Banking giant Santander reports record profit, plans massive shareholder returns

Santander, the Spanish banking behemoth, has today unveiled impressive figures for 2024, driven by increased income from its retail banking sector and reduced costs.

The group posted a profit of €12.5bn (£10.4bn), a 14 per cent increase, and an eight per cent revenue growth to €62.2bn, as reported by City AM.

The bank's return on tangible equity, a crucial indicator of banking profitability, climbed from 15.1 per cent to 16.3 per cent over the year.

Santander reported expansion across the board, with customer numbers swelling by eight million to a total of 173m.

Both net interest income and net fee income grew by eight per cent. Despite a slight rise in its cost base, with operating expenses growing by two per cent over the year, this was counterbalanced by higher income.

Consequently, the lender's overall efficiency ratio significantly improved to a 15-year record, dropping 2.3 percentage points to 41.8 per cent.

Santander attributed this performance to the group's "ongoing transformation...with the replacement of legacy technology with shared global technology platforms, such as Santander’s cloud-based core banking platform Gravity, which has helped the bank achieve savings of €452m since December 2022."

Based on these better-than-expected results, the bank announced plans to return €10bn of additional capital to shareholders through share buybacks over the next two years, in addition to its regular dividends.

Banco Santander's Executive Chair Ana Botín has announced a trifecta of record-setting performances for the financial institution: "We have announced record results for the third consecutive year as we continue to grow revenue, profitability, and returns."

She highlighted the bank’s technological edge as a crucial driver for its success, stating, "As one of the largest retail and consumer banks in the world, we have the scale to build our own technology platforms, making it possible to offer customers the best products and services while constantly reducing the cost-to-serve."

Botín emphasised this strategic advantage is evident in their progressive operating leverage improvement: "This is a key competitive advantage and is reflected in our results through continuous improvement in operating leverage. 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."

Her confidence in Banco Santander's capacity for growth remained undiminished: "And we are only scratching the surface of our potential. As we said at our Investor Day, Santander is in a new era of value creation, and we are confident that our scale, diversification and the impact of our transformation will enable us to increase profitability again in 2025."