By Jesús Aguado
MADRID (Reuters) -Spain's Santander (BME:SAN) is on track to pay shareholders more than 6 billion euros ($6.50 billion) in dividends and buybacks against 2024 results after a solid start to the year, the bank said on Friday.
The new guidance implies that the euro zone's second-biggest bank by market value would end 2024 with a net profit in excess of 12 billion euros.
Santander has a 50% payout policy (the proportion of earnings distributed to shareholders) which it splits equally between cash dividends and ordinary share buybacks.
The lender's executive chair Ana Botin told shareholders at its annual meeting on Friday that the bank expects to reach a 16% return on tangible equity (ROTE), a measure of profitability, in the first quarter, including the annualised impact of the banking tax in Spain.
"2024 has started with excellent business and commercial dynamics. We continue growing the number of customers we serve and will increase our income around 9% year-on-year in the first quarter as a result," Botin said.
Santander has relied in the past on Latin America for revenue growth but has recently benefited from higher interest rates in Europe.
By 1249 GMT, shares in Santander were up 2.3%, outperforming Spain's leading blue chip index Ibex-35 which was up 0.5%.
Botin added she was "very confident" the bank would deliver a better performance in 2024 than 2023, which was already a record year.
UBS said in a note to clients that the bank's capital return stood above consensus, adding the commentary on the first quarter was positive on all key earnings fronts.
"This should start offering some comfort and help investors focus on the stock's heavily discounted valuation," UBS said, adding that its ROTE target implied a net profit of over 12.5 billion euros for 2024.
($1 = 0.9235 euros)