Santander has said that it intends to return €10bn to investors over the next two years through buybacks after reporting record annual profits.
The Spanish lender posted an 11 per cent increase in quarterly net profit from a year earlier to €3.27bn, comfortably ahead of market expectations, which helped the bank to achieve record results for the third year in a row.
Shares in Santander rose as much as 8 per cent in morning trading on Wednesday, before falling back to trade about 5.3 per cent higher by early afternoon.
The new buyback programme comes after the lender was boosted by higher net interest income thanks to higher rates, as well as a jump in fee income.
European banks have been handing back record sums to investors in recent years as they reap the benefits of higher interest rates.
“Because of our strong capital generation, we now plan to return €10bn in buybacks from 2025 and 2026 earnings and the anticipated excess capital, in addition to our standard cash dividend distribution,” said Ana Botín, the group’s executive chair.
The results come amid questions about the future of Santander’s UK retail franchise.
While Botín has said publicly that the UK business was “not for sale” and would remain a “core market” for Santander, people at the highest level of the bank have said privately that an exit is not being ruled out if a suitor approaches with an attractive offer.
Santander last year rejected a “low-ball” offer from Barclays for the unit, the Financial Times previously reported.
On Wednesday, Botín said that the bank could shift resources away from its lower-performing businesses rather than sell them.
The lender’s UK unit posted a 10 per cent rise in net profits during the final quarter, but return on tangible equity — a measure of bank profitability — remains far below Santander’s other key markets.
The bank has already been reducing its headcount in the UK and in October announced plans to cut 1,400 jobs in the country to reduce costs.
Santander said loan volumes in the UK were down 4 per cent to €230bn “as a result of our focus on profitability”.
UK deposits also shrank 5 per cent to €212bn as they were “impacted by a competitive environment”, the bank said.
The UK business is at the heart of questions about whether Santander’s sprawling global footprint — which encompasses 10 “core markets” and more than 170mn customers — still makes sense.
The Spanish bank is seeking to convince investors that its disparate national businesses complement and aid each other.
“Our track record shows that in a challenging market we outperform peers and in 2025 we expect to grow our bottom line and profitability — with revenue stable and costs falling,” Botín said. “And we are only scratching the surface of our potential.”
Meanwhile, Santander’s corporate and investment bank, which Botín is seeking to expand, posted total income of €2.1bn during the fourth quarter, up from €1.7bn during the same period a year earlier.
