Banco Sabadell exhibits the capacity to generate capital in the midst of BBVA’s takeover bid and potentially improve the dividend. It closed September with 13.8% CET1, after collecting 32 basis points in three months. Their goal is 13% and that implies an excess of 638 million.
At the end of September the entity reached a record of 13.80% in the so-called CET1 fully loaded, the most demanding ratio in the industry to measure solvency, after having accumulated 32 basis points in just three months, the largest piggy bank among the listed banks accumulated in the period and only equaled by Unicaja, which has also taken its reference to maximums of 15.4%.
In the rest of the listed companies, the increase in the parameter varies between Santander, which repeats the 12.46% of June, also in records, and the 0.12% achieved by Bankinter. The CEO of Sabadell, César González-Bueno, defended in the recent presentation of results that the ability to generate capital is an endorsement of the entity’s ability to create value for shareholders “on a recurring basis” and of the “solo project of Banco Sabadell”. In that presentation, the increase in the ratio between September 2023 and September 2024 was estimated at 59 basis points.
Advance from 2021
The entity has improved the ratio consistently since 2021, but it is highlighted at the current time in the face of the takeover bid launched by BBVA where both entities have struggled to explain the potential for growth in business, accounts and profitability and are playing the card of the macrodividends to persuade the investor of their position. Sabadell revealed, with the offer launched, that its strategic plan committed 2,400 million to remunerate the shareholder, via dividends and share buybacks. In June he raised the bet to 2.9 billion and, although the figure has not been raised again because any payment must be approved by the board of directors, González-Bueno paved the way in that direction by ensuring that said figure is a “floor” in the last presentation of results.
The entity has increased the percentage of profit to be distributed in dividends or pay out to 60% by having to freeze the repurchase of shares that it had in progress due to the takeover bid, but its commitment is to distribute the excess capital above 13% -80 points at the end of September. If the threshold were 12% like BBVA or CaixaBank has. The excess over the 13% that has been set as the target threshold for operating is around 638 million euros and would reach 1,437 million in relation to 12%.
The best record is maintained by Unicaja, with a CET1 of 15.4% and the same gain of 32 basis points in the third quarter. In the ranking of the ratio, it is followed by BBVA, with 12.84% – adding 0.09 percentage points in three months – and in October it paid almost 1,700 million in its largest dividend in history. The entity has also had to put share buybacks on standby due to the takeover bid.
Bankinter, the only listed bank that has discarded this investor remuneration formula, took the CET1 to 12.56% after adding 0.12 points in the third quarter. Its policy has remained stable in delivering 50% of the profit as pay out. In Santander the ratio does not change from 12.46% in June and with its strategy of also distributing 50% it will commit more than 6,000 million this year – in equal parts between dividend and repurchase of securities.
This year, CaixaBank raised its remuneration commitment from 9,000 to 12,000 million in its 2021-2024 strategic plan. Its CET1 increased by 0.02 points in the third quarter, up to 12.24%, and its commitment is to distribute the excess above 12%.
The CNMC values taking more time to decide
One of the key points of BBVA’s takeover bid for Sabadell is the opinion of the National Markets and Competition Commission (CNMC). The body must decide whether to approve the transaction in the so-called Phase I or carry out a more in-depth examination, even giving a hearing to third parties, in Phase II. BBVA has conveyed commitments trying to make the resolution quick, but the body could take even more time to decide, according to Bloomberg. His decision could come on the 13th, although the date is not firm.
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