Bank dividends, rich coupons to come: dates and yields

The moment long awaited by investors and savers has finally arrived. At midnight on September 30th it officially expired the ban imposed by the ECB on dividends and on bank buybacks. From today, European banking institutions can return to remunerating their members without any restrictions. And the intentions seem to be the best. Indeed, between October and November, a rain of coupons will wet the shareholders of Piazza Affari, with returns that in some cases will be close to double digits. 

BANKS DIVIDENDS: A STEP BACK

It was 27 March 2020 the day on which the European Central Bank, in a move never seen before, asked Eurozone banks not to pay dividends and not to undertake coupon payment commitments for the financial years 2019 and 2020 at least until October of the same year (later became January 2021). The reasons behind the request were there for all to see: the Covid-19 pandemic was raging throughout Europe and lenders were called to do their part, conveying as much liquidity as possible to the real economy. 

Shortly before the start of the 2021 dividend season, the bans turned into constraints: yes to coupons, but very sparingly. The stronger banks they limited themselves to disbursing only 15% of cumulative 2019-2020 earnings, taking care to remain below 20 basis points of Cet1 capital. On 23 July, the long-awaited announcement by the president of the ECB, Christine Lagarde: given the improvement in the epidemiological situation and the consequent economic recovery, from 1 October 2021 banks can return to remunerating shareholders, without constraints or recommendations . 

BANKS DIVIDENDS: THE ESTIMATES

The policy pursued by the ECB over the last year and a half seems to have borne fruit. According to data provided by Banking Supervision, with the halt to dividends, in 2020 banks withheld 28 billion euros in their balance sheets, while in the 2021 dividend season "only" 10 billion of profits were distributed, around a third of the dividends of a normal year. A conduct that has allowed the institutions involved "to increase provisions by 5,5% and loans to the real economy by 2,4%" compared to the banks that have not altered their dividend distribution plans. But now it's back to being serious.

According to calculations by Deutsche Bank's research department cited by Republic, in the coming weeks commercial banks will distribute on average 3,6% of the stock market value of their shares, while the asset management companies will guarantee average returns of 7,2%. In figures, based on estimates by Intermonte for MF-Milano Finanza, for this year the total amount of the coupons will exceed € 6 billion, an amount to which i must be added 652 million buybacks already announced by Unicredit. 

IN THE FIELD THE BIG: INTESA SANPAOLO QUEEN OF COUPONS

Investor eyes are all focused on Intesa San Paolo. The shareholders' meeting of the bank led by Carlo Messina will meet on 14 October to resolve the distribution of an extra coupon of 1,93 billion euros - equal to 9,96 cents per share - on the 2020 results. The dividend will be paid on 18 October with payment on 20 and will be added to the 694 million already distributed last May. But there is more, because last August the Intesa board of directors gave the green light to the disbursement of a cash advance on the 2021 results of 1,4 billion euros, i.e. 0,0721 per share. The coupon detachment, in this case, is scheduled for November 22, with payment to be made two days later. By adding up the payments of May, October and November, Intesa Sanpaolo will arrive at disbursing around 4 billion euro, with a payout of 75% on 2020 and 70% on 2021 and a total return of over 7%.

THE OTHER BANKS 

Attention also to Mediobanca, which has already announced plans to distribute a dividend of 66 cents per share, a figure that equates to a 70% payout and a yield of 6,3%. The dates have already been set: the detachment will be November 22, payment November 24.  

Among the specialized banks, the coupons of Bank Ifis, equal to 1,1 euro per share for a total of 59 million euro, e Bank System, which will pay its shareholders 14 million euros, 17 cents per share. 

MANAGED SAVINGS

Asset management will take the lion's share in this period of cascading dividends for banks. September 29th General Bank announced the payment dates of the two tranches of dividends on 2019 and 2020 profits. It will start on November 24, 2021, the day on which the institute led by Gian Maria Mossa will pay a dividend of 2,7 euros per share. Three months later, on 23 February 2022, Banca Generali will pay a coupon of 60 cents per share. The total thus reaches 3,3 euros per share (355 million euros), with a yield of more than 8%. 

Similar yield for Banca Mediolanum, which on 18 October (payment on 20) will detach a coupon of 0,7533 euro per share after the 0,03 euro dividend already paid in the spring. In total, the institute will disburse 538 million euros to its members. We conclude with Finecobank, which on November 24th will pay its shareholders 53 cents per share, 341 million in total, with a yield of 3,3%. 

Below is one summary table of the most expected dividends.