Santander’s Botin seeks to lure investors with higher payout

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. The Madrid-based bank also announced a new, €921 million buyback program for this year and outlined new financial targets as rising interest rates lift earnings.
Santander rose as analysts welcomed a new profitability goal as ambitious. Led by Botin and new Chief Executive Officer Hector Grisi, the bank 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.
Rivals such as UniCredit SpA, UBS Group AG and BNP Paribas SA have already announced plans to shell out billions of euros to investors over the coming years, raising the stakes as lenders across the region fight to restore their battered valuations. Italy’s Intesa Sanpaolo SpA targets a payout ratio of 70%, one of the highest in Europe.
The increase in Santander’s payout ratio was in line with expectations, while the new financial targets “tick the right boxes,” analysts at Jefferies wrote in a note.
Santander rose 4.1% in Madrid trading, bringing the increase for this year to 32%.
Despite the recent gains, Botin has struggled to persuade investors since being named chairman in 2014 following the death of her father Emilio. Shares of the Spanish lender have lost about half of their value under her tenure, more than peers, and are still trading at a discount to their book value.
Santander has also been distracted by a long-running compensation dispute with Andrea Orcel, after the bank rescinded an offer to hire him as CEO in 2019.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 legal fight 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.
Grisi, who took over at the start of this year, has vowed to make the different regions in which the lender operates work closer together as he seeks to increase efficiency. The bank last year beat its targets for profitability, revenue growth and capital, while missing a cost goal.