Following the recent ECB recommendations asking banks not to pay dividends until January 2021, for FY 2019-20 a zero dividend will be proposed to shareholders in general meeting to be held in October 2020. In the light of the Bank’s substantial capital position and the continuing objective of optimizing capital to reach a CET1 ratio of 13.5% by end-June 2023, through a best-in-class shareholder remuneration policy and opportunistic acquisitions that will strengthen the Group in its core businesses, the dividend policy approved in the 2019-23 strategic plan is confirmed. Shareholder remuneration will resume starting from FY 2020-21, with the amount and composition (mixture of dividends and buybacks) to be decided annually in the light of the speed of the post-Covid recovery, the Mediobanca stock market performance (P/BV) and ECB authorization.
Shareholder remuneration policy set out in the 2019-23 plan
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).