SAN.MC WACC - Weighted Average Cost of Capital
The WACC of Banco Santander SA (SAN.MC) is 6.0%.
| Range | Selected | |
| Cost of equity | 11.2% - 16.0% | 13.6% |
| Tax rate | 28.8% - 31.1% | 29.95% |
| Cost of debt | 5.0% - 5.0% | 5% |
| WACC | 5.4% - 6.5% | 6.0% |
| Category | Low | High |
| Long-term bond rate | 3.1% | 3.6% |
| Equity market risk premium | 7.4% | 8.4% |
| Adjusted beta | 1.09 | 1.41 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 11.2% | 16.0% |
| Tax rate | 28.8% | 31.1% |
| Debt/Equity ratio | 3.05 | 3.05 |
| Cost of debt | 5.0% | 5.0% |
| After-tax WACC | 5.4% | 6.5% |
| Selected WACC | 6.0% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| SAN.MC | Banco Santander SA | 3.05 | 1.58 | 0.5 |
| BARC.L | Barclays PLC | 5.54 | 1.75 | 0.36 |
| BBVA.MC | Banco Bilbao Vizcaya Argentaria SA | 1.3 | 1.36 | 0.71 |
| BNP.PA | BNP Paribas SA | 4.18 | 1.23 | 0.31 |
| DANSKE.CO | Danske Bank A/S | 6.15 | 0.49 | 0.09 |
| GLE.PA | Societe Generale SA | 1.77 | 1.51 | 0.67 |
| HSBA.L | HSBC Holdings PLC | 2.25 | 1.5 | 0.58 |
| INGA.AS | ING Groep NV | 2.72 | 1.05 | 0.36 |
| LLOY.L | Lloyds Banking Group PLC | 2.7 | 1.54 | 0.53 |
| SHB A.ST | Svenska Handelsbanken AB | 6.32 | 0.81 | 0.15 |
| Low | High | |
| Unlevered beta | 0.36 | 0.51 |
| Relevered beta | 1.13 | 1.61 |
| Adjusted relevered beta | 1.09 | 1.41 |
SAN.MC's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for SAN.MC:
cost_of_equity (13.60%) = risk_free_rate (3.35%) + equity_risk_premium (7.90%) * adjusted_beta (1.09) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.