Santander disclosed a planned increase in profitability distribution to shareholders this week, indicating a payout strategy that will allocate roughly 40% of ordinary profit to cash dividends and the remainder to a mix of share repurchases. The group is aligning its approach with what many peers in the financial sector have adopted, aiming to balance returns to owners with a disciplined capital plan. Shareholders should expect a near-equal split between cash dividends and the authorization of additional share repurchases, which tends to support per-share value through a reduction in outstanding shares.
Furthermore, the bank announced a new dividend for 2022 results of EUR 0.595 per share, totaling EUR 1,178 million, representing an 18% year-over-year increase, alongside a new program to boost the value of shares valued at EUR 921 million. In aggregate terms, the total shareholder remuneration is set at around EUR 3.842 billion, about 40% of ordinary profit for 2022, with roughly half of that amount delivered as cash dividends (approximately EUR 1.942 billion) and the other half via share repurchases (approximately EUR 1.900 billion). This combination implies a solid return profile, surpassing 8% on a headline basis, depending on market conditions and stock performance.
The announcements were made during the company’s anniversary investor day held in London, where Santander refreshed its main long-term targets after meeting the objectives set for the 2019-2021 period. The group signaled a commitment to higher cost efficiency and stronger tangible capital, outlining target ranges in the mid-teens for capital efficiency metrics and a continued focus on improving the income-to-expense balance. The bank highlighted a tangible capital ratio that previously stood around 13.37% in 2022, with an aspirational range increasing toward the mid-to-high teens while maintaining prudent risk management and balance sheet discipline. In terms of profitability, Santander emphasized a continued drive to improve the return on tangible assets and overall financial resilience, placing emphasis on a balanced growth strategy that supports shareholder value.
Projection discussions also pointed to ongoing capital strength and growth ambitions. The group aimed to sustain double-digit average annual growth in key balance sheet metrics, including book value per share and the potential for further dividend per share increases. In its consumer banking and commercial space, Santander projectioned robust customer growth and asset expansion, aiming to reach substantial increases in customer counts and assets under management. This trajectory is expected to contribute to higher income, with mid- to high single-digit to low double-digit revenue growth in a year-on-year framework, before considering the impact of exchange rate movements and operating costs.
Cost of risk was addressed with a cautious but constructive stance, with new provisions anticipated to be in the 1% to 1.1% range for 2025, modestly above the 0.99% level observed in 2022. The bank also outlined a target where the return on assets would exceed the cost of capital, improving from the mid-80s percentage in terms of asset yield to the low- to mid-80% range. This reflects an expectation of better balance sheet quality and stronger credit performance while maintaining conservative risk management practices.
In summarizing Investor Day takeaways, Santander reaffirmed its goals of growing the customer base and boosting profitability while continuing to strengthen the balance sheet. The strategy emphasizes a unique mix of global scale with local strength, diversification across markets, and a relentless focus on customer needs. The bank outlined plans to advance digital banking capabilities, expand its network, and leverage its global platform to support profitable growth and enhanced shareholder value. The overarching message is one of disciplined investment, disciplined execution, and a steady path toward sustained value creation for investors across North America and beyond.