BBVA reaffirms to shareholders its goal of buying back 10% of its shares and increasing the dividend payout to 40%

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BBVA in its letter to shareholders has reaffirmed its objective to buy back 10% of the bank’s shares after the sale of its US subsidiary. In addition, the bank’s chairman Carlos Torres in this letter reaffirmed his commitment to an increase in the dividend to 350% by 2021 following the sale of its U.S. subsidiary. payout the dividend to 350% by 2021 following the limitations imposed by the ECB in 2020 due to the pandemic.

In the presentation of 2020 results, the bank already made the first nod to the bank’s shareholders who have seen how this year the dividend has been cut by the restrictions imposed by the regulator.

Negative interest rates, the end of the moratoriums, and the new wave of mergers mark the future of banks in 2021.

The sale of the U.S. subsidiary will generate excess capital of 8.5 billion euros once the transaction is closed, which is scheduled for early summer. In the letter to shareholders, the banker states that the main objective is to “advance our firm commitment to shareholder value creation,” according toCinco Días.

Increasing shareholder remuneration.

“With respect to the 2021 financial year, we expect to resume our dividend policy of 350% pay-out,” Torres points out in a missive addressed to the more than 870,000 shareholders of the bank’s securities.

Despite the bank’s willingness to increase the dividend, the fact is that the European Central Bank (ECB) has the final word, which for the moment limits the percentage of the dividend to 15% of the profit. pay-out to 15% of the profit. In this regard, in the presentation of results the bank already announced that in 2020 the payment of the maximum dividend allowed by the regulator: 0.059 euros per share.

The sale of the United States, Torres explains, puts them in a position of strength “unrivaled in the sector” and provides us with a “broad strategic optionality”. The president of the entity describes the sale as a “historic” transaction at very attractive multiples because the U.S. subsidiary is valued at almost 20 times earnings in 2019.

Thus, the capital ratio stands at 14.6%. An indicator that is “well above our capital target of 11.5% to 12%, and positions us as one of the European banks with the largest gap between the capital ratio and the regulatory minimum.”

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