By Adria Calatayud

Banco Santander said it plans to buy back 10 billion euros ($10.38 billion) of its own stock after it reported fourth-quarter results that exceeded expectations, sending shares sharply higher.

Spain's biggest lender by assets became the latest bank in Europe to outline plans for bumper returns to shareholders. European banks took steps to clean up their balance sheets and restore profitability amid high interest rates in recent years and have continued to hand money back to shareholders even as central banks moved to lower rates.

Santander said Wednesday that it expects to return 10 billion euros to shareholders through stock repurchases from its earnings this year and next on top of its dividend. Its plans came hot on the heels of buyback announcements on Tuesday from UBS Group, Intesa Sanpaolo and BNP Paribas.

The news sent the stock up, rising 7% higher in European afternoon trade to levels last seen in 2018. The jump made Santander the biggest bank of the eurozone by market capitalization with a value topping 80 billion euros, overtaking BNP Paribas and Intesa Sanpaolo.

The bank said it plans to start a new buyback program of about 1.59 billion euros on Thursday for which it already obtained regulatory authorization.

Santander said it was confident it would be able to boost profitability again in 2025, raising a key profitability target despite projecting broadly stable revenue for the year.

Net profit for the fourth quarter was 3.265 billion euros, up 11% on year, Santander said.

Total income for the quarter rose 10% to 16.03 billion euros, mainly driven by higher net fee income. Net interest income--the difference between what a bank earns on loans and what it pays clients for deposits--came to 11.99 billion euros, up 6.8% on the prior quarter.

Analysts had expected Santander to post a net profit of 2.95 billion euros on revenue of 15.39 billion euros, according to consensus estimates provided by Visible Alpha.

The bank attributed the profit rise to increases at its main income streams that offset higher costs and a hit from a U.K. provision to cover potential costs from a court ruling on the disclosure of dealer commissions on car loans.

For 2025, Santander expects revenue of about 62 billion euros, mid-high single digit growth in net fee income, lower costs and a return on tangible equity--a key profitability metric for banks--of more than 17%. It had previously targeted a 2025 return on tangible equity of 15% to 17%.

Santander executive chair, Ana Botin, said in a call with analysts she expected a challenging environment in 2025, but that the bank's progress toward its 2025 targets put it well ahead of plan.

"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," Botin said.

The bank's full-year revenue climbed 7.9% to 61.88 billion euros in 2024 and its return on tangible equity for the year stood at 16.3%, up from 15.1% a year before.

Write to Adria Calatayud at adria.calatayud@wsj.com

(END) Dow Jones Newswires

February 05, 2025 08:26 ET (13:26 GMT)

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