Santander wants to take advantage of the improvement in the banking business after the rise in interest rates to increase the remuneration for its shareholders and grow by intensifying its campaigns to attract customers. The bank will raise its ‘pay out’ from 40% to 50%, that is, the money it dedicates to remunerating shareholders, and aims to reach 200 million customers in 2025.
The increase in the percentage of profits devoted to earnings will allow it to be at the levels of the rest of the large Spanish banks. Where appropriate, the distribution will be made both in dividends and in the repurchase of shares. Santander makes this decision after obtaining a profit of 9,605 million euros in 2022, the largest in its history.
The bank has announced these developments during its ‘investors day’, in which it has presented its growth plan for the period between 2023 and 2025. The wind is in favor of the bank, and Santander will focus part of its efforts on raising their profitability, up to between 15% and 17% in terms of return on tangible capital (RoTE).
Its book value, he assures, will increase at a double-digit annual average. The improvement in banking conditions may also cause problems for clients, but Santander assures that it will be able to maintain the quality capital ratio at levels above 12% of all its risk-weighted assets.
The keys to the plan, he indicates, go through continuing to bet on local markets with the support of its global network, which will allow it to increase the number of clients and income, while reducing the costs of services. Its aspiration is to add 40 million new customers, until it reaches 200 million. Of these, 126 million will be active, 26 million more than now.
With the increase in the customer base, the bank aims to increase its income at an average of between 7% and 8% per year. “Today we announce plans to achieve profitable growth by building a digital bank with branches with the encouragement and support of Santander’s global network,” said the bank’s president, Ana Botín, in the presentation of results.
The bank will also boost the businesses with which it operates globally, including investment banking, the management of large fortunes, insurance or the PagoNxt payment platform. Last year they generated more than 30% of the income and more than 50% of the profit, and the forecast is that they will grow by 40% until 2025. The bank’s commission income will also increase by 50%.
On March 31, the bank will hold a shareholders’ meeting, in which the distribution of a dividend of 5.95 cents per share will be put to the vote, with which the remuneration will rise to 11.78 cents, 18% more than the last year. The shareholder remuneration is completed with a share repurchase plan for 921 million euros that has already obtained the go-ahead from the regulators.
With these measures, Santander will have distributed 3,842 million euros among its shareholders charged to the results of 2022, of which 1,942 million correspond to cash dividends. In this deal he has applied a ‘pay out’ of 40%, a percentage that will increase ten points from now on.
