Bankia to pay back 2.5 bn euros to shareholders over next 3 years
Madrid: Spain’s state-owned lender Bankia plans to return 2.5 billion euros (2.2 billion pounds) of excess capital to shareholders over the next three years as part of its new strategic plan, it said on Tuesday.
Bankia, given a 22.4 billion bailout in 2012 after losses on property loans at the height of Spain’s financial crisis, said it aimed for a profit of 1.3 billion euros in 2020.
As part of its 2018-2020 strategic plan, Bankia is shifting away from mortgage lending and increasing volume growth by segments, such as consumer lending, property development and corporate activities, after the EU lifted some restrictions.
On Tuesday, Spain’s fourth largest bank said it would raise its dividend pay-out ratio to between 45-50 percent in 2018-2020 from a current 41.7 percent, leading to a dividend-per-share of 0.43 euros in 2020 versus 0.26 euros in 2017.
Further cash returns would take the total payout to 2.5 billion euros.
Bankia said it would finish 2020 with a core-tier 1 fully loaded capital ratio, the strictest term of solvency, of above 12 percent. All capital above this threshold would be paid back to shareholders.
The lender finished 2017 with a CET-1 of ratio 12.33 percent.
In an effort to boost earnings, Bankia agreed in June to acquire smaller lender BMN to create Spain’s fourth largest. It said last month that it had swung into the red in the fourth quarter of 2017, blaming one-off costs.
Bankia expected it was aiming to increase its return-on-equity to an adjusted 10.8 percent in 2020 from 6.6 percent at end-2017, underpinned by higher interest rates and higher banking fees and commissions.
Spanish banks have been struggling to lift earnings from loans as interest rates hover at historic lows and increasing competition erodes margins.
To offset pressure on financial margins, Bankia said it would also maintain its focus on cutting cost and was aiming for a cost-to-income ratio of below 47 percent from 51.6 percent.
Bankia also said the BMN transaction was expected to generate gross cost synergies of 190 million euros in 2020, above the initial 155 million euros.
Spain’s bailout fund FROB holds around 61 percent of Bankia.