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Banco Santander (LSE: BNC) shares don’t typically get an excessive amount of consideration from UK buyers. That’s in all probability as a result of the Spanish financial institution has its principal itemizing in Madrid, with secondary listings elsewhere, together with the London Inventory Change. So it goes beneath the radar a bit.
Because the begin of 2024, the Santander share worth has risen 10%. Together with dividends, that provides a complete return of round 14.3%, in accordance with investing platform AJ Bell. This implies buyers who put 5 grand into the shares in January are as we speak sitting on about £5,715.
Is that return any good in contrast with different massive banks in London? And will I think about investing within the inventory in 2025? Let’s discover.
Very robust yr for many lenders
There are at the moment 5 banks within the FTSE 100. In comparison with their year-to-date share worth returns, Santander’s been lagging.
| 2024 complete return | |
| Santander | 10% |
| HSBC | 22.1% |
| Lloyds | 13.7% |
| Barclays | 71.5% |
| NatWest | 81.6% |
| Commonplace Chartered | 47% |
In 2024, Santander has even unperformed Lloyds, which a good few buyers think about to be a price lure. In order that’s fairly disappointing for shareholders. The standout winner in 2024 has been NatWest, whose shares are up 81%!
How’s it been doing?
Nonetheless, I feel there’s lots to love about Santander on paper. For starters, it has a significant presence in 10 core markets in Europe and the Americas. These embody Spain, Portugal, Poland, the UK, US, Brazil, Argentina, Chile, and Mexico. I like this geographic combine between mature and growing economies.
Within the first 9 months of 2024, the financial institution achieved an attributable revenue of €9.3bn, a 14% enhance in comparison with the identical interval in 2023. Earnings per share (EPS) rose by 19%, whereas it had 5m extra clients than the yr earlier than.
The agency’s additionally prioritising extra shareholder returns, and introduced a 23% bump in its interim dividend. Together with share buybacks, Santander expects to return over €6bn to shareholders in 2024, equating to an annualised yield of 8.9% (relative to its market-cap).
Valuation and one ongoing subject
Like most European banks, the inventory appears to be like nice worth. It’s buying and selling on a low ahead price-to-earnings (P/E) ratio of 5.5, whereas providing a ahead dividend yield of 5.2%.
In the meantime, the price-to-book (P/B) ratio is simply 0.7. This implies the market’s valuing the financial institution’s inventory at solely 70% of what its belongings are price on paper.
One danger right here although is the doubtless illegal commissions that UK banks paid to automobile dealerships. Santander UK delayed its Q3 outcomes to tot up its potential liabilities. In the long run, it put aside £295m.
On the problem, Santander UK commented: “The last word monetary impression could possibly be materially greater or decrease than the quantity supplied…[However] We stay properly capitalised with important buffers over regulatory necessities“.
But when the scandal mushrooms into one thing greater than automobile loans, it might harm the broader group’s popularity.
Will I make investments?
I have already got HSBC shares in my portfolio, giving me publicity to the UK and Europe (in addition to Asia). It additionally affords the next ahead yield of 6.6%.
For Latin America, I’ve a big place in MercadoLibre, the e-commerce and fintech big. I additionally not too long ago invested in Nu Holdings, which owns the biggest digital financial institution in Latin America.
So heading into 2025, these three holdings give my portfolio sufficient publicity to banks.