Banco Santander (LSE:BNC) SA said on Tuesday it intends to increase pay-outs to shareholders to 50% of profits from 40% as the lender laid out plans for higher profitability and growth alongside full-year results.
The Spanish bank which bought UK building society Abbey National in 2004 is targeting a return on tangible equity of 15-17% for the next three years (2023- 2025), while delivering double-digit average annual growth in tangible net asset value per share plus dividend per share through the cycle.
Madrid-based Santander set out its plans at an investor day following the release of annual results and the bank said by 2025 it is aiming to add 40mln customers, which would take its total to 200mln.
"This will help to grow revenues by 7-8% per year on average in constant euros in 2023-2025. Furthermore, through its ongoing transformation, the bank expects to improve its efficiency ratio from 45.8% to 42% by 2025," Santander added.
In 2023, the bank expects to continue to generate further, profitable growth, targeting double-digit revenue growth; a ROTE of above 15%; cost of risk below 1.2%; a cost to income ratio of 44-45%, and CET1 above 12%.
In 2022, attributable profit rose to €9.61bn, 18% more than 2021, a new record. Underlying profit also amounted to €9.61bn, up 11% year-on-year.
The lender declared a 5.95c per share final dividend, taking the annual pay-out to 11.78c which was an increase of 18%.
In the UK, underlying attributable profit totalled €1.4bn in in 2022, down 9% compared to 2021, hit by rising bad debt provisions and a €127mln charge relating to a settlement agreed with the FCA regarding AML controls prior to 2017.
Total income was up 12%, driven by strong net interest income growth (+13%) benefitting from higher mortgage volumes and margin management in a rising interest rate environment.
Costs rose 3% and bad debt provisions increased to €316mln.
Shares in Santander rose 4.9% in Madrid on Tuesday to €3.72 per share.
In London, banking shares were a firm feature helping pull the FTSE off its lows. Lloyds Banking Group PLC rose 1.6%, and Barclays PLC (LSE:BARC) and HSBC Holdings PLC advanced 1.1%.