmes, the

specific regulations establish a black-out period of

30 calendar days prior to the publication of annual

and semi-annual results, which, however, will not

apply when the buyback programme is managed by

a third party or when the issuer has a temporary

buyback programme in place.

• Disclosure to the markets of treasury shares trading.

The policy applies to the discretionary trading of treasury

shares irrespective of whether they are carried out in

regulated markets, in multilateral trading facilities,

outside the orders market, either through blocks or

through special transactions, or under buyback

programmes. Furthermore, buyback programmes shall

comply with all the applicable specific regulations, such

as those on market abuse and their relevant

implementing rules. The policy does not apply to

transactions on Banco Santander's shares carried out to

hedge market risks or provide brokerage or hedging for

customers.

The full treasury shares policy is available on Banco

Santander's corporate website.

Execution of the buyback programmes charged against

2024 results

We executed two buyback programmes under the 2024

shareholder remuneration policy:

In the first buyback programme, executed from 27

August to 3 December 2024, we acquired 341,781,250

treasury shares (approximately 2.21% of share capital).

Under the authorization of the 2024 AGM, on 17

December 2024 the board resolved to reduce Banco

Santander’s share capital through the cancellation of the

repurchased shares. 

In the second buyback programme, executed from 6

February to 2 June 2025, we acquired 267,166,950

treasury shares (approximately 1.76% of share capital).

Under the terms agreed at the 2025 AGM, on 25 June

2025 the executive committee, by delegation of the

board, resolved to reduce Banco Santander’s share

capital through the cancellation of the repurchased

shares.

First 2025 Buyback Programme

305

Under the authorization of the 2023 AGM, and according

to the 2025 shareholder remuneration policy, on 29 July

2025 the board resolved to execute a new share buyback

programme for a maximum amount of EUR 1,700

million, equivalent to approximately 25% of the Group's

net reported profit (excluding non-cash, non-capital

ratios impact items) for the first half of 2025 and for

which we have already obtained the required regulatory

authorization of the European Central Bank (ECB).

In the First 2025 Buyback Programme (executed from 31

July to 22 December 2025), we acquired 196,005,870

treasury shares (accounting for approximately 1.32% of

Banco Santander’s share capital), at a weighted average

price per share of EUR 8.67.

On 23 December 2025, the executive committee, by

delegation of the board, resolved to reduce the share

capital in the amount of EUR 98,002,935 by cancelling

the 196,005,870 repurchased shares.

Second 2025 Buyback Programme

Under the same AGM approval, on 3 February 2026 the

board resolved to execute the Second 2025 Buyback

Programme, for a maximum amount of EUR 5,030

million. The appropriate regulatory authorization had

already been obtained and the execution of the

programme began on 4 February 2026. Under the

shareholder remuneration policy in relation to the 2025

results, 1,830 million euros correspond to c. 25% of the

Group’s underlying profit for the second half of 2025.

The remaining amount corresponds to an extraordinary

buyback of 3,200 million euros, equivalent to

approximately 50% of the CET1 capital generated in

January 2026 following completion of the sale of 49% of

Santander Bank Polska to Erste Group.

The board submitted the resolution on the share capital

reduction through the cancellation of the shares

repurchased under the Second 2025 Buyback

Programme to vote at the 2026 AGM.

As at 31 December 2025, Banco Santander and its

subsidiaries held 11,077,291 shares, accounting for c.

0.08% of Banco Santander's share capital (compared to

15,529,459 shares, accounting for 0.10% of the share

capital as at 31 December 2024).

9.2 Dividends and shareholder remuneration:

As required in Banco Santander’s by-laws, each year the

shareholder remuneration policy is submitted for

approval by the AGM.

Distribution charged against 2025 results and excess

capital

The board applied the current shareholder remuneration

policy to the 2025 results. This policy sets a target to

distribute approximately 50% of the Group's net

reported profit (excluding non-cash, non-capital ratios

impact items) split almost evenly between cash

dividends and share buybacks.

Additionally, on 5 February 2025, Banco Santander

signalled its objective to allocate up to EUR 10 billion to

share buybacks in relation to the 2025 and 2026 results,

as well as expected capital excess. As part of this target,

on 5 May 2025 Banco Santander announced its intention

to distribute approximately 50% of the capital that will

be released upon completion of the sale of its 49% stake

in Santander Bank Polska S.A., through a share buyback

of approximately EUR 3.2 billion in early 2026 and that,

as a result, it could exceed the EUR 10 billion target.

Upon announcing the agreements to acquire TSB and

Webster on 1 July 2025 and 3 February 2026

respectively, Banco Santander confirmed its goal to

distribute at least EUR 10 billion in share buybacks with

regard to the 2025 and 2026 results and excess capital.

Interim remuneration.

On 30 July 2025, the board resolved to execute the First

2025 Buyback Programme worth up to EUR 1,700

million (equivalent to approximately 25% of the Group's

net reported profit in H1’25).

On 30 September 2025, the board resolved to pay an

interim cash dividend against the 2025 results of 11.5

euro cents per share entitled to the dividend (equivalent

to approximately 25% of the Group's net reported profit

in H1’25), which was paid from 3 November 2025.

Final remuneration.

Under the 2025 shareholder remuneration policy:

On 3 February 2026, the board of directors resolved to

implement the Second 2025 Buyback Programme worth

up to EUR 5,030 million and for which the required

regulatory authorization had been obtained. The

programme started on 4 February 2026. Under the

shareholder remuneration policy in relation to the 2025

results, 1,830 million euros of the Second Buyback

Programme correspond to c. 25% of the Group’s

underlying profit for the second half of 2025. The

remaining amount corresponds to an extraordinary

buyback of 3,200 million euros, equivalent to

approximately 50% of the CET1 capital generated in

January 2026 following completion of the sale of 49% of

Santander Bank Polska to Erste Group. 

On 24 February 2026, the board of directors resolved to

submit to the 2026 AGM the approval of a final cash

dividend in the gross amount of 12.5 euro cents per

share entitled to dividend. Subject to AGM approval, the

dividend will be payable from 5 May 2026.

306

Once these actions are completed, total shareholder

remuneration in relation to the 2025 results will be EUR

7,050 million (approximately 50% of the Group's 2025

net reported profit, excluding non-cash, non-capital

ratios impact items), split almost evenly between cash

dividends (EUR 3,520 million) and share buybacks (EUR

3,530 million). We have estimated these amounts on the

assumption that, as a result of the partial execution of

the Second 2025 Buyback Programme, the number of

outstanding shares entitled to receive the final cash

dividend will be 14,568,470,446. Therefore, the final

amount may be higher if fewer shares than planned are

acquired in the Second 2025 Buyback Programme;

otherwise, it will be lower.

Shareholder remuneration policy

The board of directors intends (1) to apply an ordinary

shareholder remuneration policy for 2026 to 2028

results that entails allocating approximately 50% of the

Group’s underlying profit* (excluding non-cash, non-

capital ratios impact items), split approximately evenly

between cash dividends and share buybacks for 2026

results, and (2) to distribute to shareholders any excess

capital at the end of the 2026-2028 period. From 2027

results, the ordinary shareholder remuneration policy is

expected to comprise around 35% of the Group's

underlying profit (on the same basis) in cash dividends

and around 15% in share buybacks.

The execution of the ordinary shareholder remuneration

policy and the distribution to shareholders of any excess

capital at the end of the 2026-2028 period is subject to

corporate and regulatory decision and approval.

*  Therefore excluding extraordinary results, such as those arising from

the sale of 49% of Santander Bank Polska to Erste Group, the positive

capital impact of which we considered for the purposes of the Second

2025 Buyback Programme.

9.3 Stock market information:

Banco Santander shares are listed on Spanish stock

exchanges (Madrid, Barcelona, Bilbao and Valencia), the

New York Stock Exchange as American Depositary

Shares (ADS), the London Stock Exchange as Crest

Depositary Interests (CDI), the Warsaw Stock Exchange

and in the International Quotation System (SIC) of the

Mexican Stock Exchange (BMV).

As at 31 December 2025, Banco Santander occupies the

first position in the eurozone and 14th in the world by

market value among financial institutions, with a market

capitalization of EUR 147,921 million.

7,573  million Banco Santander shares traded in the year

for an effective value of EUR 53,296.1 million and an

annualized liquidity ratio of 51%. 

The Santander share closed 2024 at 10.070 euros.

9.4 Average period of payment to suppliers:

The average period of payment to suppliers during 2025

is 10 days, term which is below the maximum

established in applicable regulations.

10. Events after the reporting

period

No significant events occurred from 1 January 2026 to

the date on which these financial statements were

authorized for issue, other than those described in these

annual accounts.

11. Annual corporate

governance report and Annual

report on directors’

remuneration

According to articles 540 and 541 of the Spanish

Companies Act, Banco Santander, S.A. has prepared the

annual corporate governance report and the annual

report on directors’ remuneration for the year ended 31

December 2025 (that are part of the directors’ report of

that financial year) with the contents determined by

Order ECC/461/2013, of 20 March, and by Circular

3/2021, of 28 September, of the National Securities

Market Commission (CNMV), that modifies Circular

5/2013, of 12 June, that defines the annual corporate

governance report model for listed companies, and

Circular 4/2013, of 12 June, that defines the annual

report on directors’ remuneration model for listed

companies.

The annual corporate governance report includes a

section that refers to the compliance of the corporate

governance recommendations in Spain.

The annual corporate governance report and the annual

report on directors’ remuneration are included, as a

separate section, in the individual directors’ report in

accordance with the provisions of article 538 of the

Spanish Companies Act. The aforementioned reports are

sent individually, as other relevant information, to the

CNMV, and are included in the consolidated directors’

report as a separate section. They are available on the

Bank's corporate website (www.santander.com) and on

the CNMV website (www.cnmv.es).

307

Pursuant to Article 253, section 1 of the revised Spanish Companies Act (Ley de Sociedades de Capital), the

board of directors of Banco Santander, S.A. draws up the individual financial statements (comprising the

balance sheet, the income statement, the statement of recognized income and expense, the statement of

changes in total equity, the statement of cash flows and the notes to the individual financial statements) and

the individual directors’ report for the 2025 fiscal year in eXtensible HyperText Markup Language (XHTML)

format, which conforms to the single electronic reporting format required under Directive 2004/109/EC and

Delegated Regulation (EU) 2019/815.

The directors of Banco Santander, S.A., listed below with an indication of their respective positions, declare

that, to the best of their knowledge, the company's individual financial statements for the 2025 financial year

were drawn up in accordance with the applicable accounting principles and give a true and fair view of the

assets, liabilities, financial position and profit or loss of the company, and that the directors’ report includes a

fair review of the development, performance and position of the company, together with a description of the

principal risks and uncertainties that it faces.

Boadilla del Monte (Madrid), 24 February 2026

ANA PATRICIA BOTÍN-SANZ DE SAUTUOLA Y O’SHEA		HÉCTOR BLAS GRISI CHECA
Chair		Chief Executive Officer

GLENN HOGAN HUTCHINS		JOSÉ ANTONIO ÁLVAREZ ÁLVAREZ
Vice Chair		Vice Chair

308

MEMBERS:

HOMAIRA AKBARI		JUAN CARLOS BARRABÉS CÓNSUL
FRANCISCO JAVIER BOTÍN-SANZ DE SAUTUOLA Y O’SHEA		SOL DAURELLA COMADRÁN
HENRIQUE MANUEL DRUMMOND BORGES CIRNE DE CASTRO		GERMÁN DE LA FUENTE ESCAMILLA
GINA LORENZA DÍEZ BARROSO AZCÁRRAGA		LUIS ISASI FERNÁNDEZ DE BOBADILLA
BELÉN ROMANA GARCÍA		PAMELA ANN WALKDEN
ANTONIO FRANCESCO WEISS