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MADRID - Banco Santander (BME:SAN) reported Friday that its CET1 capital ratio would decline by 1.73 percentage points to 10.46% under the adverse scenario of the European Banking Authority (EBA) and European Central Bank (ECB) stress test.
The stress test, which covered a three-year period from the end of 2024 through the end of 2027, assessed the bank’s financial resilience under both baseline and adverse economic scenarios.
Under the adverse scenario, Santander’s fully-loaded CET1 ratio would decrease from 12.19% at the end of 2024 to 10.46% by December 2027. The phased-in CET1 ratio, which is the legally applicable measure, would fall from 12.78% to 10.91% over the same period.
In contrast, the baseline scenario projected improvements in the bank’s capital position. The fully-loaded CET1 ratio would increase to 14.65% by the end of 2027, representing a 2.46 percentage point improvement from December 2024 levels.
The CET1 ratio is a key measure of a bank’s financial strength, representing the relationship between a bank’s core equity capital and its risk-weighted assets.
The stress test results show Santander’s capital ratios would fluctuate throughout the three-year period. Under the adverse scenario, the fully-loaded CET1 ratio would initially drop to 10.46% by the end of 2025, improve to 11.12% in 2026, before declining again to 10.46% by the end of 2027.
The EBA conducts these tests to assess the resilience of financial institutions across Europe to economic shocks. The information was disclosed in a regulatory filing based on a press release statement from the bank.
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