Company: BCDRF
Filing Date: 2025-10-29
Form Type: 6-K
Source: 0000891478-25-000132
Chunk: 32

Company: Banco Santander, S.A.
Filing Date: 2025-10-29
Form: 6-K
Chunk 32
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. In the quarter, the coverage of the different currencies impacting this ratio remained close to 100%.

Regarding financial results, the exchange rate hedging strategy is tactical and dynamic, depending on our expectations of the evolution of the different currencies in the various countries where the Group operates.

Structural interest rate risk

Interest rate risk management aims to mitigate potential negative impacts on Santander, both in terms of net interest income and economic value of its equity, due to adverse fluctuations in interest rate curves in the various currencies in which the Group operates.

The Group measures interest rate risk through statistical models based on structural risk mitigation strategies using interest rate instruments, such as fixed-income bond portfolios and derivative instruments, to keep the risk profile within the risk appetite.

In Q3 2025, market interest rates continued to reflect the monetary policy adjustments carried out by the major central banks (with the US, the UK and Mexico cutting interest rates, while there were no changes in the eurozone and Brazil).

The Group’s structural interest rate risk remained at comfortable levels during the period. However, structural debt portfolios recorded a negative performance, reflecting the persistent uncertainty regarding the final impact of US tariff policies and ongoing geopolitical tensions.

At an aggregate level, Santander maintains positive net interest income sensitivity to interest rate hikes and negative sensitivity in the same scenario for the economic value of its equity.

Liquidity risk

Liquidity risk is the risk of not having the necessary liquid financial resources available to meet our obligations as they come due. Losses can be caused by forced asset sales or margin impacts due to the mismatch between expected cash inflows and outflows.

Our strong liquidity position is based on a decentralized model, where each subsidiary is managed autonomously.

In Q3 2025, the Group maintained a comfortable position, with ratios well above regulatory limits, supported by a robust and diversified liquidity buffer.

The Group liquidity coverage ratio (LCR 1 ) ended the quarter at 160%, 1 pp higher than the previous quarter.

Operational risk

The Group constantly monitors the evolution of operational risks in general and, particularly, those arising from transformation plans (including the use of new technologies), external fraud and the most significant legal processes.

Our operational risk profile was stable in Q3 2025 compared to the previous quarter. There was a decrease in operational risk losses quarter-on-quarter. Legal processes continue to be the main cause of these losses, which are concentrated in the Group's Retail business.

Additionally, we maintained our focus on risks associated with suppliers, technology and cyberrisk