At the end of last week, BRD announced the Board of Directors’ decision to reduce the dividend proposal from the initial RON 1.4070 DPS to the now RON 1.17250 DPS, marking a 16.7% reduction, and a DY of 5.7% (previously: 7.1%). In this quick overview, we’ll look at what happened.

At the end of the last week, BRD published a supplement for the GSM agenda. In this supplement, it was stated that the majority shareholders of BRD, Société Générale at 60.17% of the total, have requested from the Board of Directors of the Group to add another point to the agenda. This point refers to the reduction in the dividend amount, from the initially proposed RON 980.5m (accounting for 60% of the 2023 net profit), and on a gross dividend per share basis, a dividend of RON 1.4070, to the revised dividend of RON 817.1m, which accounts for 50% of the 2023 net profit, or on a gross dividend per share basis, a dividend of RON 1.17250.

This would also mean that the DY (calculated at the initial proposal, and calculated based on the last closing price before the revised proposal) fell from 7.1% to 5.7%. Furthermore, the new dividend amount represents a decrease of 16.7% compared to the initial proposal. The ex-date and payment date remain the same, i.e. 16 May 2024 and 6 June 2024, respectively.

BRD dividends per share (RON) and dividend yields (%) (2016 – 2024)

Source: BRD Group, InterCapital Research

While no details are provided as to why this has happened, according to analysts and media speculation, there are two main reasons: Firstly, the fact that the forthcoming Basel IV regulations are set to take effect in 2025, which would require higher levels of capital than initially expected. Secondly, there has been unaddressed media speculation regarding the strategic shifts at the Societe Generale level, also potentially including the divestment of the Romanian operations. Furthermore, due to the lack of a response from the Group to these rumors, combined with this reduced dividend proposal, this could hint at a strategy of moderating the market valuation of BRD RO, in order to smoothen the progress of a potential transaction. However, we would like to note that until official announcements come from the Group, take these rumors with a grain of salt.