Company: BCDRF
Filing Date: 2025-04-30
Form Type: 6-K
Source: 0000891478-25-000078
Chunk: 29

Company: Banco Santander, S.A.
Filing Date: 2025-04-30
Form: 6-K
Chunk 29
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 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 the quarter, market interest rates recorded high levels of volatility mainly due to the potential increase in inflation levels globally, as a consequence of the new tariff policies in the US and their corresponding impacts on central bank monetary policies.

Despite this volatile environment, our structural debt portfolios continued to perform positively, and structural interest rate risk remained at comfortable levels during the period.

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 Q1 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 157%, 11 pp lower than the previous quarter.

Operational risk

Our operational risk profile was stable in Q1 2025 compared to the previous quarter, with a focus on risks associated with suppliers, technology and cyber risk, especially considering the potential impact of geopolitical risks on these areas. Regarding operational risk losses, there was a decrease quarter-on-quarter. Legal processes continue to be the main cause of these losses, which are concentrated in the Group's Retail business.

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

1. The Consolidated LCR ratio as at end March 2025 was 145%, comfortably exceeding internal and regulatory requirements. For more information