Commerzbank AG, UniCredit SpA and HSBC Holdings PLC are forecast to make the sharpest increases to their dividend payments in the coming years among Europe's biggest banks, S&P Global Market Intelligence data shows.

Commerzbank's dividend is forecast to increase 66.7% from 24 euro cents for full year 2022 to 40 cents for 2023, according to Market Intelligence's Dividend Forecasting unit. The German lender earlier this year said it planned a payout ratio of 30% for 2022 and 50% in succeeding years. It did not pay a dividend for the 2019 or 2020 financial years.

UniCredit is expected to pay out 44 cents for 2022, rising to 65 cents for 2023. CEO Andrea Orcel in December 2021 promised to return at least €16 billion to shareholders through 2024 as part of a strategy overhaul. The Italian bank is also one of the best-capitalized among the sample of Europe's largest lenders.

HSBC is projected to raise its payout from 31 U.S. cents per share for 2022 to 43 cents for 2023, the data shows. The bank is fighting to persuade Hong Kong-based investors that it is sufficiently profitable after its largest shareholder, Ping An Insurance (Group) Co. of China Ltd., called for it to be broken up to create a stand-alone Asia-based bank.

Shareholder returns have been a key point of contention for disgruntled investors. The bank has said it is targeting a payout ratio of about 50% of reported earnings per share for 2023 and 2024.

Belgium's KBC Group NV tops the list of dividend payouts on an absolute basis. Its bank, which also sells insurance products through its branch network, has a dividend policy that includes a target payout ratio of at least 50% plus a discretionary payment of any capital exceeding a 15% fully loaded common equity ratio.

BNP Paribas SA is second on the list for forecast dividend payouts. It grew revenue 8.5% to €12.78 billion during the second quarter. The bank has expanded its lending across Europe and built up its investment banking business during the pandemic.

NatWest Group PLC is one of the few banks projected to pay a lower dividend for 2023 than 2022. However, this cut will come after a substantial dividend rise for 2022, according to Dividend Forecasting, with an expected increase of £2.3 billion over 2021. After a sharp jump in pretax profits, NatWest declared a special dividend of £1.75 billion at its 2022 half-year results alongside a 3.5-pence-per-share interim dividend.

Strong capitalization

Almost all banks in the sample are forecast to maintain or increase their dividend payments in 2023, thanks in part to their strong capitalization.

Portugal's Caixa Geral de Depósitos SA, Denmark's Nykredit A/S and France's Crédit Agricole SA all have common equity Tier 1 ratios far in excess of their regulatory requirements. This ratio compares a bank's highest quality capital with its assets and is indicative of its ability to withstand financial shocks.

Among those with the lowest levels of excess capital are Deutsche Bank AG, Barclays PLC and BNP Paribas, though they remain comfortably above their requirements.