Banco Santander SA pledged to return a bigger share of earnings to investors as Chairman Ana Botin joins the race among European lenders to lure shareholders after years of subpar returns.
(Bloomberg) — Banco Santander SA pledged to return a bigger share of earnings to investors as Chairman Ana Botin joins the race among European lenders to lure shareholders after years of subpar returns.
Spain’s largest lender plans to pay out 50% of profit over the next three years, up from 40% previously, it said in a presentation Tuesday. The bank also announced a new, €921 million buyback program for this year and outlined new financial targets as rising interest rates lift earnings.
Botin and new Chief Executive Officer Hector Grisi are seeking to win back investors after shares of the Spanish lender trailed those of peers over the past years. Santander has one of the largest retail presences in the world with businesses from Spain to Brazil, allowing it to benefit as rate increases by central banks boost lending margins across the globe.
“We are focused on executing our plan, providing the best customer experience, and becoming the most profitable bank in each of our geographies,” Grisi, who took the role at the start of the year, said in the statement ahead of the bank’s investor day.
Shares of the Madrid-based lender have trailed those its European peers over the past three years, rising about 8% through Monday compared with double-digit gains at rivals such as UniCredit SpA and BNP Paribas SA. Both of those peers have announced plans to shell out billions of euros to investors over the coming years, raising the stakes as lenders fight to restore their battered valuations.
Santander fell 0.4% at 9:04 a.m. in Madrid trading, paring gains this year to 26%.
With inflation driving up wages, Santander pledged to keep cost growth at 4% to 5% annually over the next years, while raising revenue by 7% to 8% annually. The bank last year beat its targets for profitability, revenue growth and capital, while missing a cost goal. Grisi has said he wants to make the different regions work closer together as he seeks to increase efficiency.
Santander has also been distracted by a long-running compensation dispute with Andrea Orcel, after the bank rescinded an offer to hire him as CEO in 2019. The dispute has become one of the most acrimonious in recent European banking history, and could yet end with Orcel winning tens of millions of euros in pay for a job he never took up.
(Updates with more targets from fifth paragraph.)
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