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FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of October, 2016

Commission File Number: 001-12518

Banco Santander, S.A.

(Exact name of registrant as specified in its charter)

Ciudad Grupo Santander

28660 Boadilla del Monte (Madrid) Spain

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  x             Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ¨            No   x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ¨            No   x

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Banco Santander, S.A.

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		Item 1

PRESS RELEASE

RESULTS JANUARY-SEPTEMBER 2016

Santander earns €4.61 billion during the first nine months of 2016

Madrid, 26 October 2016

Banco Santander has delivered €4,606 million in attributable profits for the first nine months of 2016, down 22.5% from the same period in 2015 due to the impact of extraordinary items announced in Q2 of this year and Q2 of 2015. Excluding extraordinary items and exchange rate movements, profits grew by 8% year on year to €4,975 million.

In the third quarter alone, the bank delivered attributable profits of €1,695 million, up 1% when compared to the same period last year. Excluding the impact of currency depreciation against the euro, attributable profits in Q3 were 7% higher than the same period last year.

Banco Santander Group Executive Chairman, Ana Botín, said:

“We have delivered strong performance during the first nine months of 2016, earning the loyalty of a further one million customers, while maintaining our position as one of the most profitable banks in our peer group.

“While the low interest rate environment within developed economies remains a challenge for parts of our business, the resilience of our business model has allowed us to continue to deliver, with our Latin American and consumer finance franchises growing particularly well throughout the year.

“There continues to be real potential for further sustainable and profitable growth and we are confident that our strategy of earning the lasting loyalty of customers, strong balance sheet, and best-in-class efficiency leave us well positioned to continue delivering for our customers, colleagues, shareholders and communities.

“We continue to grow capital ahead of our goals while also funding growth in lending and increasing dividends. Dividend yield stands at around 5%. We expect to end 2016 exceeding last year’s profit, enabling us to increase our dividend per share and earnings per share.”

Comunicación Externa.		1
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11
email:[email protected]

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Results Summary (9M’16 versus 9M’15 and currency neutral)

Customers: Banco Santander has continued to help its customers prosper, with lending increasing 3% year-on-year (y-o-y) and customer funds increasing by 5% y-o-y. Progress in the commercial and digital transformation has allowed the bank to increase the number of loyal customers (up 1.3 million, to 14.8 million) and digitally active customers (up 4.1 million, to 20.2 million) in the last twelve months.

Santander has continued to progress in commercial transformation, including: mobile phone payments; next generation branches; and smart ATMs. This investment has allowed for a better customer experience with seven countries ranking in the top three within their markets for customer satisfaction.

Net interest income: Net interest income grew by 2% y-o-y, with growth in seven out of ten markets. This was driven by higher volumes in both lending and deposits, with particularly strong growth in Latin America, Poland, Portugal and Consumer Finance.

Non interest income: Fee income increased by 8% y-o-y to €7,543 million, with the strategic focus on earning customer loyalty helping drive an increase in fee income across all markets. Gains on financial transactions (4% of total revenues) were down 18%, while other operating income increased 13% due to higher revenues from the leasing business of Santander Consumer USA.

Total income grew in a context in which most peers are registering declines.

Comunicación Externa.		2
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11
email:[email protected]

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Expenses: Operating expenses grew 4.1% y-o-y to €15,634 million driven in part by higher inflation in some markets and an increase in the perimeter businesses. On a like-for-like basis, costs were down 1%. The bank has maintained its best-in-class efficiency, with the cost/income ratio remaining flat at 47.8%, while continuing to invest in improving service for customers.

Loan loss provisions: Loan loss provisions were broadly flat y-o-y at €7,112 million. A strong risk culture helped drive improvements across all credit quality metrics, with the non-performing loan ratio falling by 35bps y-o-y to 4.15% and cost of credit falling by 7bps to 1.19%.

Profits: Attributable profits fell to €4,606 million as a result of a number of extraordinary items during Q2’16, including: restructuring costs (-€475 million), capital gains from the sale of VISA Europe (+€227 million), and a change in the scheduled date for contributions to the Single Resolution Fund (-€120 million). Q2’15 also benefited from a one-off gain of €835 million due to a reversal of tax liabilities in Brazil. Excluding the impact of extraordinary items and exchange rate movements, profits grew by 8% year on year to €4,975 million.

Capital: Fully loaded CET1 increased by 11bps in the third quarter and 0.42 points year-to-date, to 10.47%, on track to achieve target of 11% in 2018.

ROTE: Underlying ROTE was 11.2% and statutory ROTE was 10.6%, among the highest in the banking sector.

Diversification: Europe contributed 56% of Group profits (inc. UK 19%; Spain 14%; and Santander Consumer Finance 13%) and the Americas, 44% (inc. Brazil 20% and Mexico 7%).

Country summary (9M’16 versus 9M’15 and currency neutral)

In Spain the bank’s priority remains to increase customer loyalty and improve service quality. The low interest rate environment continued to affect net-interest income, however, this was partly offset by good growth in fee income, strong cost control, and significant improvements in credit quality. Key metrics: Gross Income (€4,429m, -8.5%); Operating Expenses (€2,495m, -3.1%); Loan loss provisions (€500m, -40.1%); Underlying attributable profit, excluding contribution to SRF in 2Q’16 (€885m, +0.2%); Attributable profit (€785m, -11.1%).

Santander UK made good progress against its strategic targets, with 123 customers continuing to grow, strong cost discipline and good credit quality, despite uncertainty in the operating environment. Attributable profits have been impacted by the introduction in 2016 of the 8% bank corporation tax surcharge, turning the 0.3% increase in profit before tax into a decline of 11% in attributable profit. Key metrics: Gross Income (€4,391m, +1.3%); Operating Expenses (€2,284m, +0.3%); Loan loss provisions (€119m, +51.7%); Attributable profit (€1,207m, -11.1%).

In Brazil the bank has continued to see strong performance with growth in profit and income driven by good client growth, greater transactions and customer loyalty, and an increase in fee income. The change in business mix carried out in the last few years has also allowed the bank to maintain credit quality ahead of our peers. Key metrics: Gross Income (€8,133m, +6.2%); Operating Expenses (€3,170m, +5.4%); Loan loss provisions (€2,424m, +10.9%); Attributable profit (€1,276m, +9.5%).

Comunicación Externa.		3
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11
email:[email protected]

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In the US Santander has continued to invest to improve the retail customer experience, grow our commercial bank, and meet our regulatory requirements. Revenues fell slightly and while our costs increased, the rate of increase has begun to reduce. Provisions increased during the period due to a greater level of retention of loans at Santander Consumer USA and provisions made for Oil and Gas (mainly in Q1). Key metrics: Gross Income (€5,723m, -1.4%); Operating Expenses (€2,335m, +6.5%); Loan loss provisions (€2,342m, +9.5%); Attributable profit (€381m, -42.1%).

Santander Consumer Finance continued to strengthen its leadership position within the European consumer finance market. Profits rose due to an increase in new lending across all countries and improvements in cost control and credit quality. Key metrics: Gross Income (€3,219m, +10%); Operating Expenses (€1,418m, +10%); Loan loss provisions (€300m, -30.9%); Attributable profit (€835m, +21.1%) excluding contribution to SRF in 2Q’16. Attributable profit including SRF contribution (824m, +19.5%).

Good performance in all segments helped boost profits in Mexico with strong growth in both lending and deposits. The number of loyal customers increased further during the quarter and credit quality continued to improve. Key metrics: Gross Income (€2,375m, +13.4%); Operating Expenses (€950m, +8.1%); Loan loss provisions (€629m, +11.9%); Attributable profit (€460m, +19%).

In Chile the bank continued to focus on improving the customer experience and increasing loyal customers. Attributable profits increased due to higher commercial revenues, a modest decrease in provisions and good cost control. Key metrics: Gross Income (€1,749m, +4%); Operating Expenses (€721m, +3.4%); Loan loss provisions (€382m, -0.7%); Attributable profit (€377m, +6.3%).

In Poland the bank delivered good growth in net interest income, with the business gaining market share in loans. The cost of credit improved with material reductions in non performing loans. Attributable profits were impacted by the tax on assets introduced in February 2016. Excluding this impact, profit would have grown 8%. Key metrics: Gross Income (€985m, +5%); Operating Expenses (€440m, +2.4%); Loan loss provisions (€110m, -6.9%); Attributable profit (€208m, -10.2%).

On a like-for-like basis, profits increased significantly in Portugal due to strong income growth, lower costs and a significant reduction in loan loss provisions. Income was bolstered by gains on financial transactions from the sale of portfolios and the integration of Banif. Key metrics: Gross Income (€917m, +31.5%); Operating Expenses (€455m, +20.6%); Loan loss provisions (€44m, -33.8%); Attributable profit excluding contribution to SRF in 2Q’16 (302m; +67%); Attributable profit (€293m, +62.3%).

Comunicación Externa.		4
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11
email:[email protected]

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The strategic focus in Argentina continues to be on expanding and modernising the branch network to take advantage of growth opportunities. Attributable profit increased significantly due to good performance in both net interest income and fee income. The market position will be further strengthened by the acquisition of Citibank’s retail portfolio. Key metrics: Gross Income (€999m, +40.4%); Operating Expenses (€549m, +39.5%); Loan loss provisions (€75m, +24.1%); Attributable profit (€250m, +48%).

Comunicación Externa.		5
Ciudad Grupo Santander Edificio Arrecife Pl. 2
28660 Boadilla del Monte (Madrid) Telf.: 34 91 289 52 11
email:[email protected]

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KEY CONSOLIDATED DATA

Balance sheet (€ million)		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Total assets			1,329,538				1,342,906				(1.0	)			1,329,538				1,320,427				0.7				1,340,260
Net customer loans			773,290				783,457				(1.3	)			773,290				777,020				(0.5	)			790,848
Customer deposits			667,439				671,903				(0.7	)			667,439				669,255				(0.3	)			683,142
Managed and marketed customer funds			1,075,162				1,077,369				(0.2	)			1,075,162				1,045,507				2.8				1,075,563
Total equity			101,122				100,346				0.8				101,122				98,687				2.5				98,753
Total managed and marketed funds			1,508,587				1,517,386				(0.6	)			1,508,587				1,479,841				1.9				1,506,520
Underlying income statement* (€ million)		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
Net interest income			7,798				7,570				3.0				22,992				24,302				(5.4	)			32,189
Gross income			11,080				10,929				1.4				32,740				34,378				(4.8	)			45,272
Net operating income			5,831				5,703				2.2				17,106				18,229				(6.2	)			23,702
Underlying profit before taxes			2,940				2,954				(0.5	)			8,625				8,766				(1.6	)			10,939
Underlying attributable profit to the Group			1,695				1,646				3.0				4,975				5,106				(2.6	)			6,566

Changes on a currency-neutral basis:

Quarterly: Net interest income: +1.5%; Gross income: -0.1%; Net operating income: +0.2%; Attributable profit: +2.3%

Year-on-year: Net interest income: +2.2%; Gross income: +2.7%; Net operating income: +1.4%; Attributable profit: +8.4%

Underlying EPS, profitability and efficiency* (%)		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
EPS (euro)			0.11				0.11				3.2				0.33				0.35				(5.9	)			0.45
RoE			7.66				7.45								7.52				7.49								7.23
RoTE			11.36				11.09								11.19				11.42								10.99
RoA			0.61				0.60								0.59				0.61								0.58
RoRWA			1.40				1.37								1.37				1.35								1.30
Efficiency ratio (with amortisations)			47.4				47.8								47.8				47.0								47.6
Solvency and NPL ratios (%)		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
CET1 fully-loaded			10.47				10.36								10.47				9.85								10.05
CET1 phase-in			12.44				12.32								12.44				12.39								12.55
NPL ratio			4.15				4.29								4.15				4.50								4.36
Coverage ratio			72.7				72.5								72.7				71.1								73.1
Market capitalisation and shares		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Shares (millions)			14,434				14,434				—				14,434				14,317				0.8				14,434
Share price (euros)			3.947				3.429				15.1				3.947				4.744				(16.8	)			4.558
Market capitalisation (€ million)			56,973				49,496				15.1				56,973				67,918				(16.1	)			65,792
Tangible book value (euro)			4.18				4.13								4.18				4.10								4.07
Price / Tangible book value (X)			0.94				0.83								0.94				1.16								1.12
P/E ratio (X)			9.02				7.93								9.02				10.19								10.23
Other data		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Number of shareholders			3,920,700				3,794,920				3.3				3,920,700				3,209,138				22.2				3,573,277
Number of employees			189,675				191,138				(0.8	)			189,675				191,504				(1.0	)			193,863
Number of branches			12,391				12,589				(1.6	)			12,391				12,901				(4.0	)			13,030
Information on total profit**		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
Attributable profit to the Group			1,695				1,278				32.6				4,606				5,941				(22.5	)			5,966
EPS (euro)			0.11				0.08				35.1				0.30				0.41				(25.9	)			0.40
RoE			7.66				7.03								7.10				8.41								6.57
RoTE			11.36				10.47								10.57				12.82								9.99
RoA			0.61				0.57								0.57				0.68								0.54
RoRWA			1.40				1.32								1.31				1.51								1.20
P/E ratio (X)			9.78				8.99								9.78				8.71								11.30

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Key consolidated data

KEY CONSOLIDATED DATA

Balance sheet (€ million)		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Total assets			1,329,538				1,342,906				(1.0	)			1,329,538				1,320,427				0.7				1,340,260
Net customer loans			773,290				783,457				(1.3	)			773,290				777,020				(0.5	)			790,848
Customer deposits			667,439				671,903				(0.7	)			667,439				669,255				(0.3	)			683,142
Managed and marketed customer funds			1,075,162				1,077,369				(0.2	)			1,075,162				1,045,507				2.8				1,075,563
Total equity			101,122				100,346				0.8				101,122				98,687				2.5				98,753
Total managed and marketed funds			1,508,587				1,517,386				(0.6	)			1,508,587				1,479,841				1.9				1,506,520
Underlying income statement* (€ million)		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
Net interest income			7,798				7,570				3.0				22,992				24,302				(5.4	)			32,189
Gross income			11,080				10,929				1.4				32,740				34,378				(4.8	)			45,272
Net operating income			5,831				5,703				2.2				17,106				18,229				(6.2	)			23,702
Underlying profit before taxes			2,940				2,954				(0.5	)			8,625				8,766				(1.6	)			10,939
Underlying attributable profit to the Group			1,695				1,646				3.0				4,975				5,106				(2.6	)			6,566

Changes on a currency-neutral basis:

Quarterly: Net interest income: +1.5%; Gross income: -0.1%; Net operating income: +0.2%; Attributable profit: +2.3%

Year-on-year: Net interest income: +2.2%; Gross income: +2.7%; Net operating income: +1.4%; Attributable profit: +8.4%

Underlying EPS, profitability and efficiency* (%)		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
EPS (euro)			0.11				0.11				3.2				0.33				0.35				(5.9	)			0.45
RoE			7.66				7.45								7.52				7.49								7.23
RoTE			11.36				11.09								11.19				11.42								10.99
RoA			0.61				0.60								0.59				0.61								0.58
RoRWA			1.40				1.37								1.37				1.35								1.30
Efficiency ratio (with amortisations)			47.4				47.8								47.8				47.0								47.6
Solvency and NPL ratios (%)		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
CET1 fully-loaded			10.47				10.36								10.47				9.85								10.05
CET1 phase-in			12.44				12.32								12.44				12.39								12.55
NPL ratio			4.15				4.29								4.15				4.50								4.36
Coverage ratio			72.7				72.5								72.7				71.1								73.1
Market capitalisation and shares		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Shares (millions)			14,434				14,434				—				14,434				14,317				0.8				14,434
Share price (euros)			3.947				3.429				15.1				3.947				4.744				(16.8	)			4.558
Market capitalisation (€ million)			56,973				49,496				15.1				56,973				67,918				(16.1	)			65,792
Tangible book value (euro)			4.18				4.13								4.18				4.10								4.07
Price / Tangible book value (X)			0.94				0.83								0.94				1.16								1.12
P/E ratio (X)			9.02				7.93								9.02				10.19								10.23
Other data		Sep’16				Jun’16				%				Sep’16				Sep’15				%				2015
Number of shareholders			3,920,700				3,794,920				3.3				3,920,700				3,209,138				22.2				3,573,277
Number of employees			189,675				191,138				(0.8	)			189,675				191,504				(1.0	)			193,863
Number of branches			12,391				12,589				(1.6	)			12,391				12,901				(4.0	)			13,030
Information on total profit**		3Q’16				2Q’16				%				9M’16				9M’15				%				2015
Attributable profit to the Group			1,695				1,278				32.6				4,606				5,941				(22.5	)			5,966
EPS (euro)			0.11				0.08				35.1				0.30				0.41				(25.9	)			0.40
RoE			7.66				7.03								7.10				8.41								6.57
RoTE			11.36				10.47								10.57				12.82								9.99
RoA			0.61				0.57								0.57				0.68								0.54
RoRWA			1.40				1.32								1.31				1.51								1.20
P/E ratio (X)			9.78				8.99								9.78				8.71								11.30

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Santander aim

Helping people and businesses prosper

(*) 2015 data

(**) The last four dividends paid / 9M’16 average share price

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Santander aim

Simple | Personal | Fair

Employees
•  Human Resources continued to focus on people and in the third quarter reviewed the corporate segmentation of executives in order to adapt the structure to the new culture and adjust it to the organisation and the current challenges.
In order to improve the working environment, the following actions were launched:
•  Globlal commitment survey conducted throughout the Group, for the third time.
•  Be Healthy, a global health and wellbeing programme in various countries.
•  Solaruco Pop Up, an initiative to extend the knowledge shared in the Corporate Centre of Knowledge and Development to all the Group’s professionals.
•  Further progress in Flexiworking.
Customers
•  Of note among the measures for improving customer loyalty is the 1|2|3 strategy in Spain, Portugal and the UK, and consolidation of differentiated value offers in Brazil, Mexico, Chile and Argentina.
•  More important changes were also made to the commercial NEO CRM tools and we continued to transform the distribution network by improving the technology platforms and increasing digital capacities.
•  The objective is to enhance the customer experience, strengthen the relationship and loyalty via technological advances that enable us to have a unique vision and offer different channels and products. In short, let the customer decide when, how and where they want to be tended to (anytime, anywhere, anyhow).
Shareholders
•  The Group held in London on September 30th its first Group Strategy Update, at which senior management explained to analysts and international investors the progress made by the Group since the last Investor Day.   •  EBA’s stress test: shareholders and investors were told the Group’s results.   •  Santander App Shareholders and Investors: updating and renewal of the app, incorporating the latest technological advances.   •  Becas Capacitas: scholarships for university studies for shareholders and families with disabilities.
Communities
•  Spin 2016 was held in Santiago de Compostela, the largest entrepreneurial event for Latin American university students, attended by more than 2,300 entrepreneurs, students and investors.
•  Workshop organized by Madrid’s Complutense University and the Institute for Global Law and Policy at Harvard University, with the participation of 90 young doctors from 50 countries, which discussed issues to do with global policies and internationalization.
•  Primus Inter Pares prize presented to Portugal’s three best university students in economics, engineering and management.

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Highlights of the period

HIGHLIGHTS OF THE PERIOD

Increase in loyal and digital customers within the transformation of the commercial model

 

•  We continued to transform our commercial model and make it increasingly Simple, Personal and Fair.
•  The number of loyal customers increased by 1.3 million in the last 12 months (+10%), with individuals up 9% and companies 16%.
•  The number of digital customers rose by 4.1 million (+25% since September 2015), reflecting the strength of the multi-channel strategy.

Underlying profit growth with good performance of commercial revenues and provisions

 

•  Third quarter attributable profit of €1,695 million, up from €1,278 million in the second quarter, affected by non-recurring items and the contribution to the Single Resolution Fund. Excluding them, and on a currency-neutral basis, profit was 2% higher.   •  First nine months’ underlying profit of €4,975 million, 8% more than in the same period of 2015 (on a currency-neutral basis), due to:   –  Solid commercial revenues, driven by net interest income and fee income.   –  Costs stable in real terms and on a like-for-like basis.   –  Provisions remained practically stable.   •  Including the non-recurring impacts, attributable profit was 22% lower than in September 2015 at €4,606 million.

Solid capital ratios and appropriate for the business model, balance sheet structure and risk profile

 

•  Fully-loaded CET1 ratio of 10.47%, up 11 b.p. in the third quarter (+42 b.p. year-to-date), due to profit generation (16 b.p.) and management of risk-weighted assets together with some non-recurring impacts (overall, -5 b.p.)
•  Total capital ratio of 13.70% and fully-loaded leverage of 5.0%.
•  Tangible net asset value per share of €4.18 (+€0.05 in the quarter).
•  European Banking Authority stress test: Santander is the bank that least destroys capital among its peers in the adverse scenario.

Return, earnings per share and dividend per share. Creating value for our shareholders

 

•  Underlying RoTE of 11.2%, in line with 2015.
•  Underlying RoRWA of 1.37%, higher than in 2015.
•  EPS of €0.30 per share. Underlying EPS of €0.33 per share (€0.35 in the first nine months of 2015).
•  The first interim dividend charged to 2016’s earnings was paid in cash and the scrip dividend programme applied to the second dividend. We aim to increase the total dividend by 5% and by around 10% in cash.

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Highlights of the period

HIGHLIGHTS OF THE PERIOD

In a complex environment, we continued to expand our activity, mainly in emerging countries

 

•  Negative impact of exchange rates on customers’ balances: -1 p.p in the third quarter and -3/-4 in 12 months.
•  On a currency-neutral basis:
–  Lending rose 3% year-on-year and increased in all the main segments and in eight of the 10 core units.
–  Funds increased 5% year-on-year due to demand deposits and mutual funds. Growth in nine of the 10 core units.
•  Solid funding structure and liquidity. Net loan-to-deposit ratio of 116% (117% in June).

Improvement in all credit quality ratios

 

•  Non-performing loans (NPL) entries, isolating the perimeter effect and on currency-neutral basis, were 21% lower than in the second quarter. Non-performing loans down 5% in the third quarter and 8% year-on-year.
•  NPL ratio of 4.15% on a continued downward trend.
•  Coverage remained at 73% (+2 p.p. since September 2015).
•  Cost of credit of 1.19%, 7 b.p. lower than in September 2015. Excluding Santander Consumer USA, 0.85% (-10 b.p.).

Business areas: (more detail on pages 21-36 and in the appendix)

 

•  Continental Europe: first nine months’ underlying attributable profit, excluding the contribution to the Single Resolution Fund in order to have a more homogeneous comparison, of €2,104 million (+17% year-on-year), driven by stable revenues, control of costs and lower provisions. Profit was 4% lower than the second quarter, due to the higher collection of dividends that usually occurs in that period and the increase in provisions.
•  United Kingdom: first nine months’ attributable profit of £967 million (-11% year-on-year due to corporate tax surcharge). Excluding this, pre-tax profit was stable. Third quarter profit up 3% because of fee income, lower costs and provisions.
•  Latin America: very negative impact of exchange rates in the last 12 months (-16 p.p.). Excluding this, the first nine months’ attributable profit was 13% higher year-on-year at €2,424 million, due to higher revenues (net interest income: +6%; fee income: +14%). Gross income, net operating income and profit were at the highest levels of the last 11 quarters.
•  United States: first nine months’ attributable profit of $425 million, 42% lower than in the same period of 2015 because of higher costs and provisions, partly due to the temporary impact of ongoing measures (creation of the holding, investment in the franchise, priorities in consumer credit, etc) and provisions in the first quarter for Oil&Gas in line with the sector’s. Third quarter profit lower, as provisions are usually higher in that period.

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Other significant events in the quarter

Group Strategy Update

In order to strengthen our commitment to transparency and improve communication with the market, Santander held its first Group Strategy Update event on September 30.

The management team, both at the corporate level as well as the main retail units, explained the changes in the environment over the last 12 months, the progress made in achieving the goals set for 2016 and gave details on the strategy and next steps for achieving the 2018 objectives.

We are advancing toward meeting our targets for 2016

Our main targets for 2018

In a more demanding economic and regulatory environment, where developed markets continue to be affected by interest rates at historic lows, combined with the uncertainty over the UK’s exit from the EU and greater tax pressure in some countries:

Targets 2018

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Other significant events in the quarter

Stress Test

The European Banking Authority (EBA) published in July the results of the stress tests applied to the EU’s 51 main banks.

This time, a minimum capital level required to pass the test was not set. Instead, the final results were used as one more variable for the European Central Bank to determine the minimum capital requirements for each of the banks (under the Supervisory Review and Evaluation Process, SREP).

The test established two scenarios (base and adverse), taking as the starting point the banks’ balance sheets at the end of 2015 and with a three-year horizon until 2018. This exercise cannot be compared with that in 2014, as it is based on a more demanding scenario and with different assumptions.

The adverse scenario, with a very low probability of happening, sees a sharp macroeconomic downturn and in the financial markets, both in Europe as well in other countries where Santander operates. For example, the euro zone’s GDP was envisaged as falling 3%, the stock markets 30% and housing prices 11%, while public debt spreads widened.

Santander again obtained excellent results, as it did in the previous stress tests

Results of the EBA’s stress test

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		Customers

Customers

Our competitive advantage is having sufficient critical mass in each of our 9+1 core markets (including Santander Consumer Finance in Europe), where we serve 124 million customers. This is what enables us to generate revenues consistently, quarter after quarter, and via the economic cycle.

We have gained the confidence of our clients during many years of efforts, taking care of their financial needs.

Our business continues to be based on personal relations. Our priority this year and beyond is to win the loyalty of our customers and foster greater use of our digital banking services.

Loyal customers: 14.8 million
•  We want to engage a larger number of customers and make transaction banking the key element. We analyse which products have opportunities to be improved within each market and work to develop projects to capture more customers.
•  Developing value offers for each type of customer and having a long-term strategy are the base for increasing customers’ confidence and loyalty in the Group’s core countries.
•  The number of engaged customers increased to 14.8 million in the third quarter, thanks to new commercial tools (Poland and Argentina) and to tailored value offers (cards, 1|2|3 mini account, Santander Select Global Value proposal throughout the Group).
•  Loyal individual customers increased 9% in the 12 months to September and 16% to companies.
•  We continued to transform our offices in order to offer a more personalised service and simpler and more intuitive processes.
Digital customers: 20.2 million
•  Digitalization is the key for adapting Santander to the new way of interacting with customers.
•  Santander is carrying out an intense digitalisation process that affects not only the services provided to its customers but also all its operations, both internal as well as external; how to use data to spur business growth; updating and modernising systems and streamlining processes and the organisation in general.
•  The number of digital customers increased in 12 months by 4.1 million to 20.2 million at the end of September (+25%).
•  The main units are Brazil (6 million digital clients) and the UK (over 4.5 million). Also of note is Mexico (+55% year on year).
•  Online banking users surged 54% in the last 12 months, reflecting the success of our focus on developing strategies to foster greater use of our digital services and products.

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FINANCIAL REPORT 2016
		JANUARY - SEPTEMBER
		General background

General background

Grupo Santander conducted its business against a backdrop of an economic environment with major challenges and highly volatile capital markets. Banking activity, moreover, continued to be affected by historically low interest rates in most developed countries, tougher competition in some markets, mainly in lending, and a more demanding regulatory environment.

Developed economies in the first half of 2016 slowed a little, while emerging markets recovered slightly. The latest indicators point to some improvement in activity in the second half of the year, chiefly in the emerging economies of Europe and Latin America, particularly Brazil.

Exchange rates: 1 euro / currency parity