(News Bulletin 247) – The Italian bank intends to return more than 10 billion euros per year over the next three years.

The return to shareholders can constitute one of the attractions of the banking sector in Europe. In any case, the Italian Unicredit is taking care of its profile on this point.

The general director of the transalpine bank, Andrea Orcel, declared on Saturday, in an interview with Milano Finanza, that his bank would be able to return to its shareholders the equivalent of more than half of its market capitalization (which amounts to more than 60 billion euros) over the next three years.

In other words, Unicredit will return to its shareholders, either in the form of dividends or in the form of share buybacks, more than 30 billion euros over three years, or 10 billion euros per year.

Already for the 2023 financial year, Unicredit had indicated that it would distribute 8.6 billion euros to its holders. The group had also indicated that it would return around 10 billion euros in cash over the calendar year 2024 alone. And its distribution policy is impressive, since the company intends to return more than 90% of its net profit to its shareholders. . UBS estimates that this rate could exceed 135% over the financial years 2025 and 2026, with the group being able to return excess cash of around 6 billion euros in its balance sheet to its shareholders.

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A jump in action in three years

It’s difficult to find many European groups that return more cash to their shareholders. This is the case in Paris with Totalenergies. For 2023, the oil major distributed $16.5 billion, or 15.3 billion euros, in the form of dividends ($7.5 billion) and share buybacks ($9 billion).

But, for example, the car manufacturer Stellantis is far from the mark with 6.6 billion euros in 2023 and 7.7 billion euros planned for 2024.

This is also the case for French banks in the CAC 40. BNP Paribas plans to report, in 2024, 4.60 euros per share for the 2023 financial year, to which must be added a share buyback program of 1. 05 billion euros. Knowing that 1.13 billion shares were in circulation as of May 6, this results in a total of approximately 6.25 billion euros, according to our calculations. BNP’s distribution rate, moreover, amounts to approximately 60% of its distributable net income.

Last year, BNP Paribas repurchased five billion euros of shares and paid a dividend of 3.90 euros, a distribution which corresponds, according to our calculations (and on the basis of 1.234 billion shares in circulation to end of December 2022) to a total of 9.8 billion euros.

Let us recall, however, that this amount was “inflated” by 4 billion euros of share buybacks linked to the sale of the American establishment Bank of The West, the sale of which had brought in 16.3 billion dollars and freed 11, 6 billion euros of equity.

The other two French banks are further behind in terms of shareholder return. Crédit Agricole SA is proposing a dividend of 1.05 euros per share for 2023, or a total of 3.2 billion euros (based on total capital of 3.025 billion shares). As for Société Générale, the bank had announced to distribute, for 2023, 1.25 euros per share, or around 1 billion euros (the bank had itself calculated this amount), with a dividend of 90 cents per share and share buybacks equivalent to 35 cents.

Beyond the distribution to shareholders, UniCredit has had an impressive stock market performance. The stock has gained 46% since the start of the year, 91% over one year and more than 330% over three years. The “stock is one of the most popular in the sector, but the (stock market) story continues to surpass expectations,” Azzurra Guelfi, an analyst at Citi, explained to Bloomberg. In the first quarter of 2024, Unicredit’s profit exceeded expectations by 20%, according to Jefferies.