BCP to give more money to shareholders to ward off rival attacks

Miguel Maya has already signaled that he wants to give shareholders more money. The new strategic plan includes a payout increase and a share buyback program. The measures aim to "protect” the bank from rivals.

BCP 0.38% is expected to announce this Wednesday an ambitious cash distribution plan for shareholders, in an effort to attract investors and compensate for the potential departure of Fosun and Sonangol, thus "protecting” itself from potential attacks by rivals, according to analysts.

The bank led by Miguel Maya will post profits of around 700 million euros for the first nine months of the year, according to the Reuters pool of analysts. But investors will focus their attention on the strategic plan for 2025-2028, which is set to be released after the stock market closes, and which is expected to include a significant increase in dividends and a share buyback program.

The analysts at Keefe, Bruyette & Woods anticipate a presentation with "few slides”, but with "high level” objectives, including a payout ratio (% of profits to dividends) of 65% - up from the 30% provided for in the current plan - and also share buybacks amounting to 200 million euros, according to the note to which ECO had access.

For João Queiroz, head of trading at Banco Carregosa, the reinforcement of shareholder remuneration (through the dividend and the buyback program) can be interpreted as "a twofold strategy” by the bank.

On the one hand, to "attract a broader and more diversified investor base, compensating for the possible departure of reference shareholders such as Fosun and Sonangol”;

On the other hand, "it can also be a preventive argument to protect the bank from potential offers from competitors, making it more attractive and solid in the eyes of investors, reinforcing the trajectory of sustainable capital appreciation and strengthening market confidence”.

João Queiroz's statements are in line with what Miguel Maya himself said recently. "If we can manage and have the conditions to remunerate shareholders adequately, it's the only way to protect and maintain the hub. (...) When it's fragile, it's much more likely that someone will look here,” said the manager three months ago.

"If we can do it and if we can afford to remunerate the shareholders adequately, it's the only way we can protect and maintain the hub. (...) When it's fragile, it's much more likely that someone will look here.” - Miguel Maya (CEO of BCP)

Buy or be bought

Although the movements surrounding Fosun (which has already reduced its stake from 30% to 20%) and Sonangol (which has an ongoing plan to sell non-strategic holdings) open the door to a new buyer, BCP is not condemned to be a passive party in an M&A market that is boiling in Europe and which will have important developments in Portugal next year, with the launch of the Novobanco sale process.

The bank owned by the American fund Lone Star is working towards a stock market listing in the first half of 2025, but a direct sale to a bank or a merger with BCP is not ruled out, as has been speculated in recent years with regard to consolidation in the Portuguese market.

"The departure of BCP's main shareholders could open up space for new investors or strategic moves, such as a merger or acquisition,” says João Queiroz.

"However, the bank, having consolidated its position in Portugal and Poland, could also explore the opportunity of acquiring a domestic competitor, such as Novobanco , to increase its market share and obtain synergies of scale. This depends on how the market evolves and the regulatory framework,” says the expert.

Regarding the possible departure of the Chinese and Angolans, Miguel Maya has played down the issue with the argument that the bank is in the process of "normalizing” its shareholder structure, moving to a more dispersed base and in line with the main European banks.

Poland to pay dividends in 2027

In addition to shareholder remuneration, the strategic plan should bring news regarding the bank in Poland. Bank Millennium, 50.1% controlled by BCP, revealed at the beginning of the week that it wants to start paying dividends again from 2027, given the growth of the business. On the table is a payout of between 35% and 50%.

The Polish bank has suffered several setbacks in recent years, above all with the issue of mortgage loans in Swiss francs, which led to impairments of 1.7 billion euros, and also with other regulatory issues, such as the credit moratorium.

These problems are now behind us. The bank recorded profits of 127 million euros in the first nine months of the year, it announced on Tuesday. Keefe, Bruyette & Woods believes that Bank Millennium is well positioned to generate results of more than 450 million euros on a recurring basis.

"BCP could explore a partial or total sale of this operation,” admits João Queiroz. "Although unlikely, such a scenario would allow it to free up capital, reduce exposure to riskier markets and focus on its core businesses,” he explains.

Good momentum on the stock exchange

The bank's good performance is reflected in the stock market: the shares are at eight-year highs and are practically above the bank's book value, with the price-to-book at 0.97, reflecting investor confidence in the future.

Since the beginning of the year, BCP has risen 54% (after rising 80% in 2023) and has a market capitalization of 6.4 billion euros.