£5,000 invested in Santander shares at the start of 2024 is now worth…

Our writer takes a look at the Santander shares performance in 2024. Did they do better than the UK’s largest listed banks?

| More on:
Man putting his card into an ATM machine while his son sits in a stroller beside him.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

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%
HSBC22.1%
Lloyds13.7%
Barclays 71.5%
NatWest 81.6%
Standard Chartered47%

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ben McPoland has positions in HSBC Holdings, MercadoLibre, and Nu Holdings. The Motley Fool UK has recommended Aj Bell Plc, Barclays Plc, HSBC Holdings, Lloyds Banking Group Plc, MercadoLibre, Nu Holdings, and Standard Chartered Plc. 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.

More on Investing Articles

Young woman holding up three fingers
Investing Articles

Just released: our 3 top income-focused stocks to buy in January [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Investing Articles

Here’s the growth forecast for Nvidia shares through to 2026!

Demand for Nvidia shares has soared as investors eye up US growth stocks. Royston Wild looks at the chipmaker's earnings…

Read more »

a couple embrace in front of their new home
Investing Articles

Down 30% in 3 months, is the Taylor Wimpey share price too cheap for me to ignore?

Taylor Wimpey’s share price has plummeted since September and the stock now yields 8%. Should our writer buy the shares…

Read more »

Investing Articles

Is the S&P 500 heading for a correction in 2025?

This writer wonders whether the blue-chip US index is ready for a stumble, with one popular S&P 500 share up…

Read more »

Investing Articles

£15,000 invested in Tesco shares at the start of 2024 is now worth…

This writer takes a look at the performance of Tesco shares since the start of last year and considers whether…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

3 passive income ideas for Stocks & Shares ISA investors to consider!

Searching for ways to make a gigantic second income? Royston Wild reveals three ways that ISA investors could build long-term…

Read more »

Investing Articles

Beaten-down FTSE 250: a chance to get rich in 2025?

FTSE 250 stocks have endured a tough few years, with these typically UK-focused businesses suffering amid broad macroeconomic challenges.

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

6.5% dividend yield! Here’s the dividend forecast for BP shares through to 2026

City analysts expect the dividend on BP shares to keep growing. But just how robust are current estimates? Royston Wild…

Read more »