The European banking begins the countdown to recover the dividend, after it has been kept with limitations since the beginning of the pandemic before the recommendations of the European Central Bank (ECB) not to pay shareholders to retain capital and finance the economy . The European supervisor, finally, will lift this veto on September 30 (except for “adverse” events, according to the body itself), after a year and a half of limitations.
After giving the green light to banks, the dividend from Banco Santander is positioned as one of the best in the sector on the European continent, with a return of 6.4%. Only the Swedish entity Swedbank surpasses the Cantabrian group, with 6.8%. However, both banks far exceed, even almost double, the average dividend yield of the banks of the Old Continent, which will be 3.84% in charge of the 2021 result, according to the Factset market consensus.
Analysts expect Santander to close the year with a profit of close to 7 billion euros. With an announced pay-out of 50%, it will distribute almost 3,500 million among its shareholders, with 0.20 euros per share. The bank led by Ana Botín will maintain the throne of the highest profitability in the distribution also in Spain, and it will do so both this year and the next two years, 2022 and 2023, with 6.8% and 7.7%, respectively .
At the end of this year, CaixaBank will see its results distorted by the accounting effects of the merger with Bankia . However, despite discounting the accounting impacts of this operation, the group will also exceed the average dividend yield of its European competitors. The entity of Catalan origin will have profits close to 4,000 million euros in 2021, after having recorded at the end of March profits of 4,786 million, of which 4,300 came from the negative goodwill of the integration.
As the CEO, Gonzalo Gortázar explained, in his day, “not even a euro will enter with the badwill, so let’s not think that we have a treasure with which to do things, nothing can be paid with it. “Bearing this in mind, the market foresees a dividend yield for CaixaBank of 4.5% in real terms (with a real pay-out 50%), and not 9.3% as the simple account would come out if the distorted profit were taken into account. However, for the next few years, the bank will give a return of 6.4% by 2022 and 7.1% by 2023, positioning itself on the third step of the podium with Santander and Unicaja ahead.
In third position by dividend yield of Spanish banks is Bankinter , not exempt from extraordinary events either, with the spin-off of Línea Directa for its IPO last April . The financial group led by María Dolores Dancausa will earn 436 million euros this year, of which it plans to distribute half among its shareholders, with 0.24 euros per share, with a return of 4.9%.
Unicaja will have a yield by dividend of 4.8%, although the evolution regarding the Andalusian group is not negligible according to the forecast of the market consensus. The bank headed by Manuel Azuaga will achieve one of the best returns in the sector by 2023, with 7.4%, only surpassed by Banco Santander, which will then be 7.8% and the highest among its Spanish counterparts. The market expects a profit for Unicaja in 2023 of close to 320 million euros, thanks to having digested the costs of the merger with Liberbank by those dates, of which it will distribute 50% among shareholders.
BBVA and Sabadell are the ones with thelowest pay-out , 40% and 30%, respectively. However, the bank headed by César González-Bueno gave the bell in the presentation of results for the first half of the year announced that it would give a dividend after raising profit by 51% , after various analysts questioned the distribution and did not see the probability that they will recover it until 2022 and even 2023. Now, the market forecast for Sabadell is that it will close the year with profits of 214 million euros, when only six months ago, they estimated a result of 153 million for the bank and Looking back almost a year ago, the forecast was 60% lower, at 85 million.
For BBVA, the market expects a profit for the end of 2021 of 3,769 million euros, of which it plans to distribute 40% among shareholders, with 0.23 euros per share. Thus, the dividend yield will stand at 4.1% for this year, also above its European counterparts. Only Sabadell, with a profitability of 1.9%, will be below the average for the Old Continent sector.
The ECB’s March 2020 veto on the banking dividend distribution had a direct effect on its valuation on the stock market. According to a report dated June 28 of this year published by the supervisor itself and which analyzes the impact of the restriction on distribution among shareholders, the share price of the European sector fell by an average of 12% after the recommendation. The agency made this decision at the beginning of the pandemic so that banks would save enough capital with which to face the health crisis and its effects.
Nine months later, in December 2020, it raised its hand slightly and allowed the sector to share 15% of its 2019 and 2020 profitsamong its partners. Although the sector awaits the end of the limitations, both the ECB and the Bank of Spain ask the banks for prudence in the distribution while the crisis continues.
Distribution of 7,350 million
The Spanish bank will distribute 7,350 million among its shareholders in charge of 2021. According to the consensus of the Factset market, Santander will earn almost 7,000 million, (it lost 8,700 million in 2020) and will give a pay-out of 50%. CaixaBank will also distribute 50% of the profit, which will be 3,919 million (although it bears the accounting impact of the merger with Bankia). BBVA will earn 3,799 million (191% more), with a pay-out of 40%. Bankinter will obtain a result of 436 million and will also give 50%. Sabadell will earn 214 million and will distribute 30% and Unicaja, 208, and will also distribute half.