Banco Santander will distribute the most succulent dividend of all the Ibex 35 banks next year, although for this we will have to wait – still unknown – until October, once the European Central Bank (ECB) has raised, as well it is expected, the limitations on the distribution of dividends to the sector.
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The profitability of its payments will reach 3.9%, based on the 0.10 euros that the entity approved at the shareholders’ meeting as a payment charged to 2020 and payable in 2021. Bloomberg analysts expect the first payment of 7 cents next May.
Check here the calendar of the next dividends of the Spanish stock market. What is known with certainty is that European banks will have to send their dividend proposal charged against the results – not very promising – of 2020 to the ECB before January 15 for approval. Five days ago the body chaired by Christine Lagarde decided to lift the veto for the sector that weighed on shareholder remuneration but with conditions that end, in any case, in which it is Frankfurt who ultimately authorizes the dividend.
What are these new limitations? The ECB allows them to distribute, roughly, 15% of their accumulated profit between 2019 and 2020 -who would not have paid from last year- or only on this year’s profits -who would have done so-. Another option that she raises is to limit it to 0.2% of the common equity CET1 of each entity and, in fact, sources in the sector believe that this metric will be prioritized in the face of “excess capital” that the pandemic has generated. And this is the perch that Banco Santander could use to give back, taking into account that the market foresees losses of more than 8,000 million this year, mainly due to extraordinary provisions due to the pandemic.
In any case, if the entity adjusts its dividend to a maximum of 20 basis points over CET1, this, with data from the end of the third quarter, implies that it will have a little more than 1,300 million euros available to distribute among its shareholders, which It would mean 7 cents per share, which yield 2.7%.
The other way is to wait until October – as the rest of the entities can do – to distribute its dividend, which, by the way, has already been approved at the shareholders‘ meeting. The entity committed to pay 10 cents in cash with a charge to reserves in 2021, which increases its return to 3.9%. Santander has been the only entity that has avoided the instructions of the ECB this year, with the distribution of the equivalent of 0.1 euros per share among its shareholders through a paid-up capital increase that closed in December.
For their part, Unicaja and Liberbank have the most profitable payment expected to be distributed in 2021. The reason? Basically, they are the only two entities that kept the dividend charged to 2019, and, therefore, the ECB will allow them to pay 15% of the sum of the profit for the two years. The estimate points to a payment – separately, since the merger has not yet been announced – of 2 cents for Unicaja and 0.009 euros in the case of Liberbank.