Santander Investor Payout Set to Come In at Low End of Range

(Bloomberg) -- Banco Santander SA plans to pay out around 40% of underlying profit to investors, coming in the low end of a range previously laid out by the lender. 

The remuneration will be paid through a mix of cash dividends and share buybacks, with the dividend paid in two cycles, Spain’s largest bank said in a filing late Tuesday in Madrid. The buyback will be equivalent to approximately 841 million euros ($982 million), while the interim dividend was set at 4.85 euro cents per share and is payable in November. 

Santander shares rose as much as 1.8% to EU3.134 after the opening of Madrid trading Wednesday. 

Santander said in March that it intended to restore a shareholder remuneration policy of 40% to 50% of underlying profit. The policy announced Tuesday allows the bank to maintain a fully loaded CET1 capital within its 11% to 12% target.

“Total payout is at the low end of range, but is broadly aligned with consensus expectations,” Jefferies International Ltd. analysts Benjie Creelan-Sandford and Marco Nicolai said in a report. the “message on targeting top end of 11-12% fully-loaded CET1 target could reassure, given capital questions had come to the fore again.”

The move comes after the European Central Bank said in July that it would lift a cap on how much lenders could return to shareholders, as the region’s economy recovers from the pandemic. The ECB issued an effective ban on payouts in March last year and in December capped dividends and buybacks for the first nine months of 2020.

The plan “re-enforces the view that management, the Santander board and regulators are all relatively comfortable with Santander’s capital ratios,” KBW analyst Daragh Quinn said in a note.

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