Banks, Arcelor and Repsol erase 9% of their shares from the market since the pandemic

The two largest banks in the country, Banco Santander and BBVA, will foreseeably allocate more than 16,840 million euros to remunerate their shareholders from the results of 2022 and 2023, the two years where the rise in interest rates in the Eurozone has had impact. Of this amount, 41%, close to 7,000 million euros, will be made via share repurchases and it is not an occasional decision.. Only the amount of the foreseeable buyback that the entity chaired by Ana Botín will undertake, of around 2,600 million euros divided into two tranches (one per semester), will be higher than the money that BBVA, CaixaBank and Sabadell will jointly allocate to acquire part of the capital. and that will amount to 1,704 million thanks, above all, to the firm chaired by Carlos Torres, which took the lead in the dividend two years ago.

Along with the banking sector, ArcelorMittal and Repsol stand out, which have championed share buybacks in recent years for the same reason: a maximum profit thanks to the rebound in raw materials after the outbreak of the pandemic.. The steel company owned by the Indian Mittal family has acquired 31% of its shares after chaining one buyback program after another since September 2020. In total, Arcelor has withdrawn some 385 million securities from the market in this period and plans to acquire another 85 million until 2025 in the latest program approved by the company, which represents 10% of its capital.. This implies that in five years the steel company will have managed to reduce the number of shares in circulation by over 40%, which gives an annualized return for the shareholder of 6.6% to which the dividend would have to be added.. It was difficult for him to resume it, but after three years of cancellation, the largest steel group in the world recovered its annual payment in 2018. Since then it has grown exponentially and the last payment in May (0.42 euros gross per share) yielded 1.8%. To the buybacks and the cash dividend we should also add the evolution in the market. Since January 1, 2021, its shares have risen 25%, despite the correction they suffer this year, close to 6%.

Repsol preferred to err on the side of caution rather than boldness when presenting its strategic plan for 2025. The shareholder remuneration objective, of the order of 50 million shares per year, up to a total of 200 million at the end of the four years, has already been exceeded, as has the cash payment itself.. If the capital data for January 2021 is taken as a reference, the oil company is the second company in the market that has reduced the number of securities in circulation the most, exceeding 18.5% since then and what is to come. Repsol announced at the end of July its intention to redeem another 60 million shares until mid-December, of the 50 million will be acquired on the market and the remaining 10 will come from its treasury stock, currently 2.11%, which reaches a market valuation of more than 400 million euros.

These 60 million shares that will be redeemed represent 4.7% of the total, meaning that by the end of 2023 the company chaired by Antonio Brufau will have reduced the volume of securities in the hands of shareholders by more than 20%.. To this we must add the dividend that it has distributed during this year, of 0.7 euros gross per share, and it has already approved the payment that will occur in January 2024 of 0.375 euros, so it is foreseeable that the payment with This year's profit charge reaches 75 cents, with a profitability of 4.8% without taking into account the revaluation of its shares, which in the last twelve months alone exceeds 32%.

BANKS

BBVA occupies the third position among those who have reduced the number of shares in circulation the most. The entity carried out the largest share repurchase program by volume, of 3,160 million euros, and duration of the entire European bank between 2021 and 2022, since it did it in record time, in less than a year. With this starting point, the entity led by Onur Genç has redeemed 11% of all its securities in the post-pandemic period, until it is left with a total of 5,965 million shares after two other buyback programs worth 1,000 and 422 million euros and a fourth that is to be announced throughout the last quarter of the year with the amount already closed of another 1,000 million euros. This makes a total of 4,682 million euros allocated by BBVA to the purchase of its own shares in recent years, the equivalent of 10.5% of its market capitalization. If we add what it has distributed in dividends charged to 2022 and what is planned for 2023, BBVA's shareholder remuneration rises to 7.8 billion between buybacks and cash dividends.

BBVA announced last week the distribution of an interim dividend of 0.16 gross euros per share on October 11. If the same amount of the complementary payment of 0.31 euros is maintained (as has been the case), this would imply an annual dividend of 47 cents, with a profitability that exceeds 6%, plus another 2.2% of the amortization of future buyback shares. In addition to an increase of more than 50% in the dividend in just two years.

Banco Santander has made share buybacks its new shareholder remuneration philosophy.. Of the 50% of the profit that it distributes among its investors, half is done through two annual programs for the purchase and subsequent amortization of securities.. The entity has announced that it will repurchase shares worth 1,310 million euros and will allocate the same amount to pay a dividend of 0.081 gross euros per share on November 2, as usual, and will do so with a charge to a profit that historic expectation thanks to the impact that the rate hike has had on the banks' interest margin.

Since 2021, the entity chaired by Ana Botín has redeemed almost 7% of its total shares, until it is left with 16,184 million in the absence of the two buybacks that are to come this year and that can amount to over 2,620 million of euros if the shareholder remuneration announced for the first half of 2023 is doubled. Only considering the buyback already announced, which started this September, the bank will amortize 2.2% of its capital in the coming months. The expected dividend yield for this year is 4.4%.

The third entity on the list is CaixaBank, which in recent years has reduced the number of shares in circulation by almost 7%.. The bank led by Gonzalo Gortázar completed the repurchase of securities worth 1.8 billion euros in December 2022, within a first program, and is now carrying out a second, more modest buyback, which will amount to a maximum of 500 million and of which it has already executed almost 12%. This means that the Catalan entity will redeem another 1.7% of its shares at the end of the program, which will have an impact on the shareholder.. In any case, CaixaBank has the highest dividend in the sector, thanks to the distribution of 50% of the profit among its shareholders. The expected profitability is 8.4% for the only annual one that it carries out and that it expects for next spring.

Banco Sabadell, for its part, has launched what is its first share repurchase program by which it will amortize at its end the equivalent of 3.3% of its capitalization, hence its treasury stock has reached maximums above 3% in The last weeks. It will be obtained with a maximum of 204 million euros in own securities, of which it has already executed more than 75%. Added to this is the payment in cash, with a payout that has increased year after year since the pandemic from the initial 30% to today reaching 50%. The market estimates a return for the shareholder on their cash payments of more than 5.5%. The first disbursement will occur at the end of December, if tradition is followed, and should be higher than 0.04 euros gross in 2022, based on the increase in its net profit to 564 million euros in the first half, a 43% more.