On Friday 24 September, Croatian National Bank ended consultations with the public, and it is expected that it will announce termination of the decision on temporary dividend ban to become effective from 1 October. It is expected that Zagrebačka banka could soon announce call for GA where proposition for dividends will be published.
On Friday 24 September, Croatian National Bank ended consultations with the public, and it is expected that it will announce the termination of the decision on temporary dividend ban to become effective from 1 October. It is expected that Zagrebačka banka could soon announce a call for GA where the proposition for dividends will be published.
As a reminder, on 14 January 2021 decision on the temporary restriction of distributions for all banks became effective to be valid until 31 December 2021. It entailed payment of dividends, the creation of a dividend payment obligation, the repurchase of treasury shares and the allocation of variable receipts. CNB made this decision to increase the resilience of credit institutions and to preserve the stability of the financial system imposed by drop of economy activity resulted from coronavirus pandemics and relating government measures.
Favorable epidemiological situation and introduction of travel documentation within EU has resulted in strong tourist season which strengthened economic recovery evidenced in a surge of revenue of companies operating in related sectors. Coupled with growth in vaccination rate (41.5% of the population fully vaccinated), CNB was prompted to publish short consultation with the public on the abolition of dividend ban decision. It is expected that the decision on scrapping the dividend ban will be announced soon. The start of consultation was announced on 14 September to last for 10 days until 24 September. Since then, more intensified trading with the biggest listed Croatian bank ZABA was evidenced and daily average turnover of the share amounted to HRK 0.43m while share price increased 6.2% to HRK 65.0 per share. Yesterday, a turnover with ZABA share of HRK 1.07m was realized, while at some point the share was traded at HRK 67 per share. This makes an increase of 9.5% compared to the last closing price on the day before the consultation on the abolition of dividend ban was announced (13 Sept 2021).
As a reminder, the two biggest Croatian banks Zagrebačka banka and PBZ together hold more than 47% of Croatian banking assets, which have at the end of June 2021 amounted to HRK 478.8bn (EUR 64bn). ZABA paid last dividend in 2019 from 2018 earning in the amount of HRK 5.79 per share and dividend yield amounted to 9.4%. ZABA didn’t pay out dividend announced in 2020, as it was just before the start of Covid-19 crisis and soon afterward dividend ban was introduced. Taking into consideration that ZABA could pay 70% of its net income for 2019 and 2020 another HRK 2.14bn could be paid as dividend. This would amount to dividend yield of 10.1%. PBZ delisted from the stock exchange on 6 May 2021. The bank also didn’t pay any dividend in 2020 as CNB required all the banks not paid dividend for the year 2019 due to start of pandemics. PBZ paid last dividend in 2019 when its DY has amounted to 10%. It is expected that PBZ could also paid dividend soon after dividend ban is lifted. It is estimated that the dividend amount for these two years could amount up to HRK 2.3bn. HPB didn’t pay any dividend in 2019 as it took over Jadranska bank and it continued to strengthen its position on the market. In 2019 and 2020 it showed strong set of results and its net income has amounted to HRK 147m and HRK 183m, respectively. Even though HPB showed positive results, it might continue to distribute its earnings to equity to further strengthen its balance sheet and improve market position as no dividend policy is made public.