(Bloomberg) -- Banco Santander SA Chairman Ana Botin said she expects the bank’s valuation to improve as interest rates rise and the lender pledged to return a bigger share of profits to investors.

While Spain’s largest bank is still trading at a discount to rivals, that reflects the fact that its business model as a retail and commercial lender suffered more than others from negative interest rates, Botin said in a Bloomberg TV interview Tuesday. With rates rising and Santander improving its operating model, that should change, she said.

“It’s a new phase of value creation for our stakeholders,” Botin said from London, where she hosted the bank’s investor day. “We were until three or four years ago at a multiple and we will get there again.”

Santander’s shares surged on Tuesday after the Madrid-based lender vowed to return half of its profit to investors and set a target for a return on tangible equity of as much as 17%. The bank has one of the largest retail presences in the world with businesses from Spain to Brazil, allowing it to benefit as rate increases by central banks boost lending margins across the globe.

Rivals such as UniCredit SpA, UBS Group AG and BNP Paribas SA have already announced plans to shell out billions of euros to investors over the coming years, raising the stakes as lenders across the region fight to restore their battered valuations.

“European banks are going to do much better, and Santander is going to do better than others,” Botin said. “More than half of our return will be because we are improving our operating model, and some of it is tailwinds from the normalization of interest rates.”

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