Banco Santander (LSE: BNC) shares don’t often get too much attention from UK investors. That’s probably because the Spanish bank has its main listing in Madrid, with secondary listings elsewhere, including the London Stock Exchange. So it goes under the radar a bit.
Since the start of 2024, the Santander share price has risen 10%. Including dividends, that gives a total return of around 14.3%, according to investing platform AJ Bell. This means investors who put five grand into the shares in January are today sitting on about £5,715.
Is that return any good compared with other big banks in London? And should I consider investing in the stock in 2025? Let’s explore.
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Very strong year for most lenders
There are currently five banks in the FTSE 100. Compared to their year-to-date share price returns, Santander’s been lagging.
| 2024 total return | |
| Santander | 10% |
| HSBC | 22.1% |
| Lloyds | 13.7% |
| Barclays | 71.5% |
| NatWest | 81.6% |
| Standard Chartered | 47% |
In 2024, Santander has even unperformed Lloyds, which a fair few investors consider to be a value trap. So that’s pretty disappointing for shareholders. The standout winner in 2024 has been NatWest, whose shares are up 81%!
How’s it been doing?
Still, I think there’s a lot to like about Santander on paper. For starters, it has a meaningful presence in 10 core markets in Europe and the Americas. These include Spain, Portugal, Poland, the UK, US, Brazil, Argentina, Chile, and Mexico. I like this geographic mix between mature and developing economies.
In the first nine months of 2024, the bank achieved an attributable profit of €9.3bn, a 14% increase compared to the same period in 2023. Earnings per share (EPS) rose by 19%, while it had 5m more customers than the year before.
The firm’s also prioritising more shareholder returns, and announced a 23% bump in its interim dividend. Including 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 issue
Like most European banks, the stock looks great value. It’s trading on a low forward price-to-earnings (P/E) ratio of 5.5, while offering a forward dividend yield of 5.2%.
Meanwhile, the price-to-book (P/B) ratio is just 0.7. This means the market’s valuing the bank’s stock at only 70% of what its assets are worth on paper.
One risk here though is the potentially unlawful commissions that UK banks paid to car dealerships. Santander UK delayed its Q3 results to tot up its possible liabilities. In the end, it set aside £295m.
On the issue, Santander UK commented: “The ultimate financial impact could be materially higher or lower than the amount provided…[However] We remain well capitalised with significant buffers over regulatory requirements“.
But if the scandal mushrooms into something bigger than car loans, it could damage the wider group’s reputation.
Will I invest?
I already have HSBC shares in my portfolio, giving me exposure to the UK and Europe (as well as Asia). It also offers a higher forward yield of 6.6%.
For Latin America, I have a large position in MercadoLibre, the e-commerce and fintech giant. I also recently invested in Nu Holdings, which owns the largest digital bank in Latin America.
So heading into 2025, these three holdings give my portfolio enough exposure to banks.
