The roadmap for Bankinter on shareholder remuneration remains unmovable. It maintains its commitment to distribute 50% of the net profit among investors , as soon as possible it hopes to return to it – and the ECB is expected to make public its decision to lift the ban on banking tomorrow – but it will not allocate a single euro of the profits attributed this semester by the departure of Línea Directa to pay its investors.
Before the ‘listing’ the entity already distributed 1,184 million among Bankinter shareholders. Now the capital gains will go to strengthen the bank’s balance sheet.
This has been recognized by the CEO of Bankinter, María Dolores Dancausa, during the presentation of the results of the first half of the year of the entity. The bank has announced a historical net profit of 1,140 million euros, logically distorted by the capital gain generated by the removal of Línea Directa from its balance sheet before the listing on the stock market at the end of April.
Of the 1,140 million presented, 244.5 million correspond to Bankinter’s net profit – the profit contributed by LDA for the four months that did remain on the balance sheet is included – and the remaining 895.7 million correspond to the spin-off of Línea Directa .
But this capital gain “will be used to strengthen the bank’s balance sheet” and “will not be part of the dividend distribution,” Dancausa said this morning, and everything will go to reserves.
What it will contribute to the remuneration is “18% of the capital” that the bank maintains in Línea Directa “which will contribute to the company’s gross margin and will help distribute dividends.” In general terms, the entity remains on the only guidance it has given to date and that is to achieve a profit of 550 million euros without Direct Line in 2023.
It must be borne in mind that the insurer reported 20% approximately of the net profits to the company. If this is achieved, it would mean that Bankinter will earn on its own what it used to do with the insurer.
Before going public, Línea Directa distributed 82.6% of the insurer to its shareholders through the delivery of 1 share of the new company for each share of the bank, and kept the remaining 17.4%. In total, the entity distributed 1,184 million euros of share premium to its investors . Whoever has decided to keep the shares of the insurer since its premiere on April 29 has obtained profits of almost 32%.
The future of the dividend
Bankinter has been clear from the beginning as to what its intention is with regard to shareholder remuneration . This Friday, the European Central Bank (ECB) is expected to forward to the public its decision to lift the restrictions on dividends that currently weigh on the European financial sector, both banks and insurers, and that affected the distribution of installments charged to 2019 and, above all, to 2020.
The entity complied with the requirements of Brussels and agreed to a payment of 45 million euros charged to the result of 2020, which implied the maximum distribution of 15% of the benefits as wanted by the regulator. This implied a 1% return on its payment charged to 2020 of 5 cents per share, but for 2021 the market expects more.
According to analysts’ forecasts collected by Bloomberg , Bankinter could distribute some 210 million euros in dividends charged to 2021 if one takes into account that the estimate is that of a net profit of almost 420 million euros at the end of December .
The consensus of analysts estimates a gross dividend of 0.14 euros in 2021, which will reach 0.16 in 2022 and 0.28 in 2023. This would imply that not even in three years would Bankinter recover pre-Covid remuneration such as that of 2019, which was 0.29 euros. This implies returns of 3.2% this year.