Santander has announced that it will launch a €1.5bn (£1.28bn) share buyback scheme as a way of returning record profits back to investors.

The banking group has also boosted its dividend by 50% in an attempt to lift its stock price.

Santander reported an annual net profit of €11bn (£9.4bn) in January but has faced questions from investors about operations across more than a dozen countries, according to the FT.

The lender has said that the payouts to shareholders will equate to about 40% of its pre-tax profits, while the remaining 60% will be used to pay tax bills and extend new loans.

Santander has become the latest European bank to raise shareholder returns, after enjoying the boost from central bank interest rate increases.

Banks including UniCredit and Deutsche Bank have also stated their intention to increase their respective dividends and buy back more shares.

Santander will pay the final cash dividend on 2 May 2024, with the shareholder remuneration totalling over €5.5bn (£4.7bn) against the 2023 results.

Executive chair at Banco Santander, Ana Botin, said: "Our strategy and competitive advantages have proven to deliver sustainable, increasing profitability and growth, year after year. After record performance in 2023, we continue to invest for future growth while increasing shareholder returns, returning more than €5.5bn through dividends and buybacks, which represents an equivalent yield of approximately 10%.

"We are already seeing good progress in 2024 and expect to achieve all our targets for this year, including a return on tangible equity of 16%."

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