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Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Banco Santander\u00a0(LSE:BNC) shares have been on fire in recent times. In fact, anyone who ploughed \u00a37,500 into the Spanish bank just three years ago would now have roughly \u00a325,500 before dividends.<\/p>\n
That\u2019s obviously a cracking result for shareholders. What has sent Santander flying? And might there still be room left in the tank for more tasty gains?<\/p>\n
Three key reasons <\/p>\n
Looking back, this bumper return is the result of higher interest rates, aggressive cost-cutting, and massive capital returns to shareholders.<\/p>\n
Higher rates mean Santander has benefited from wider margins \u2014 charging more for loans while keeping deposit costs relatively low.\u00a0In 2025, net profit rose 12% to \u20ac14.1bn (16% in constant euros), marking the bank\u2019s fourth consecutive year of record results.<\/p>\n
In the past three years, Santander has reduced its cost-to-income ratio from 45.8% to 41.2%. This shows the bank is becoming more leaner and efficient, particularly through using artificial intelligence (AI).<\/p>\n
By 2028, the bank expects to generate more than \u20ac1 billion of business value annually (cost savings plus revenues) from data and AI initiatives, contributing around 1 percentage point of the group\u2019s cost-to-income improvement.
Santander 2026 Investor Day<\/p>\n
In terms of shareholder returns, Santander has aggressively ramped these up. Once a \u20ac5bn share buyback announced in February is completed, the lender will have repurchased around 18% of its outstanding shares since 2021.<\/p>\n
Reducing the share count on this scale is shareholder-friendly in a number of ways:<\/p>\n
Each remaining share now represents a larger percentage of the bank\u2019s total assets and future earnings<\/p>\n
Earnings per share (EPS) is usually boosted<\/p>\n
Constant buying pressure can support the share price<\/p>\n
Buybacks can boost the dividend per share<\/p>\n
Taken together, higher interest rates, record profits, rising dividends, and massive buybacks have lit a fire under the stock.<\/p>\n
Some risks to remember <\/p>\n
Looking ahead, it\u2019s unrealistic to expect another 200%+ share price surge. Interest rates should settle or even come down a bit, potentially weakening the net interest margin somewhat.<\/p>\n
Meanwhile, a price-to-tangible-book ratio of 1.7 isn\u2019t low, and the forecast dividend yield of 3.1% isn\u2019t as high as many other bank stocks around today.<\/p>\n
Then there\u2019s the potential for a global recession, sparked by food inflation and higher energy costs. This could increase the bank\u2019s operating costs while dampening lending activity.<\/p>\n
Is the stock still worth checking out? <\/p>\n
Having said all that, I\u2019m still quite bullish on the bank stock, especially after the recent investor day presentation.<\/p>\n
By 2028, Santander aims to reach\u00a0more than\u00a0210m customers, up from 165m in 2023. It has made key acquisitions in the UK (TSB) and the US (Webster Financial), and continues to grow its presence in Latin America (where tens of millions remain unbanked or underbanked).<\/p>\n
Other 2028 targets include achieving a profit of more than \u20ac20bn and double-digit EPS growth every year till then. The lender also plans to more than double the cash dividend per share versus 2025 levels by shifting more of the payout ratio from buybacks to dividends.<\/p>\n
So, while Stander is unlikely to repeat the heroics of the past three years anytime soon, I do still think it\u2019s worth looking at right now.<\/p>\n
The post \u00a37,500 invested in Santander shares 3 years ago is now worth\u2026<\/a> appeared first on The Motley Fool UK<\/a>.<\/p>\n More reading<\/p>\n Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Banco Santander\u00a0(LSE:BNC) shares have been on fire in recent times. In fact, anyone who…\n","protected":false},"author":2,"featured_media":17971,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[121],"tags":[144,9958,9959],"class_list":{"0":"post-17970","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-banco-santander","8":"tag-banco-santander","9":"tag-interest-rates","10":"tag-outstanding-shares"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts\/17970","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/comments?post=17970"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/posts\/17970\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/media\/17971"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/media?parent=17970"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/categories?post=17970"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/spain\/wp-json\/wp\/v2\/tags?post=17970"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}