Large European banks are rewarding their investors with record-breaking shareholder returns based on their 2024 financial results. According to a report by the Financial Times, €123 billion will be distributed through dividends and share buybacks, surpassing pre-financial crisis levels.
UBS predicts that the largest publicly traded European and UK banks will pay €74.4 billion in dividends and carry out €49 billion in share buybacks in the coming weeks.
- Top contributors include:
- HSBC: €19.3 billion
- BNP Paribas: €11.6 billion
- Unicredit: €8.8 billion
This payout exceeds the already impressive 2023 returns, when banks distributed €123 billion, comprising €74.3 billion in dividends and €48.9 billion in buybacks, the highest levels since 2007.
The surge in payouts reflects the banks' recovery from the constraints imposed during the pandemic:
- In 2020, the European Central Bank (ECB) urged banks to refrain from distributing profits to bolster their capital reserves amid concerns over potential credit losses during the COVID-19 crisis.
- With the pandemic's economic impact subsiding, banks are now compensating shareholders for dividends deferred during that period.
The rebound in profitability is largely attributed to rising interest rates since 2022. Central banks across Europe have raised lending rates significantly, enabling banks to generate higher margins on loans compared to the interest they pay on deposits..
For now, the record distributions signal a renewed confidence in the financial health of European banks, buoyed by favorable market conditions and stronger post-pandemic performance.
