(Bloomberg) -- Banco Santander SA is joining European peers in raising investor payouts as it kicks off a share buyback worth about €1.5 billion ($1.6 billion) and boosts the dividend.

Spain’s largest lender has received regulatory approval for the buyback that will be launched on Feb. 20, it said in a regulatory filing Monday. The bank also plans to submit a proposal for a final cash dividend of €0.095 per share at its annual general meeting, it said.

The decision increases Santander’s payout ratio to 50% from 40%, meeting a pledge it gave at an investor day year ago.

Santander achieved its highest profit ever last year as it reported €11.1 billion in net income, underlining how it has become one of the largest beneficiaries of the rate hikes carried out by the European Central Bank. The tailwind is set to fade as the ECB is expected to start cutting rates this year.

Still, the bank has forecast that revenue and profitability will continue to rise this year, with Chairman Ana Botin counting on the bank’s geographical diversification to compensate the expected top line hit from lower interest rates in some of its main markets.

The move means Santander joins a slew of European peers including Deutsche Bank AG, Intesa Sanpaolo SpA and UniCredit SpA in announcing new share buybacks after strong 2023 results.

Shares of Santander gained as much as 1.6% in Madrid trading, among the best performers on the Stoxx 600 Banks Index.

“We continue to invest for future growth while increasing shareholder returns, returning more than €5.5 billion through dividends and buybacks,” Botin said in a statement. “We are already seeing good progress in 2024 and expect to achieve all our targets for this year.”

The bank will submit the appointments of Carlos Barrabés and Antonio Weiss as new independent directors for approval at the general meeting, which will be held March 22. They will replace Bruce Carnegie-Brown and Ramiro Mato.

(Updates with more details throughout)

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