Spanish banks will increase dividend payments by 25% in 2022

Spanish banking was one of the first sectors to recover one of the characteristic customs of the Ibex 35 companies: the distribution of dividends. Looking ahead to 2022, the sector will register an increase 25%.

With the lifting by the European Central Bank of the recommendation not to distribute profits among shareholders – a measure that in practice was more of an imposition to prevent the banks’ capital from remaining too exposed to an unfavorable conjuncture during the pandemic? Spanish banks announced the first remunerations to their shareholders and will also be among those that will increase the distribution of profits the most by 2022.

The five entities within the Ibex 35 will register a 25% average increase ?? 40% if we take into account the distorting effect of Banco Santander that we will see next ?? Regarding the amount that is estimated to be distributed in the year that is about to end. Thus, although there are wide differences between the entities within the Spanish selective ?? Bankinter is the one that will least extend the payment to its shareholders in 2022, according to FactSet ?? Banks will offer the largest dividend increases, discounting those companies that did not announce distributions in 2021, but will resume this policy next year, as could be the case with Aena or Amadeus.

In fact, this average would skyrocket even more if Unicaja is taken into account ?? it would be 58.4% ??, which will go from distributing 0.2 euros per share to the 5 cents that are estimated for next year.

Sabadell would lead the increases, going from a remuneration of 0.017 euros to 0.024 per share next year and with a dividend yield of 4.2%, the lowest among its peers. In an interview by the Economist to the financial director of the entity, Leopoldo Alvear, remarked that They have proposed to distribute 30% of the profit of 2021 although the payment would not be made until the year is closed.

The best dividend yield

Compared to the 14 cents indicated by analysts as the gross dividend for Banco Santander this year, a payment per share of 0.19 is expected for the next. This would leave the entity directed by Ana Patricia Botín with a increase greater than 38%, while it would offer the best profitability of Spanish banks in 2022: 7.3%. The consensus of analysts is more optimistic about its dividend forecast for 2021, with the aforementioned 14 cents, than the calculation that results from multiplying by two the remuneration that Santander has already paid to its shareholders this autumn ?? 0.485 euros in cash and the equivalent through the repurchase of shares, of 841 million euros.

In total, it would represent a cash dividend of 9 cents between the payment in November and the one planned in the spring of next year. To this should be added the share buyback, for an approximate amount of 1,700 million euros, which would be equivalent to a distribution of 18 cents per title.

BBVA offers the median of the banks within the Spanish selective. With a fork of between 35 and 40% of payout, the entity announced on September 30 that it would make two payments to its shareholders to resume its dividend policy after the coronavirus drought. Thus, in October it executed a payment of 0.08 euros per share and they committed to another in April next year, plus a share buyback for 10% of the capital ?? 3,500 million euros, in total ??. Estimates point to a payment of 31 cents for next year and a profitability of 6%.

After the absorption of Bankia

The Chairman of CaixaBank, José Ignacio Goirigolzarri, promised in the end of the year speech for his shareholders to resume cash payment 50% of Caixabank’s consolidated net profit “adjusted for extraordinary impacts after the merger” in reference to the absorption of Bankia.

Thus, analysts would place the dividend yield for this year at 6.03%, the largest among its peers, and they raise it to 7% for the next ??? the second best behind the percentage of Santander ??. With the latest profit estimates for Caixabank, a dividend of around 14 cents is predicted for this year and two more for the next.

Bankinter would be the one that will least increase the payment to its investors for next year ?? 7.6% more than what it will pay in total this year, according to the experts ??. It was the first entity to confirm that it would resume its dividend distribution routine and has already paid the first dividend of 0.13 euros gross per share corresponding to the results of the first half of 2021 and after raising its payout 50% given the good data in terms of capital and solvency, according to the entity. They would still have to make new payments, the total distribution of Bankinter’s profits in 2021 would amount to 22 cents.

A ‘payout’ of 50%

The consensus of the analysts collected in FactSet predicts a dividend distribution in 2021 that would touch two cents per share, 134% more for next year ?? up to five cents ?? and where it would offer a dividend yield of 6.5%. The entity is still assimilating the absorption of Liberbank. Thus, from Unicaja they have estimated in their strategic plan until 2024 that they will generate 1,500 million euros and that they will allocate to the shareholder at least 50% of the profits obtained. They also aim to achieve a return on tangible equity of more than 8%.