viewRoyal Bank of Scotland

RBS set to return £11bn to shareholders over the next three years

The German investment bank expects RBS to pay-out almost £7bn in dividends between now and 2021, plus a further £4.5bn via a share buyback programme

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RBS has returned £1.5bn to shareholders since it reinstated its dividend last year

Analysts at Deutsche Bank think Royal Bank of Scotland Group PLC (LON:RBS) could return £11bn to shareholders over the next three years.

That is on top of the £1.3bn pay-out it announced in last week’s fourth-quarter and full-year results.

“Over 2019 to 2021 we expect £11bn of capital distribution (£3.8bn via ordinary dividends, £2.8bn via special dividends, £4.5bn via directed buyback), which represents c.36% of the market capitalization (40% if including the 4Q dividend yet to be paid),” read a note to clients on Tuesday.

READ: RBS unveils £1.3bn dividend pay-out

The recent dividend announcement went down a treat with investors, including the UK Treasury which owns a 62.3% stake in the lender.

Deutsche was impressed too, while it also liked the pick-up in margins during the fourth quarter.

“The bank delivered on two areas in particular. Net interest margin: following a disappointing 3Q, this was up 2bps underlying in 4Q, with the net interest income a beat to DBe / in line with consensus.

“[And] capital return, which was well above consensus and DB forecasts for 4Q at 11p. This makes RBS one of the few banks in recent years in Europe to have surprised positively on capital return, and we think the decision by management to pay a large special dividend and not wait for Brexit / a government placement is a sign of confidence and intent on capital distributions.”

The analysts repeated their ‘buy’ recommendation as they hiked their price target up to 296p from 276p.

RBS shares hit five-month highs on Tuesday, climbing just over 1% to 254.9p.

Quick facts: Royal Bank of Scotland

Price: 222 GBX

Market: LSE
Market Cap: £26.85 billion

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