Banco Santander Shares Upgraded Ahead of Investor Day

Banco Santander shares received a significant boost today as RBC Capital upgraded the Spanish banking giant to Outperform from Sector Perform, raising its price target to €12.25 from €8.50.

The upgrade comes just two days before the bank's highly anticipated Investor Day on February 25, where management is expected to outline its strategic priorities and financial targets in greater detail.

RBC Capital analyst Benjamin Toms highlighted that the next phase of Santander's growth trajectory will be driven primarily by cost-cutting initiatives, positioning the bank to emerge at a valuation premium to its European peers.

The firm projects Santander will achieve a return on tangible equity (RoTE) of 19.5% by 2028, surpassing the consensus estimate of approximately 18% and approaching the bank's own guidance of above 20%.

This optimistic outlook reflects growing confidence in Santander's ability to extract operational efficiencies while maintaining strong revenue generation across its diversified geographic footprint.

Transformative Acquisitions in US and UK

The upgrade follows a period of transformative strategic activity for Santander. In early February 2026, the bank announced a definitive agreement to acquire Webster Financial Corporation for approximately $12.2 billion, a deal that will catapult Santander into the ranks of the top-10 retail and commercial banks in the United States by assets.

The acquisition is expected to deliver substantial cost synergies of around $800 million, representing approximately 19% of the combined cost base, while targeting an 18% RoTE in the U.S. market by 2028.

This follows Santander's July 2025 acquisition of TSB Banking Group from Banco Sabadell for £2.65 billion, strengthening its position as the third-largest bank in the UK by personal current account balances. That transaction is projected to generate cost synergies of at least £400 million, equivalent to 13% of the combined business's cost base, and contribute to lifting Santander UK's RoTE from 11% in 2024 to 16% by 2028.

RBC Capital's thesis centers on the view that these recent acquisitions provide Santander with meaningful scale in geographies where the bank has historically delivered sub-optimal returns. The anticipated synergies from both the Webster and TSB deals underscore management's commitment to operational discipline and margin expansion, themes likely to feature prominently at the upcoming Investor Day.

Record Profits and Improving Efficiency

The upgrade comes against a backdrop of strong fundamental performance. Santander reported a record profit of €14.101 billion in 2025, marking a 12% increase year-on-year and representing the highest profit in Spanish banking history.

The bank's efficiency ratio improved to 41.5%, while operating expenses declined 1% to €25.75 billion. Return on tangible equity rose to 16.3%, demonstrating the bank's progress toward its medium-term targets even before the full impact of recent acquisitions materializes.

Markets will be closely watching the February 25 Investor Day for further details on cost reduction programs, capital allocation priorities, and updated financial guidance. With RBC Capital now expecting Santander to trade at a premium valuation relative to European banking peers, the event represents a critical opportunity for management to articulate how operational improvements and strategic acquisitions will drive sustained shareholder value creation in an increasingly competitive banking landscape.