--> Those who can and those who can’t
Dividend ratios are currently the best predictor of returns for European bank shares. This suggests that forthcoming regulatory changes will be critical to determine which banks can and can’t surprise on dividends. Regulators are
currently considering changes to how RWAs are calculated and to purify CET1 definitions. Whilst in general higher yielding shares (eg, DNB, UBS, Lloyds) should be able to absorb these changes, we highlight Credit Agricole, BNP and SocGen as challenged, at the very least in terms of payout ratios increasing.