Banco Santander sees growth potential amid Ibex 35 rebound and Mexico expansion

Banco Santander has seen a 26.67% rebound in the Ibex 35 since January. Analysts at Citi suggest the bank has further growth potential, noting that its current valuation of approximately 10 times the estimated 2028 price-to-earnings (PER) ratio does not fully reflect its projected earnings per share (EPS) growth and resilience. Citi projects a compound annual growth rate for EPS of nearly 18% between 2026 and 2028, with net profits potentially exceeding 20 billion euros by the end of that period.

While interest rate shifts in major markets like the euro, pound, and dollar are expected to boost net profits, Brazil presents a different dynamic. Although Brazil's contribution to consolidated profits has decreased from 40% to roughly 15%, analysts from UBS maintain a buy recommendation, citing a reduced dependency on the Brazilian market despite tactical risks surrounding local elections.

In Mexico, Santander is implementing a targeted growth strategy focused on large and medium-sized corporations. CEO Héctor Grisi stated that while credit expansion will accelerate for these sectors, the bank will maintain strict capital discipline elsewhere to manage risk. The bank has specifically reduced its appetite for credit cards and personal loans due to higher risk costs, while increasing focus on auto financing and mortgages where profitability and security appear higher.