Banco Santander will shower its shareholders with almost 1,300 million euros with the first dividend charged to the results of 2023. The entity chaired by Ana Botín is expected to communicate the amount to the National Securities Market Commission (CNMV) at the end of this month. which will be used to remunerate the shareholder and which will be effective at the beginning of November. The payment will experience a substantial improvement with respect to the first payment made on account for fiscal year 2022.
The estimates included in the ‘Bloomberg Dividend Forecast’ contemplate a first payment of 0.080 euros per share, which represents an improvement of almost 34.5% compared to the 0.0595 euros paid in the fall of 2022. It also implies a substantial increase compared to 2021, when the payment was set at 0.0485 euros and became the first dividend after the lifting of the suspension of remuneration by the European Central Bank (ECB) to European banks due to the covid pandemic .
And this has been possible due to a set of variables. To begin with, because on February 28, during its Investor Day, Banco Santander raised its ‘pay out’, the part of the profit it allocates to shareholders, to 50% compared to the previous 40%, a percentage that was set in 2021. With this increase, the entity brings its distribution percentage into line with the rest of its competitors, who distribute between 50% and 60% of their profits.
Also because the bank presented record profits in the first half of the year. Thus, it earned 5,241 million euros until June, which not only represents an improvement of 7.1% compared to the same period in 2022 (when it reported profits of 4,894 million euros) but also recorded the highest profit to date and points to close the year above the psychological barrier of 10,000 million euros. This result is due to the favorable winds generated by the rise in the ECB’s interest rates and which allows the interest margin to increase despite the fall in credit volumes.
Finally, the lower number of the entity’s shares in circulation also has an influence thanks to the recovery plans for its own securities carried out by the entity and their subsequent amortization. At the end of June, the number of shares stood at 16,184 million, which represents a decrease of 3.4% compared to June 2022, when it had 17,794 million shares.
Cash payment and share buyback
As we said, Banco Santander raised the percentage allocated to the dividend in February of this year to 50%. However, its distribution remained unchanged. The bank chaired by Ana Botín distributes its dividend equally between cash and share repurchases at a rate of 25% each. As a consequence of this, the market also expects the bank to communicate a new buyback plan also for an import of 1.3 billion euros.
Once the bank receives the relevant authorizations from regulators, the next step would be the redemption of the shares, to reduce the entity’s share capital and increase the value of the securities. The entity’s securities have recorded a rise so far this year of 24% to 3.55 euros, although without exceeding the highs recorded in March, before the outbreak of the crisis of confidence caused by the bankruptcy and rescue of Silicon. Valley Bank, when the 3.86 euros were marked.
Precisely, in the first quarter of the year, the bank closed its last share buyback program to which it allocated 921 million euros. In the last two years, the entity has acquired 7% of its outstanding shares, which has provided its shareholders with an approximate return of 21%, according to the CEO, Héctor Grisi, and involves withdrawing more 1,157 from the market. millions of titles. It has also made it possible to increase the entity’s earnings per share, which closed at 0.31 euros until June, 13.4% more than for the same period in 2022, when it stood at 0.27 euros. At the end of last year this reached 0.54 euros.