Item 1. January - December 2024 Financial Report

Alternative performance measures

Condensed consolidated financial statements

EPS, PROFITABILITY AND EFFICIENCY (%) 1

Efficiency ratio 2

UNDERLYING INCOME STATEMENT 2 (EUR million)

Note: for Argentina and any grouping which includes it, the variations in constant euros have been calculated considering the Argentine peso exchange rate on the last working day for each of the periods presented. Additionally, from Q2 2024 onwards for the Argentine peso, we apply an alternative exchange rate that better reflects the evolution of inflation (we continue to apply the official ARS exchange rate to all prior periods). For further information, see the 'Alternative performance measures' section in the appendix to this report.

Certain figures contained in this report, have been subject to rounding to enhance their presentation. Accordingly, in certain instances, the sum of the numbers in a column or a row in tables contained in this report may not conform exactly to the total figure given for that column or row.

The Q4 2024 Financial Report is a simplified version of the report that we publish in other quarters. It contains all the same information that we usually provide, except for the explanations in some of the sections, since all this information will be detailed in the annual report that we will publish in a few days. We will continue to publish the financial report with the usual structure and contents in the other quarters.

CREDIT QUALITY (%)1

Cost of risk 2, 3

For further information, see the 'Alternative performance measures' section in the appendix to this report.

In addition to financial information prepared in accordance with International Financial Reporting Standards (IFRS) and derived from our consolidated financial statements, this report contains certain financial measures that constitute alternative performance measures (APMs) as defined in the Guidelines on Alternative Performance Measures issued by the European Securities and Markets Authority (ESMA) on 5 October 2015, and other non-IFRS measures, including the figures related to “underlying” results, which do not include factors that are outside the ordinary course of our business, or have been reclassified within the underlying income statement. Further details are provided in the 'Alternative performance measures' section of the appendix to this report. For further details on the APMs and non-IFRS measures used, including their definition or a reconciliation between any applicable management indicators and the financial data presented in the annual consolidated financial statements prepared under IFRS, please see our 2023 Annual Financial Report, published in the CNMV on 19 February 2024, our 20-F report for the year ending 31 December 2023 filed with the SEC in the United States on 21 February 2024 as well as the 'Alternative performance measures' section of the appendix to this report.

Building a digital bank with branches

→ We continue to build a digital bank with branches, with a multichannel offer to fulfil all our customers' financial needs.

173 mn

103 mn

→ Our global and in-market scale helps us to improve our local banks' profitability, adding value and network benefits.

→ Our activities are organized under five global businesses: Retail & Commercial Banking (Retail), Digital Consumer Bank (Consumer), Corporate & Investment Banking (CIB), Wealth Management & Insurance (Wealth) and Payments.

→ Our five global businesses and our presence in Europe, DCB Europe, North America and South America support value creation based on the profitable growth and operational leverage that ONE Santander provides.

→ Well-balanced diversification between businesses and markets with a solid and simple balance sheet that gives us recurrent net operating income with low volatility and more predictable results.

Our purpose

To help people and businesses prosper.

Our aim

To be the best open financial services platform, by acting responsibly and earning the lasting loyalty of our people, customers, shareholders and communities.

Our how

Everything we do should be Simple, Personal and Fair.

In Q4 2024, profit attributable to the parent was EUR 3,265 million, a new record for the third consecutive quarter, with a slight increase quarter-on-quarter (+0.5%). In constant euros, profit rose 1%, due to positive trends across the main revenue lines, which offset higher costs, impacted by seasonality, and the provision for potential complaints related to motor finance dealer commissions in the UK.

Attributable profit increased 11% compared to Q4 2023. In constant euros, profit rose 16%, supported by strong revenue growth across all global businesses and regions.

In 2024, attributable profit totalled EUR 12,574 million, 14% higher than in 2023 (+15% in constant euros), underpinned by solid revenue growth, which outpaced the rise in costs, and with a cost of risk improvement.

By business, notable year-on-year profit growth in Retail, CIB and Wealth. Consumer's bottom line performance was impacted by higher CHF mortgage portfolio provisions in Poland and the provision related to motor finance in the UK, while Payments reflected impacts related to the discontinuation of our merchant platform in Germany and Superdigital in Latin America.

These strong Group results, with record levels of net interest income, net fee income, total income, net operating income and profit, enabled us to achieve the 2024 targets that we upgraded in Q2 2024.

Profitability improved strongly year-on-year. RoTE in 2024 stood at 16.3%, compared to 15.1% in 2023.

Sustained earnings per share growth, increasing 18% year-on-year to EUR 77.1 cents in 2024, supported by the good performance in profit and the share buybacks executed in the last 12 months.

In terms of business volumes, growth of customer funds continued to outpace loans and advances to customers while we continued to focus on active capital management and disciplined capital allocation.

Gross loans and advances to customers (excluding reverse repos) rose 1% year-on-year in constant euros, supported by increases in Consumer, Payments and Wealth. They were stable in CIB and they decreased slightly in Retail, as higher volumes in South America and Mexico did not completely offset the fall in Europe due to Spain (prepayments) and the UK (strategy to prioritize profitability), and in the US (focus on capital optimization).

Customer funds (customer deposits excluding repurchase agreements plus mutual funds) increased 4% year-on-year in constant euros, underpinned by double-digit growth in mutual funds and a rise in deposits, mainly due to demand deposits, with a recovery in the quarter, particularly in Europe in a falling interest rate environment.

The benefits from our global scale, margin management and higher customer activity were reflected in year-on-year increases in net interest income (+8%, +10% in constant euros) and net fee income (+8%, +11% in constant euros), resulting in 8% total income growth (+10% in constant euros).

The structural changes we have implemented to move towards a simpler and more integrated model through ONE Transformation continued to contribute to efficiency gains and profitable growth. The efficiency ratio improved 2.3 pp year-on-year to 41.8% driven mainly by Retail, Consumer and Wealth.

Credit quality remains robust, supported by the positive overall macroeconomic environment and employment across our footprint. The NPL ratio improved 9 bps year-on-year to 3.05%. Total loan-loss reserves reached EUR 22,835 million, resulting in an NPL coverage ratio of 65%.

The Group's cost of risk improved 3 bps year-on-year to 1.15%, better than our target for 2024. In Retail, the cost of risk decreased to 0.92%, while in Consumer, the ratio continued to normalize, remaining at controlled levels (2.16%). Retail and Consumer accounted for approximately 85% of the Group's net loan-loss provisions.

As at end December 2024, the fully-loaded CET1 ratio stood at 12.8%, having increased 0.3 pp quarter-on-quarter, supported by 82 bps of organic generation, mainly resulting from gross profit generation, risk transfer and RWA mobilization, which amply offset RWA growth. The ratio was also impacted by a 26 bp deduction for expected shareholder remuneration against profit earned in Q4 2024 in line with our 50% payout target1, -17 bps in regulatory charges (SME models and DTAs) and -9 bps in markets and others.

Think Value

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In November, in accordance with the 2024 shareholder remuneration policy, the bank paid an interim cash dividend against 2024 results of EUR 10.00 cents per share, 23% higher than its 2023 equivalent. Including the EUR 9.50 cent dividend paid in May 2024, the total cash dividend per share during 2024 was 39% greater than cash dividends per share paid during 2023.

In addition, between 27 August 2024 and 3 December 2024, the bank carried out the first share buyback programme against 2024 results totalling EUR 1,525 million.

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The bank's board of directors is expected to propose to the AGM the approval of a final cash dividend, in line with the current shareholder remuneration policy1. The total cash dividend per share charged against 2024 results is expected to be approximately 20% higher than the one charged against 2023 results.

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As at end December 2024, TNAV per share was EUR 5.24. Including the EUR 9.50 cent dividend per share paid in May 2024 and the EUR 10.00 cent dividend per share paid in November 2024, the TNAV per share + cash dividend per share increased 14% year-on-year.

Think Customer

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Our efforts to simplify and improve our product offering and service quality are reflected in an increase of 8 million customers year-on-year, bringing our total customers to 173 million. We have 103 million active customers, up 4 million year-on-year.

u

The volume of transactions per active customer rose 9% year-on-year in 2024.

u

We continue to focus on delivering great customer experience and improving our service quality, ranking in the top 3 in NPS2 in seven of our markets.

Think Global

Contribution to Group revenue3

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In Retail, attributable profit was EUR 7,263 million (+29%) driven by 11% growth in total income, structural improvements in costs due to our transformation efforts and lower provisions.

u

Efficiency improved 3.4 pp to 39.7%, cost of risk decreased year-on-year to 0.92%. RoTE increased to 18.9%.

u

In Consumer, net operating income grew 11%, backed by positive trends in total income (+6%) and costs (-1%), which were not reflected in attributable profit's performance (-12% to EUR 1,663 million), due to cost of risk normalization and higher provisions (CHF mortgages in Poland and the aforementioned provision in the UK).

u

Efficiency stood at 40.1%, improving 2.7 pp, cost of risk continued to normalize reaching 2.16% and RoTE stood at 9.8%.

u

In CIB, record attributable profit of EUR 2,740 million, up 16%, driven by all-time high revenue, supported by double-digit growth in both net interest income and net fee income.

u

The efficiency ratio stood at 45.6%. RoTE was 18.1%.

u

In Wealth, attributable profit amounted to EUR 1,650 million (+14%) underpinned by increased activity, good margin management and higher fees, boosted especially by Private Banking.

u

Efficiency improved 2.0 pp to 35.9% and RoTE was 78.7%.

u

In Payments, attributable profit reached EUR 413 million, impacted by write-downs in PagoNxt related to the discontinuation of our merchant platform in Germany and Superdigital in Latin America in Q2 2024. Excluding them, profit increased 18% year-on-year, supported by revenue growth.

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Cost of risk stood at 7.39%. In PagoNxt, EBITDA margin reached 27.5% (+2.7 pp year-on-year).

Net fee income1

Gains or losses on financial assets and liabilities and exchange differences2

Other operating income/expenses (net)3

1.‘Commission income’ and ‘Commission expense’.

2.‘Gain or losses on financial assets and liabilities not measured at fair value through profit or loss, net’; ‘Gain or losses on financial assets and liabilities held for trading, net’; ‘Gains or losses on non-trading financial assets and liabilities mandatorily at fair value through profit or loss’; ‘Gain or losses on financial assets and liabilities measured at fair value through profit or loss, net’; ‘Gain or losses from hedge accounting, net’; and ‘Exchange differences, net’.

3.‘Other operating income’; ‘Other operating expenses’; ’Income from insurance and reinsurance contracts’; and ‘Expenses from insurance and reinsurance contracts’.

Gains (losses) on financial transactions 1

Underlying profit attributable to the parent 2

Financial assets designated at fair value through profit or loss1

Other assets2

Other liabilities3

   Reserves (including treasury stock)4

1.'Non-trading financial assets mandatorily at fair value through profit or loss' and 'Financial assets designated at fair value through profit or loss'.

2.‘Hedging derivatives’; ‘Changes in the fair value of hedged items in portfolio hedges of interest risk’; 'Assets under reinsurance contracts'; ‘Tax assets’; ‘Other assets’; and 'Non-current assets held for sale’.

3.‘Hedging derivatives’; ‘Changes in the fair value of hedged items in portfolio hedges of interest rate risk’; ‘Tax liabilities’; ‘Other liabilities’; and ‘Liabilities associated with non-current assets held for sale‘.

4.‘Share premium’; ‘Equity instruments issued other than capital’; ‘Other equity’; ‘Accumulated retained earnings’; ‘Revaluation reserves’; ‘Other reserves’; and ‘Own shares (-)’.

Gross loans and advances to customers 1

    Customer deposits 2

Eligible capital (phased-in) 1. Consolidated

Net loan-loss provisions 1

Cost of risk (%) 2

TOTAL GROUP 3

TOTAL GROUP 3

Trading portfolios1. VaR performance

The businesses included in each of the segments in this report and the accounting principles under which their results are presented here may differ from the businesses included and accounting principles applied in the financial information separately prepared and disclosed by our subsidiaries (some of which are publicly listed) which in name or geographical description may seem to correspond to the business areas covered in this report. Accordingly, the results of operations and trends shown for our business areas in this document may differ materially from those of such subsidiaries.

The results of our segments presented below are provided on the basis of underlying results only and include the impact of foreign exchange rate fluctuations. However, for a better understanding of the changes in the performance of our business areas, we also provide and discuss the year-on-year changes to our results excluding such exchange rate impacts (i.e. in constant euros), except for Argentina, and any grouping which includes it, where the variations in constant euros have been calculated considering the Argentine peso exchange rate on the last working day for each of the periods presented. Additionally, from Q2 2024 onwards for the Argentine peso, we apply an alternative exchange rate that better reflects the evolution of inflation (we continue to apply the official ARS exchange rate to all prior periods). For further information, see methodology in the 'Alternative performance measures' section in the appendix to this report.

Certain figures contained in this report, have been subject to rounding to enhance their presentation. Accordingly, in certain instances, the sum of the numbers in a column or a row in tables contained in this report may not conform exactly to the total figure given for that column or row.