Big Banks Q4/21 Outlook By TDWe expect all five banks to raise dividends this quarter. Following OSFI's November 4 announcement removing all pandemic-imposed restrictions on dividend increases and share buybacks (report), we expect all five banks to announce dividend increases concurrent with their Q4/21 earnings release. The forecasted dividend increases range from NA and BMO at 27% and 18%, respectively, to 4% for BNS. Our estimates contemplate all the banks, except BNS, returning to a 40%-45% payout ratio, with BNS reaching 47%-48% reflecting the more material hit on earnings from the pandemic. Our forecasted buyback activity envisions the industry CET 1 ratio never falling below 13%. We take a conservative approach here because OSFI announced that the DSB was increased to 250bps (its maximum level) effective October 31, bringing the minimum required CET 1 ratio for the Big Canadian Banks to 10.5%. Reflecting their stronger CET 1 ratios, we expect RY and BMO to lead the group in terms of share repurchases.
Royal Bank (RY) BUY 155.00
project 13% Div. increase = $1.22 x 4 =$4.88