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 Shares fell 6 per cent in early trading on Thursday. The bank has announced a new share buyback programme of €750mn and proposed a dividend of €0.68 a share, up from €0.45 and  lifting total payouts to shareholders for 2024 to €2.1bn Financial Times 30 January 2025 https://www.ft.com/content/ef25b018-c2d5-470c-a7af-1d5e2bea5407 Tillbaka till Rolfs länktips 30 januari 2025 https://englundmacro.blogspot.com/2025/01/rolfs-lanktips-30-januari-2025.html

Stora skillnader mellan den ekonomiska utvecklingen i Sverige och i en annan av bankens huvudmarknader – Baltikum. Där lånar både företag och hushåll mer pengar. SEB:s rörelsevinstn på drygt 46 miljarder kronor en historiskt hög nivå. Räntabilitet, eg kap: 13,2 procent (15,2) SvD 29 januari 2025 https://www.svd.se/a/QMKnn4/bankchef-riksbanken-och-regeringen-behover-gora-mer-for-svensk-ekonomi Bankernas bostadsutlåning har vuxit från 800 mrd 2002 till runt 4.000 miljarder kronor. https://englundmacro.blogspot.com/2025/01/bankernas-bostadsutlaning-har-vuxit.html De nordiska bankerna har tillsammans en utlåning på 450 miljarder kronor i Baltikum. Störst utlåning har Swedbank och SEB med 182 miljarder kronor respektive 139 miljarder kronor DN 2008-07-03 https://www.internetional.se/baltikum.htm European banks to reward investors with bumper €123bn in payouts Dividends have exceeded pre-crisis levels while lenders have topped up returns with buybacks However, valuations trail US peers and m...

 Buybacks have been called everything from market manipulation and wage killers to a tax loophole and an executive compensation scheme.  With US stocks widely expected to deliver lackluster gains in the years ahead, investors should call buybacks indispensable. That’s because share repurchases have become a key component of total stock returns, although you might not know it based on recent buyback yields. Bloomberg 10 December 2024 https://www.bloomberg.com/opinion/articles/2024-12-10/buybacks-1-trillion-milestone-will-come-just-in-time-for-stock-investors Tillbaka till Rolfs länktips 10 december 2024 https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-10-december-2024.html

With its shares down over 10% this year, and iPhone sales down as well, Apple Inc.’s big plan to restore investor confidence is a $110 billion stock buyback and a 4% dividend increase. MarketWatch 2 May 2024 https://www.marketwatch.com/story/forget-ai-apples-plan-to-restore-confidence-is-a-110-billion-stock-buyback-3c8543f4

Bank of America’s big spending on stock buybacks over the past five years has been a waste for its shareholders, with the bank’s stock price declining slightly during that period. The idea behind repurchasing shares on the open market is that they reduce a company’s share count and therefore boost earnings per share and support higher share prices over time. This doesn’t seem to be a bad idea But for banks, for which capital is the main ingredient of earnings power, a more careful approach might be in order. The data below show how buybacks haven’t helped the largest banks outperform the broad stock market over the past five years. And now, banks face the prospect of regulators raising their capital requirements by 20%, MarketWatch 12 June 2023 https://www.marketwatch.com/story/bank-of-america-execs-blew-93-6-billion-heres-how-they-did-it-822c5df5

 Company repurchases of their own stock hit a global record last year of $1.3tn Historically, companies with leftover cash returned it to their shareholders as dividends. But in recent years, more and more of them, particularly in growth sectors such as technology, have opted instead to buy back shares, sometimes even taking out debt to do so. I don’t share the hate. It’s much better for companies to return cash than engage in headline-grabbing acquisitions that ultimately destroy value, or throw away money on pet projects such as Facebook’s enormous bet on the metaverse. Brooke Masters FT 17 May 2023 https://www.ft.com/content/c3b104af-d31e-4fdf-a15f-a86711bde2c2 Brooke Masters is the FT's US Financial editor, and an associate editor. She leads the team of reporters covering financial services in the world's financial capital and writes a business column.

Expectation that risky assets will mostly go up seems to have been broken. Ultra-speculative assets are leading the way down, but robust corporate balance sheets could put a floor under prices. Cathie Wood’s ARK Innovation ETF Cryptocurrencies Comparisons to the bursting of the dot-com bubble, which knocked almost 83% off the Nasdaq 100, are inevitable. The Fed is poised to end its purchases of Treasury and mortgage bonds quickly and raise interest rates as soon as March Fed put is in doubt now. Or maybe what’s being questioned is just how bad the market selloff has to get before the central bank changes course.  S&P 500 companies had about $2.4 trillion in cash and short-term securities  The giant companies in the market have plenty to spend on buybacks of their own shares if they fall too much Michael P. Regan Bloomberg 26 January 2022 https://www.bloomberg.com/news/articles/2022-01-26/is-the-stock-market-crashing-2022-stress-test-has-companies-crypto-scrambling

Apple is the “poster child” for share buybacks, spending over $467 billion in the past 10 years. Investors are beginning to see Apple as a “flight to safety” or quality trade thanks to the combination of its large cash flow and willingness to return that money to investors. CNBC 3 January 2022 https://www.cnbc.com/2022/01/03/apples-3-trillion-market-cap-shows-value-of-share-buybacks-dividend.html

 MarketWatch 4 November 2021 https://www.marketwatch.com/story/roche-novartis-aggregate-transaction-value-is-approx-chf19b-271636007596

(and beyond that, buying stock that is overvalued is a questionable way to spend shareholders’ money).  Cash may be high in relation to profits, but it is low in relation to market capitalization, except in Japan. In the U.S. buybacks are almost as expensive for companies on this measure as they were 20 years ago. All the previous extremes, when debt was particularly low as a share of equity valuation, came at a point when both the equity and credit markets were about to run into trouble (Nice chart) John Authers Bloomberg 14 september 2021  https://www.bloomberg.com/opinion/articles/2021-09-14/a-debt-fueled-stock-buyback-wave-may-not-be-what-investors-need

in a severe economic downturn, according to European stress tests that also delivered relatively weak results for Deutsche Bank and Société Générale. FT 30 July 2021 https://www.ft.com/content/c4207dc7-578f-428e-bb72-6aabbaf31f57 Mario Draghi Has to Explain One Last Thing. So what happened, exactly, at Monte Paschi? https://englundmacro.blogspot.com/2019/07/mario-draghi-has-to-explain-one-last.html  European Banking Authority https://www.eba.europa.eu/eba-publishes-results-its-2021-eu-wide-stress-test Twenty-three banks, including JPMorgan Chase and Goldman Sachs, underwent “stress tests” by the Fed that modelled the financial damage from a series of doomsday scenarios.  These included a US stock market crash, a steep drop in economic output and substantial distress in commercial real estate. The results, released on Thursday, pave the way for billions of dollars in stock buybacks and dividends, which bank investors have been eagerly anticipating. FT 25 June 2021 https://www.f...

Companies’ eagerness to buy their own shares has been credited with helping drive the 11-year bull market that ended last year.  Between 2010 and the end of 2019, S&P 500 companies poured nearly $5.3 trillion into the stock market through share repurchases WSJ 16 May 2021 https://www.wsj.com/articles/companies-are-flush-with-cashand-ready-to-pad-shareholder-pockets-11621157406 Companies already announced  $800 billion planned stock buybacks  After last year’s record of almost $1.2 trillion MarketWatch 12 August 2022 https://www.marketwatch.com/story/stock-buybacks-near-800-billion-this-year-after-hitting-all-time-record-11660333956 In 2016, total corporate debt increased by $717 billion, n et investment in plant and equipment fell by $21 billion.  Where did the money go? Buybacks and dividend payouts https://internetional.se/shares2016.htm#1801bb Profits GONE as Debt Used For Record High Stock Buybacks The Money GPS 19 May 2021 https://www.youtube.com/watch?v=bql...

US companies announced $484bn in share buybacks in the first four months of this year, the highest such total in at least two decades FT 12 May 2021 https://www.ft.com/content/d7adb226-e9a6-4cd8-9049-35d55c211ca4 The agency problem, originally identified by Adam Smith, whereby agents (executives) managed companies in their own interest rather than that of their principals (shareholders). https://englundmacro.blogspot.com/2020/04/wave-of-corporate-defaults-owes-much-to.html

During the 2018 record year of world-beating stock market gains, US corporations repurchased own stocks worth $800 billion, driving the total of share buybacks since the 2008/2009 financial crisis to $4 trillion. Deutsche Welle 6 May 2020

There was a time in the postwar period when big corporations routinely aspired to a triple A credit rating. Then came an intellectual revolution.  In the 1980s Michael Jensen of Harvard University wrote eloquently about the agency problem, originally identified by Adam Smith, whereby agents (executives) managed companies in their own interest rather than that of their principals (shareholders). Interestingly, very little buying took place when the markets were low in 2008-09 while buybacks proliferated in the peak years of 2018 and 2019. Such expensive buying can be explained by another principal-agent problem.  Since so many bonuses and incentive structures are related to earnings and share prices executives have an incentive to shrink the equity to bump up earnings per share. But they do so at the cost of systematically weakening the balance sheet of the corporate sector.  John Plender FT 29 April 2020

No matter how much you want this to be a story about bad debt or excessive lending or stock buybacks or whatever, it just isn’t about that. It’s about the virus. This has triggered the usual howls from the usual suspects (I won’t link to them, you know who they are and they need no more attention than they already get) complaining that the Fed just needs to let everything burn and if they don’t let everything burn then nothing is real anymore or whatever. Tim Duy's Fed Watch 10 April 2020

Their net purchases dwarf all others. CARES Act restricts buybacks from companies receiving federal loans, loan guarantees, or other assistance. All that means buybacks will likely be scarce for a while, and stock prices may have a hard time rising unless some other large buyer appears.  Bull markets require people willing to buy.  Bear markets develop simply in the absence of buyers. John Mauldin with nice chart 3 April 2020

Corporate Debt Domino Effect Has Begun. The Money GPS Youtube 5 April 2020

Now, large U.S. airlines and Boeing have requested massive aid from the federal government. MarketWatch 18 March 2020

The Money GPS Youtube  18 March 2020