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Doomster,
surely you are not surprised. You came on board, lavishing your praise on BIRG and, as posted,that was the death knell of BIRG.
you are well aware of your negative correlation with the market.when you are up the market gone in direct opposite direction.
Johnhume said 27/6/23:
"very confident will see €11 by y/e or early new year."
Fair point about growth. The increased profit has come from the gap widening between wholesale and retail money. From what I can see management predicted a decrease in NIM of 5 % which would reduce PBT by about 180mn but the current share buyback and a reduction in bad debt provision would easily cancel out that effect on future dividends and I allowed for a reduction from the 2023 dividend 1.1 euro to 1 euro. It would be a very poor look and surprising if the board recommended any reduction in dividend going forward. What correlation between dividend and share price do you think is appropriate for Birg
My interpretation of future dividends is that management are saying it will 40% of PAT as cash and then flexibility on the surplus up to 60% flexibility that says to me next year 76c (at 40% payout) plus anywhere from 0 to 38c per As the year is €1.1 per share I would be surprised if management go below that number
Observe,
also only fair to post that going from 1.1bn to 1.9bn PBT in 12 months is not exactly standing still. If the 23 figures incorporated the identical 22 bad debt reserve provision the 23 PBT figure just about doubled the 22 figure.
Observe
No doubt but growth is essential for SP to flourish. However a 10% share buy back will definitely make a difference and will compensate to some extent that growth that BIRG may lack. Ryanair prove this.
Should BIRG maintain a div of 60c plus ,and I see no reason why they cannot do so, then this will be in big demand from a dividend pay out alone - at €10 it is a 6% yield and nobody will walk away from this when the alternative is 1.75% with plenty of T & C attached.
UK Banks not setting the world on fire for a long time . Barclays p/e ratio is 6.02, Lloyds is 6.09 and BIRG is 5.49 assuming SP of 8.22.
Trudemill,
an interesting point which may come into play later in the year is that a buy back of 10% of the share issue was approved at last AGM ( 108mill shares approx ) with buy back to be completed by mid december 2024. €520million of this buy back commenced yesterday (453,000) and such a rate of buy back will ensure this is completed in about 135 trading days or sometime in august. Will the balance of the approved buy back continue post 2024H1 results through to mid december which would result in s/holding of c 950million.
As regards future dividends BIRG have confirmed a max payout ratio of 40% which they met this year - PAT =1601million.
You appear to be equating buy back with div. A max pay out ratio of 40% will limit divs to 60/70c for near term future unless profits take off.70c div = PAT of 1.755Bn = 2.2Bn PBT.
The share buy back must affect the SP as there are less shares in issue so sp must rise. 3 kids get more out of same inheritance than 4 !
I agree SP is undervalued on fundamentals . SP was up to €11 in February/march 2023 when annual profits of 1.1Bn announced - now 1.9Bn announced. If AIB results positive on wed should see a bounce. If not ..
Agree that SP will just roll along over the summer after div pay out.
@ Trudemill
Your analysis did not mention the word growth once. Without the purchase of the KBC loan book in 2023, BIRG would have showed negative loan growth of E7.7 billion. With KBC in they showed growth of E300m. They also appear to be exiting the UK market, so no future growth from there. For all intends and purposes they are not permitted to spread their wings into other markets outside of Ireland.
Management point out that the call on PBT in 2024 is down on 2023. That changes all your smart ratios!
If your number on NAV at 0.8 is correct then best look at where European Banking is trading on this ratio. 0.65????
Ex growth is not a good space to be in. You may pass go and collect dividends in the future but you can kiss the SP goodbye.
My opinion is that this little fkir has been undervalued for 10 years at this stage and I don't know why. After that set of results in a normal world the share should have jumped 20 - 33%, instead it slid 10% based on not making expectation of 2 bn PBT and high bad debt charge of 400 mn. Currently on a valuation of 4.6 times PBT or 5.6 earnings or 80% of Net Asset Value. A capital ratio of 14.3% and all factors in its favour economy, monopoly, demographics etc.
When this share buy back is complete that will contribute about 7/8 c per share to next years distribution and assuming a distribution of 1.2 bn in cash dividend we are looking at €1.20 dividend per share. Historically a good dividend yield is 5% but for arguements sake say 8% as ECB interest rates are now 4.5% that should mean in a normal world the share price would be €15 minimum at an 8% yield or upto €24 at a 5% yield. Reducing next years dividend to €1 per share moves these share prices to €12.50 at the low end to €20 at the high end.
The cash element of this years dividend is 60 c puts the range at €7.50 to €12. I believe the share buyback won't affect the shareprice this year. Expected ex dividend date of early May as per last year should see the trading range move to the higher end as we approach early May followed by doldrums until next Jan and then bring out the Boli
Please give me good reasons why the above opinion is wrong and what will derail it. Of course we have all watched the market manipulation of fkir and shouldn't expect anything different. From my perspective the only potential black cloud is if there is a further share buyback in 2025.
Leave is alone John.hume. I feel bullied
In yesterday’s Business Post interview Myles O Grady said as much, ECB rates gone up by 4.5%, but BOI rates only up by 1.75%. Drops in the ECB rates are not going to be mirrored by BOI as they did not follow them up.
GLA
Agree - this return to very low rates is going to be slower than the market has anticipated
Or at todays price -8.30 less 60 cent dividend this year ( and almost certain minimum same next year - as that is guidance for 2024 ) so that’s 7.10 less 6-10% share buyback ! That we will have a company making 2 billion at a PE of about 3-1. !! Insane but true
Following my gut as well and ignoring brokers and their bs.
I was only dreaming of a life without share buybacks and a dividend of €1.10…….
GLA
I would hate to be any amateur who sold yesterday,
Good thing nobody pays any attention to you
Theres a chance this might go up first thing in the morning 8.33euros i would get out if i was you johnhume, it will sink after!!!!!!!!!!!!
Going back to following gut from now on - eventually it will fall just under 6euros thats what i feel. All thesess silly brokers saying 14euros 13 euros 12 euros, i was sucked in when it was 10euros my plan was to dump all over 10euros thank god i did sell alot 9.50euros. my buyback and dividend is holding it up skin on the teeth, but sorry i see it going down johnhume - thurday/friday bloody days
It was confirmed yesterday that 634mill being allocated as div payout in june. As this is a specific amount could it mean that this amount might be payable to say 30 million less shareholders (1.028bn or 61.6c per share. I do not see the SP falling by the full div amount ex div. You probably find the sp appreciates in the run up to the ex div date to reflect the div payment in following few weeks.
On looking at yesterday's rns it mentions approval given to buy back 10% of capital at last year's agm. interesting to see what today's buy back in tomorrow's rns.
Ryanair deliver results in coming weeks and profit expected in 1.85/1.95 Bn - identical to BIRG but valued at close to 21 Billion !
It really doesn't.... Markets are slow to react to what seems obvious to me... this reporting season we are witnessing the return of Euro banks stocks becoming popular solid investment choices (Birg is really yielding 13% when you consider bb and divi )... extra low interest rate periods are gone for the foreseeable and normal interest rates have returned... "IF" the ECB lowers rates this year it will be to around 3.5 by the end of the year Max IMO... This means another bumper year for the Euro Banks next year and the year after that most likely.
We could work it another way-After dividends the SP should go down 60 cent to 7.5 euro ,with a billion shares, a 7.5 bn company making 2bn profit.Doesn't add up.
18 mill savings.
Then Shen,
do you think that BIRG will apply the dividend savings in additional buy back. Last year their buy back averaged about 450,000 daily and with 60 odd trading days to the agm you could be looking at 30mill div savings.
The 60 cent dividend is still built into the current SP so birg will get that as well with the buy back.
The notion that the SP has peaked goes along with the thinking that the Bank is going to sit on their hands and not do anything.
Given Market cap of €8.6B a distribution of €1.15B is some 13.33%……in a year !
GLA