Deutsche Bank plans to boost dividend after 3-year drought

Bloomberg

Deutsche Bank AG plans to further increase its dividend after resuming payouts following a huge restructuring that saw it exit equities trading and cut thousands of jobs.
The decision to pay out 700 million euros ($790 million) through buybacks and dividends is an “important first step” in the bank’s commitment to pay out 5 billion euros ($5.60 billion) over coming years, Chief Financial Officer James von Moltke said in a Bloomberg Television interview on Thursday. The lender, which announced fourth quarter earnings that beat estimates, is seeking “to grow the dividend from here,” he said.
Chief Executive Officer Christian Sewing had scrapped payouts in previous years to cover the cost of an ambitious turnaround program he unveiled in 2019, while also promising to resume distributions as the lender returns to profit. Many of the bank’s peers have announced strategic plans that include ramping up payouts, or are expected to do so later this year.
Von Moltke highlighted that share repurchases will remain an avenue to return money to shareholders given “the powerful corporate finance benefits of being able to repurchase shares at relatively low multiples of book values and earnings.” Deutsche Bank’s stock currently trades at a deep discount to its book value, defined as the reported value of its tangible equity.
The decision to suspend the dividend during Sewing’s restructuring followed years of payments that paled in comparison to peers as Deutsche Bank lurched from one giant annual loss to the next. Instead of returning cash to investors, it repeatedly tapped them for fresh money to fund a series of
restructuring plans.
The Frankfurt-based bank plans to repurchase 300 million euros of its own stock by the end of the first half of this year and proposed a dividend of 20 euro cents per share for 2021.
Sewing has stabilised investor confidence and revived the stock, which is one of the best performers among banks in Europe over the past two years. He is now in the final year of his turnaround program and plans to unveil a strategy update in March.
The German lender’s capital returns add to a wave of distributions that banks are planning to make after regulators lifted a cap imposed during Covid-19. Europe’s top banks including BNP Paribas SA and UniCredit SpA plan to hand out record rewards to investors in the coming months, as they seek to support their share prices amid uncertainty over revenue growth and the economic outlook.
Nine of the euro area’s biggest listed lenders are set to pay about $31.35 billion in dividends and share buybacks in the coming months, more than the highs preceding the 2008
financial crisis, according to
calculations by Bloomberg.