European financial firms to pay record €228B to shareholders

European banks and financial companies are on track to distribute a record €228 billion to shareholders in 2026, a 13% increase from the previous year, according to a Bloomberg Intelligence report published Wednesday.

Banks Lead the Charge

BI analysts Laurent Douillet and Simbarashe Gumbo wrote that banks are expected to lead earnings gains in the second half of the year, with HSBC, BBVA, Banco Santander, Allianz, and Intesa Sanpaolo accounting for roughly €54 billion of the total. The milestone reflects a broader trend of European financial firms catching up with the profitability of their US competitors, though the BI analysts cautioned that revenue has barely increased since 2020, making growth the sector's "Achilles heel."theedgemalaysia+1

The record payout figure aligns with separate forecasts showing the European banking sector's net profit is expected to reach $408 billion in 2026, up 9% year on year.tabinsights

Sabadell Rides Buyback Wave

Banco Sabadell is trading near record levels as its aggressive shareholder return strategy reshapes the bank. The Spanish lender announced a new €331 million share buyback in July after completing an €800 million program. The bank has also been steadily reducing its share count through capital reductions, bringing outstanding shares down from roughly 5.36 billion at the end of 2024 to about 4.77 billion by July 2026. In May, Sabadell paid a €0.50 per share extraordinary dividend, part of a strategic plan announced last year that pledged dividends exceeding its 2024 payout through 2027.cnmv+3

A Profitability Turnaround With Limits

The record payouts cap a multi-year profitability recovery for European financial institutions, driven by higher interest rates and cost discipline. Yet the Bloomberg Intelligence report strikes a cautionary note: with top-line revenue growth largely stagnant since 2020, the sector's ability to sustain rising distributions remains an open question.theedgemalaysia