Santander launches £1.3bn share buyback under new payout scheme

Santander has launched a share buyback for up to €1.5bn (£1.3bn) as the banking giant fulfills its promises to boost investor payouts.

The Spanish lender said its new programme would be for an amount equivalent to some 25 per cent of its underlying profit for the first half of 2024.

The buyback started on Tuesday and is due to end no later than 3 January, Santander said.

It follows a previous buyback for €1.5bn that Santander unveiled in February while increasing its target payout ratio to around 50 per cent of underlying profit, from 40 per cent.

Santander said its new programme would represent roughly 2.14 per cent of the bank’s share capital.

Its share price rose 3.3 per cent around midday in Madrid.

The lender booked a record annual profit in 2023 on the back of interest rate hikes from the European Central Bank.

Fellow European giants Deutsche Bank, UniCredit and Intesa Sanpaolo have also unveiled fresh buybacks after bumper profits last year.

In June, the ECB became the first major Western central bank to lower interest rates from a fresh peak, with further loosening of monetary policy set to weigh on the earnings tailwind from higher borrowing costs.

Still, Santander posted a record net profit of €6.1bn (£5.1bn) for the first half of this year. Analysts predict the bank will post another record profit for 2024, with a net income of more than €12bn (£10.1bn).

The bank said a decision on the interim dividend cash payout against its 2024 results would be submitted for board approval on 24 September.

Implementation of the rest of its 2024 shareholder remuneration is subject to regulatory approval.