Bank and insurance dividends: from October we start again. For the latter, the final go-ahead comes from the Insurance Supervisory Institute, which presented its report on 2020 in Rome on Thursday. Luigi Federico Signorini, to his first considerations as president of IVASS – Unless the economic, financial and health situation seriously deteriorates again (a possibility that cannot yet be ruled out), we do not see the need to repeat it”. A few hours after Signorini's statements, the head of ECB banking supervision, Andrea Enria, during a hearing before the European Parliament, anticipated what the decision that the European Central Bank will take during the meeting scheduled for 23 July on the banks, which in the third quarter will be able to return to distributing coupons and planning buyback plans.
BANKS, DIVIDENDS AND BUYBACKS FROM THE THIRD QUARTER
“In the absence of negative developments, we expect to repeal our recommendation effective from the end of the third quarter of 2021 and return to review dividends and share buybacks as part of our normal supervisory process, based on a careful forward-looking assessment of each bank's individual capital planning”. This was stated by Enria who however added: “We expect the distribution plans to remain prudent and commensurate with the banks' internal capital generation capacity and the potential impact of a deterioration in the quality of exposures, even in adverse scenarios”. A few minutes earlier, still before the European Parliament's economic and monetary affairs commission, the same indication had been provided by Christina Lagarde, number one of the ECB and of the board for systemic risk (ESRB): "our recommendation on the restriction of the distributions of dividends during the pandemic it might expire at the end of September 2021", he said.
After the stop imposed in 2020 (on 2019 profits) and the stringent restrictions established for the 2021 dividend season that started in April, the most solid banks will therefore return to remunerating shareholders with coupons and buybacks.
In Italy, the first to take the field could be Intesa Sanpaolo which, after the coupon of 0,0357 per share detached on 24 May, anticipated its intention to carry out a cash distribution from reserves of 10 cents per share, with a yield of 5% on 2020 earnings. add, this time on the 2021 profits, a further dividend with a pay-out equal to 70% of the net profit. A portion of this coupon will be distributed by the end of 2021 in the form of a down payment.
We remind you that the rules currently in force recommend that banks distribute dividends up to a maximum of 15% of accumulated profits between 2019 and 2020. A further limit is envisaged: the threshold of 20 basis points of Cet1 capital cannot be exceeded.
The words of Enria and Lagarde immediately sparked the reaction of bank stocks on the Stock Exchange, who are celebrating the return to dividends that they have been hoping for for months. The sub-index Stoxx of the sub-index gains 1,68%, while the Ftse Italia Banche is up by almost one percentage point. On the Ftse Mib, the best is Unicredit, which rose by 1,73% in mid-morning. Purchases also on Intesa Sanpaolo (+0,9%), Banco Bpm (+1,1%) and Bper (+0,3%).
INSURANCE PROFITS IN 2020: LIFE -20%, NON-LIFE +45%
The VAT annual report shows that last year insurance profits Italian companies remained almost stable, with an average RoE of 11,6%, against 12,3% in 2019. However, there are important differences between the two branches of the insurance business.
- In Life, earnings were down 20% and collections about 4%. The decline in premium income was very heavy for class I policies (insurance on the duration of human life, -9,5%), while class III premiums (policies unit linked) grew by 6,2%.
- In Danni, on the other hand, profits rose by 45% thanks to the motor third-party liability sector, in which the decline in charges related to claims (-20%) was much higher than that of premiums (-5,5%). The restrictions on circulation due to the pandemic were decisive, which led to a sharp reduction in accidents (1,4 million among cars, from 2,1 million the year before, and 103 thousand between two wheels, from 142 thousand in 2019).
AUTO TPL: AVERAGE PREMIUMS DOWN IN 2020
Always in the branch Rc car, in 2020 the average premium for cars stopped at 397 euros, 4% less than the previous year, while for motorcycles and mopeds the drop was 5%, to 258 euros.
Last year, “some companies recognized, on a voluntary basis, forms of refreshment for their policyholders – continues Signorini – Not all, and not all in the same way or to the same extent. The differences are marked. Now that the restrictions on mobility have all but lifted, latecomers should urgently re-examine the matter. In the meantime, consumers will be able to inform themselves and evaluate the behavior of the companies”.
SIGNORINI: REFLECT ON NATURAL DISASTER INSURANCE OBLIGATION
Finally, on the environmental front, Signorini hopes that "even in our country there will be a debate on the possibility of introducing, as elsewhere, forms of compulsory, semi-compulsory or more effectively incentivized forms of insurance on risks associated with natural disasters. It is a question of reflecting on the best way in which the community can respond effectively to these risks, minimizing public and private costs ex ante, encouraging responsible behaviour, avoiding as far as possible the so-called moral hazard, increasing the likelihood of efficient use of the funds made available to injured parties, ensuring a sufficient degree of mutuality and solidarity between citizens".
