Santander stock steadies as capital strength and 2024 profit growth underpin valuation

Santander stock is trading against the backdrop of rising 2024 profits, stronger capital ratios and continued shareholder payouts, as the Spanish banking group balances higher net interest income with regulatory and economic headwinds.

Santander (ISIN ES0113900J37) reported higher attributable profit and a stronger capital base for 2024, giving investors in Santander stock an updated view on earnings power and balance sheet resilience as of late 2024 according to the group’s published results.

Attributable profit rises in 2024

According to the group’s full-year 2024 report, Santander generated an attributable profit of approximately EUR 11.1 billion in 2024, compared with around EUR 10.4 billion in 2023, reflecting annual growth of roughly 7% driven by higher commercial activity and efficiency gains in several core markets.

The bank reported that total income in 2024 was close to EUR 57 billion, up from around EUR 53 billion in 2023, an increase of about 8% year on year as net interest income benefited from higher rates in Europe and the Americas while fee income also expanded.

Santander’s management highlighted that underlying return on tangible equity (RoTE) for 2024 was in the low to mid-teens, compared with a similar range in 2023, indicating that profitability remained robust even as funding costs and regulatory requirements increased over the period.

Capital ratio above 12 percent

In terms of solvency, Santander reported a fully loaded Common Equity Tier 1 (CET1) capital ratio slightly above 12% at the end of 2024, compared with a level in the high 11% range at the end of 2023, underscoring a modest but tangible strengthening of its regulatory capital position.

The bank indicated that its CET1 ratio stood comfortably above its stated regulatory requirement, which leaves room for continued organic growth and ongoing shareholder remuneration, including cash dividends and share buybacks, subject to supervisory approvals and market conditions.

Total loan-loss provisions for 2024 rose versus 2023 as credit costs normalized from unusually benign post-pandemic levels, but the cost of risk remained broadly in line with the bank’s target range and was offset by higher net interest income and stable operating expenses in several key geographies.

Net interest income and regional mix

Santander reported that net interest income for 2024 increased by a mid-single-digit percentage compared with 2023, supported by higher average interest rates in the euro area and in Latin American markets, although the pace of growth moderated in the second half of the year as competition for deposits intensified.

Europe and North America together contributed a significant share of group profits in 2024, with Spain, the United Kingdom and the United States all generating solid results, while Brazil and other Latin American operations continued to provide diversification benefits despite more volatile macroeconomic conditions in some countries.

The bank’s management emphasized that its retail and commercial banking franchise in Europe and Latin America remained a core earnings engine, while its corporate and investment banking and wealth management units added fee-based revenue streams that reduced reliance on pure interest margin.

Revenue up around 8 percent

The roughly 8% increase in total income to about EUR 57 billion in 2024 compared with around EUR 53 billion in 2023 reflects both volume growth and pricing effects across loans and deposits, as well as positive contributions from payments and consumer finance activities.

Operating expenses also rose in 2024, partly due to inflation and ongoing investments in technology and regulatory compliance, but the cost-to-income ratio remained relatively stable versus 2023 as revenue growth outpaced cost increases on a group level.

This combination of rising income and controlled operating costs allowed Santander to translate top-line expansion into higher net profit, even after absorbing higher loan-loss provisions and maintaining a conservative approach to risk-weighted asset growth.

Dividend and shareholder remuneration

For 2024, Santander continued its policy of shareholder remuneration with a mix of cash dividends and share buybacks, with the total payout corresponding to a payout ratio in the range that management had communicated as its medium-term target, typically around half of attributable profit.

The cash dividend per share for the full year 2024 increased compared with 2023, reflecting the rise in earnings and the bank’s confidence in its capital position, while share buybacks complemented the cash component and helped to offset dilution from past capital actions.

This remuneration strategy is intended to balance capital accumulation with returns to shareholders, and is regularly reviewed in light of regulatory guidance, stress test outcomes and the broader macroeconomic backdrop in Santander’s core markets.

Risk profile and asset quality

In terms of asset quality, Santander’s non-performing loan (NPL) ratio remained contained in 2024 compared with 2023, with only a modest increase in some portfolios as interest rates stayed higher for longer and certain customer segments experienced pressure on repayment capacity.

The coverage ratio for non-performing loans remained at a level that management described as prudent, helping to absorb potential future losses and supporting confidence in the resilience of the loan book under adverse scenarios.

Geographically, credit quality dynamics varied, with some Latin American markets showing higher nominal NPL ratios than Spain or the United Kingdom, but these were generally compensated by higher loan yields and established risk management practices in those countries.

Focus on digital and cost efficiency

Santander continued to invest in digital channels and technology in 2024, aiming to migrate more customer interactions to mobile and online platforms, which can reduce transaction costs and support cross-selling of products over time.

The bank reported that the share of customers using digital channels increased further in 2024 compared with 2023, contributing to higher digital sales and improving the cost-to-serve metric in some retail markets.

These investments are also linked to regulatory expectations on operational resilience and cybersecurity, as authorities in Europe and the Americas scrutinize how large banks handle technology risks and service continuity.

Retail banking scale in Spain

Retail banking in Spain remained one of Santander’s core franchises in 2024, with the group serving millions of individual and small business customers through a combination of branches, digital platforms and specialized service centers.

Loan volumes to households and small and medium-sized enterprises in Spain were broadly stable to slightly higher compared with 2023, as mortgage demand normalized after a period of rapid growth while consumer lending and business credit gradually recovered.

Deposit volumes in Spain showed moderate growth, with a mix shift toward time deposits as customers sought higher yields, which in turn influenced the margin dynamics in the domestic retail business.

United Kingdom and United States contribution

In the United Kingdom, Santander’s subsidiary delivered solid earnings in 2024, supported by higher net interest income from a still-elevated rate environment, although margin pressure increased as competition for deposits intensified and regulatory requirements remained strict.

In the United States, the bank’s consumer finance and auto lending operations contributed to group profits, but also faced a more challenging credit environment as higher interest rates and economic uncertainty weighed on some customer segments.

Both geographies are important to Santander’s strategy of maintaining a diversified earnings base across multiple mature and emerging markets, reducing reliance on any single country or business line.

Latin America remains key earnings engine

Latin America, and Brazil in particular, remained a key earnings engine for Santander in 2024, with strong franchise positions in retail, consumer and corporate banking segments providing scale advantages and cross-selling opportunities.

Net interest margins in several Latin American markets were higher than in Europe, which supported profitability, but currency fluctuations and political developments added volatility to the translated euro results.

The bank continued to invest in digital offerings and financial inclusion initiatives in the region, aiming to attract new customers and deepen relationships with existing ones while managing credit and regulatory risks.

Regulation and capital requirements

Regulatory developments in Europe and globally continued to shape Santander’s capital and liquidity planning in 2024, with the implementation of final Basel III reforms and ongoing work on resolution frameworks influencing risk-weighted assets and capital buffers.

The bank’s fully loaded CET1 ratio above 12% at the end of 2024 provided management with some flexibility to absorb regulatory changes, but the institution remains subject to supervisory expectations that can affect dividend and buyback decisions over time.

Liquidity coverage ratios and net stable funding ratios remained comfortably above regulatory minimums, reflecting Santander’s access to wholesale funding markets and stable customer deposit bases in key markets.

Santander Consumer Finance and payments

Santander Consumer Finance and the group’s payments activities, including merchant acquiring and card businesses, contributed meaningfully to total income in 2024, benefiting from resilient consumer spending and increased electronic payment volumes.

Fee and commission income from payments and cards grew compared with 2023, helping to diversify the bank’s revenue mix away from purely interest-driven income and providing additional levers for profitability.

The bank continued to roll out new digital payment solutions and partnerships, seeking to capture a larger share of transaction flows across its markets.

ESG and sustainability commitments

In 2024, Santander reiterated its environmental, social and governance (ESG) commitments, including previously announced targets for financing the energy transition and supporting sustainable projects in multiple regions.

The bank reported progress toward its goals for green financing volumes and social inclusion initiatives, integrating these objectives into its broader strategic and risk management frameworks.

Investors increasingly monitor such ESG indicators alongside traditional financial metrics, and Santander’s disclosures are designed to align with evolving regulatory and market expectations on sustainability reporting.

Digital banking products and services

Santander’s digital banking applications continued to be an important tool for customer engagement in 2024, with features such as mobile payments, instant transfers, budgeting tools and digital onboarding supporting customer satisfaction and retention.

The bank’s digital-only and platform-based offerings in selected markets are intended to reach younger and more tech-oriented customers, complementing the traditional branch network and enhancing the group’s competitive position against fintech and neobank entrants.

These digital initiatives also generate valuable data that can be used to refine risk models and personalize product offerings, within the constraints of data protection and privacy regulations.

Santander CIB and corporate clients

Santander’s corporate and investment banking unit (CIB) provided services to large corporates and institutional clients across Europe, the Americas and other regions in 2024, offering financing, advisory and capital markets solutions.

Fee income from corporate transactions, bond issuance and syndicated loans contributed to the group’s non-interest income, and activity levels in these areas were influenced by macroeconomic conditions, interest rate trends and market volatility.

The CIB business also plays a role in supporting clients’ energy transition and infrastructure projects, which can involve complex financing structures and long-term commitments.

Market valuation and 52-week range

On its primary Spanish listing, Santander stock traded within a 52-week range that saw lows in the lower single-digit euro area and highs approaching the mid single-digit euro range, reflecting shifts in investor sentiment toward European banks and global risk assets over the period.

The group’s market capitalization, based on recent trading levels toward the end of 2024, was in the tens of billions of euros, placing Santander among the larger listed financial institutions in the euro area and underpinning its inclusion in major equity indices.

Relative to book value and earnings, valuation metrics for Santander have tended to trade at a discount or modest premium compared with some global peers, reflecting both the opportunities and risks inherent in its diversified geographic footprint and exposure to emerging markets.

Deposits, loans and margin dynamics

At group level, customer loans and advances were broadly stable to modestly higher in 2024 compared with 2023, as growth in some retail and corporate segments offset slower demand in others amid higher interest rates and economic uncertainty.

Customer deposits also grew, with a shift in mix from non-interest-bearing balances toward term deposits and savings products offering higher rates, which supported customer retention but also affected the net interest margin as funding costs rose.

The balance between loan yields and deposit costs remains a key driver of Santander’s net interest income, and management has emphasized active balance sheet management to navigate changing rate environments.

Credit cards and consumer finance products

Credit card and consumer finance products remained an important part of Santander’s offering in 2024, particularly in Europe and Latin America, where the bank provides financing for consumer purchases, autos and other durables.

These activities contributed to net interest income and fee income, but also required careful risk management as consumer credit is more sensitive to economic cycles and interest rate changes than some other loan types.

The bank applies risk-based pricing and uses data analytics to monitor customer behavior and portfolio performance in these segments.

Technology platforms and core systems

Santander continued to work on modernizing its technology platforms and core banking systems in 2024, a multi-year effort aimed at improving efficiency, reducing complexity and enabling faster deployment of new products.

Core system upgrades and cloud adoption can eventually reduce operating costs and improve scalability, although they require significant upfront investment and careful execution to avoid disruptions.

The bank’s technology strategy is also closely tied to its cybersecurity posture and its ability to comply with ever more demanding regulatory requirements on data management and reporting.

Funding and wholesale markets

Santander remained an active issuer in wholesale funding markets in 2024, raising funding through senior unsecured bonds, covered bonds and subordinated instruments to meet regulatory requirements and support business growth.

Funding costs were influenced by global interest rate levels, credit spreads for European banks and investor appetite for financial sector debt, which can change quickly during periods of market stress.

The bank’s diversified funding base, including retail deposits, wholesale funding and capital market instruments, provides resilience but also requires continuous management of maturities and costs.

Macro backdrop and interest rate environment

The macroeconomic backdrop in 2024 featured slowing inflation from the peaks of prior years, but interest rates in key Santander markets such as the euro area, the United Kingdom and the United States remained higher than in the pre-pandemic decade, supporting net interest income but weighing on some borrowers.

Economic growth varied across the bank’s footprint, with some Latin American countries growing faster than mature European economies, while political and policy developments in several markets added uncertainty for planning and risk management.

This environment underscores the importance of diversification for Santander, with the group’s global presence helping to smooth out local shocks even as it increases overall complexity.

Competition from fintech and neobanks

Competition from fintech companies and digital-only banks remained intense in 2024, particularly in payments, personal finance management and small business services, areas where technology-driven players can offer low-cost, user-friendly solutions.

Santander’s response includes partnerships, investments and internal innovation efforts aimed at offering comparable or superior digital experiences while leveraging the trust and scale associated with a large, regulated bank.

For investors, the outcome of this competitive dynamic will influence the bank’s ability to maintain margins and grow fee income over the medium term.

Corporate governance and board oversight

Corporate governance structures at Santander continued to involve a board of directors with oversight of strategy, risk management, remuneration and ESG matters, in line with regulatory expectations for a globally systemic bank.

Board committees review key decisions on capital allocation, risk appetite and executive compensation, areas that investors watch closely when assessing alignment between management incentives and shareholder interests.

Governance practices and disclosures also play a role in how rating agencies and institutional investors view the bank’s risk profile and long-term sustainability.

Analyst expectations and consensus trends

Consensus expectations for Santander’s earnings in 2025 and 2026, as captured by market data providers, generally reflect a view of stable to modestly growing profits, with key variables including net interest margin trends, cost of risk and the pace of capital generation.

Changes in macroeconomic forecasts, regulatory developments or geopolitical events can lead to revisions in these expectations, which in turn may influence how Santander stock trades relative to its historical multiples and peer group.

Investors often compare the bank’s reported results and guidance with consensus estimates to assess whether performance is tracking ahead of, in line with or below market expectations.

Key risks and opportunities

Among the key risks for Santander are potential economic downturns in major markets, adverse regulatory changes, cyber incidents, and higher-than-expected credit losses, any of which could put pressure on profits and capital.

At the same time, opportunities include continued growth in digital banking, expansion in underpenetrated markets, increased demand for sustainable finance, and efficiency gains from technology and process improvements.

How effectively the bank manages these risks and opportunities will play a significant role in determining the future trajectory of earnings, capital and shareholder returns.

Representative product focus: Santander credit card

A representative product in Santander’s consumer offering is its branded credit card range, which provides customers with revolving credit lines, rewards programs and integration with mobile payment solutions across several markets where the bank operates.

In markets such as Spain and Brazil, Santander’s credit card business forms a significant part of its consumer finance portfolio, contributing to both net interest income and fee income through interest charges, interchange fees and ancillary services.

The performance of this product line is closely tied to consumer spending patterns, employment trends and interest rate levels, making it a useful indicator of broader economic and credit conditions in the bank’s key markets.

Santander stock and recent trading context

Based on recent data from its primary listing on the Spanish market, Santander stock has been trading in the single-digit euro range per share, with the latest quoted levels in late 2024 placing the bank’s market capitalization in the tens of billions of euros.

At those levels, the shares reflect the market’s assessment of Santander’s 2024 profit of about EUR 11.1 billion versus roughly EUR 10.4 billion in 2023, its fully loaded CET1 ratio above 12% compared with the high 11% range a year earlier, and its strategy of balancing growth, digital investment and shareholder remuneration.

For investors monitoring European banks, these metrics provide a framework for comparing Santander stock with peers in terms of profitability, capital strength and exposure to different regions and business lines.

Santander at a glance

• Company: Banco Santander, S.A.
• ISIN: ES0113900J37
• Ticker: BME: SAN
• Trading venue: Bolsa de Madrid
• Sector / Industry: Financials / Banks
• Index membership: IBEX 35