MADRID: At its Investor Day in London, Banco Santander presented its strategic plan for the medium term to drive growth and increase profitability by accelerating digitalisation, improving operational performance and continuing to improve capital allocation.

Banco Santander will invest over €20 billion in digital and technology over the next four years, improving customer experiences to further increase loyalty, while lowering the cost of delivery.

To accelerate the bank’s growth, the Group plans to expand several of its digital offerings, including a comprehensive global payments initiative incorporating a new open-market international payments service called Pago FX; the international expansion of Getnet, the Bank’s Brazilian subsidiary, to create a Global Merchant Services platform and a new Global Trade platform to make it easier for SMEs to trade internationally.

Moreover, the bank will drive additional improvements in operational performance and capital allocation, leveraging opportunities for scale and efficiency leading to €1.2 billion of incremental annual cost savings, while re-weighting capital towards more profitable businesses.

As a result, the Group expects to achieve an underlying return on tangible equity (RoTE) of 13-15% in the medium term, further strengthening its position among the most profitable and efficient banks in Europe.

Santander will also target a reduced efficiency ratio of 43-45% and maintain a fully loaded CET1 ratio of 11-12%, while aiming to increase the payout ratio to 40-50%.

To drive this accelerated execution of the strategy, the bank has announced a new, simplified management structure, creating unified leadership for Europe, South America, and North America, as well as a management committee with increased business focus which will allow better and more agile execution throughout the Group.

Ana Botín, Executive Chairman of Banco Santander, said: “We have made excellent progress over the past three years, driving our return on tangible equity to a level amongst the best of our global peers, and increasing EPS by 55% in the period on a constant currency basis. Our focus remains on driving greater loyalty within our customer businesses, and leveraging our global scale to accelerate investments in digitalisation and capitalise on cross-border flows.

“Technology is changing banking as we know it and we are positioning the company to capitalise on the world class assets we have across the Group, including our technology, talent and scale. This will allow us to benefit from the opportunities presented by digital innovation and will result in us becoming a digital leader in global financial services for the next decade. Our digital and technology investments will enable us to improve the customer experience while also enhancing our growth and profitability. Combined, we expect these initiatives will create greater value for our shareholders while ensuring we continue to deliver on our commitments to customers and stakeholders.”[the_ad id=”31605″]