The institute last paid a dividend of eleven cents in 2019 for the 2018 financial year.
(Photo: Reuters)
Frankfurt After a long dry spell, Deutsche Bank wants to distribute capital to its shareholders again. The Frankfurt money house announced on Wednesday that it would buy back its own shares for 300 million euros in the first half of 2022 and pay a dividend of 20 cents per share for 2021.
Overall, this would mean a distribution of around 700 million euros to the shareholders. At the beginning of his major restructuring program, which will cost up to 18,000 jobs, CEO Christian Sewing promised to return five billion euros in capital to shareholders in the summer of 2019. This is now the first step on this path, the bank said. The last time the institute paid a dividend of eleven cents for the 2018 financial year.
In all likelihood, Deutsche Bank will have significantly increased its profits in 2021. Analysts are expecting earnings of 2.1 billion euros for the year as a whole, which should rise to 3.3 billion euros this year.
By the end of 2022, Sewing has promised investors a return on tangible equity of eight percent. However, the analysts still think this is unlikely. On average, the experts predict a return of just 5.5 percent for the end of this year. The group will publish the exact figures for 2021 this Thursday (7 a.m.).
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The planned distribution gave the shares of the money house a boost. The papers rose by a further 0.7 percent in Frankfurt late trading after they had already gained 3.1 percent in regular business.
Despite the turmoil in global equity markets, European bank stocks have held up well year-to-date. The industry index Stoxx 600 Banks has been up almost six percent since the beginning of January, while the broad Stoxx 600 Index has lost around five percent. An important reason for the price gains of the banks is the hope of investors for lucrative dividends.
restraint is abandoned
At the beginning of the corona crisis in 2020, the supervisors urged the banks to hold their capital together and to refrain from share buybacks and dividends. Now that the institutes have survived the pandemic better than feared, they can now give up this reluctance. Citigroup analyst Andrew Coombs estimates that banks could increase their payouts to over 80 billion euros.
However, after its tough restructuring, Deutsche Bank will not be one of the most generous institutions. For comparison: the major Italian bank Unicredit announced in December that it intends to distribute 16 billion euros to its shareholders via buybacks and dividends in the coming years.
For Benjamin gardener, head of equity portfolio management at Union Investment, this is an “important signal for the entire industry”. According to experts, the differences in the distribution policy are an important reason for the below-average development of the Deutsche Bank share compared to the competition. Since the beginning of the year, the price of the largest domestic money house has virtually stagnated.
More: Up to 18 percent upside potential: European bank stocks are back on investors’ buying lists.