"As a result, we expect Santander's RoTE to be relatively stable at 10-11% over the coming years with capital continuing to build from an adequate but relatively low base. This does not appear to be discounted by the current share price either from a fundamental or a sum-of-the-parts perspective. So, with improving economic prospects, we expect the shares to outperform," Chandra-Rajan wrote in a note.
However, the analyst acknowledged the U.K.'s decision to leave the EU and the subsequent cut to U.K. interest rates adds to earnings pressure.
That said, the company's end-September strategy update could provide further insight on implications of Brexit on the UK business, the key issues of Spanish profitability, and the operating outlook for Brazil.
At time of writing, ADRs of Banco Santander were up 0.77 percent to $4.59.
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