Following the ECB recommendations asking banks not to pay dividends, for FY 2019-20 no dividend was paid. For FY 2020-21, In view of the recent regulatory provisions, the Board of Directors will submit the following proposals to shareholders at the Annual General Meeting to be held in October 2021, subject to authorization from the ECB:
- Dividend per share of €0.66, in line with a payout ratio of 70% as stated at the start of the financial year;
- Cancellation of up to 22.6 million treasury shares owned (already deducted from CET1);
- New buyback scheme (up to 3% of the share capital) aimed at performance share schemes, acquisitions and including the possibility of cancellation.
For FY 2021-22 a cash dividend payout of 70% is confirmed.
The increase in distribution will derive from the group’s significant ability to generate profits and the change in capital management strategy. Unlike the past, a target CET1 phase-in of 13.5% per annum (12.5% fully loaded) has been identified and specified over the duration of the plan, adjusted to:
- maintain the ratings among the best in the domestic setting;
- consolidate Mediobanca among the European banks with the highest capitalisation levels, a key factor particularly in carrying out Corporate & Investment Banking and Wealth Management activities.
As a result of the organic growth and acquisitions made, the group will distribute capital exceeding the 13.5% CET1 phase-in each year, through a remuneration policy that will associate dividend payments with treasury share buyback and cancellation transactions. More specifically, based on prior annual authorisation by the ECB and the shareholders’ meeting:
- the dividend per share in 2020 is expected to be €0.52, up by 10% compared to €0.47 paid in 2019. Subsequently, annual growth will be 5%, reaching €0.60 in 2023. Total dividends distributed in the 2020-2023 four-year period will come to €1.9 billion;
- a new treasury share buyback and cancellation programme is implemented for a minimum amount of €0.3 billion and maximum of €0.6 billion accumulated over the duration of the plan, starting from October 2020 with annual valuation based on the trend in capital ratios (corresponding to an annual maximum of 2% of capital).
The distribution policy will be reviewed if the CET1 phase-in is below 13.0% (management buffer of 50 basis points to ensure management flexibility).