Remuneration of shareholders
Over the duration of the plan, we’ll increase the remuneration of shareholders significantly, reaching a maximum cumulative total of €2.5 billion over 4 years (2020-2023), roughly 50% higher than the amount distributed in the previous four-year period (2016-2019)
Post-Covid update
Following the ECB recommendations asking banks not to pay dividends, for FY 2019-20 no dividend was paid. However, in the light of the Group’s substantial capital position and the continuing objective of optimizing capital to reach a CET1 ratio of 13.5% by end-June 2023, Mediobanca reiterates its intention to resume shareholder remuneration as soon as possible. For FY 2020-21 a dividend distribution policy will be resumed with a 70% payout ratio, subject to removal of ECB restriction, currently in force until 30 September 2021.
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).
