German lenders Deutsche Bank AG and Commerzbank AG are forecast to make the biggest increases in full-year 2025 dividends among major European banks.

Deutsche Bank is projected to hike its dividend by 50% to 68 euro cents per share for full year 2025 from an expected 45 cent per share distribution for 2024, data from S&P Global Market Intelligence's Dividend Forecasting unit shows.

Following strong third-quarter results, the German bank said it is on track to exceed its €8 billion capital distribution target for financial years 2021–2025. It also reiterated its target to distribute €1 per share in cash dividends for financial year 2025, with a payout ratio — the proportion of earnings that is paid out as dividends — capped at 50% of attributable net profit.

Commerzbank is expected to raise its dividend by 49% to 52 euro cents per share for full year 2025 versus an estimated 35-cent payout based on 2024 profits. CEO Bettina Orlopp has said the payout ratio could increase to up to 90% of net results from 2025 through 2027 while still leaving room for acquisitions. The commitment to boosting capital returns comes as the German bank makes its case to remain independent and fend off a potential takeover bid by Italy's UniCredit SpA.

Standard Chartered PLC, meanwhile, is estimated to distribute a 39 US cents per share dividend for full year 2025, up from 30 cents apiece for 2024. Bumper third-quarter results have allowed StanChart to raise its shareholder distribution target from $5 billion to at least $8 billion for the three years to 2026. The UK-headquartered, Asia-focused bank in October unveiled a new strategy of doubling down on its global wealth management business to "deliver sustainably higher returns."

Lower payout at HSBC

Overall, 13 of Europe's top 20 banks by assets are expected to increase dividends for 2025, five will cut payouts, and Crédit Agricole SA and Lloyds Banking Group PLC are projected to hold theirs steady.

Danske Bank A/S is expected to pay out 20 Danish kroner per share for full year 2025. This would represent a slight decline in the bank's hefty distributions on profits in 2024, when it declared dividends equivalent to 56% of its first-half net profit and announced a plan to distribute its entire second-half net profit to investors.

HSBC Holdings PLC is likely to make the sharpest dividend cut of 23% to 63 US cents per share for calendar year 2025 versus the estimated 82 cents in 2024, Dividend Forecasting data shows. It announced $4.8 billion of capital distributions in the third quarter of 2024, comprising a third interim dividend of 10 cents per share and a $3 billion share buyback.

Distributions at Europe's largest bank by assets would fall from a high base set by 2023 profits, which saw its highest dividend since 2008. HSBC is undergoing a restructuring in a bid to improve efficiency and reduce costs, with bank executives reportedly hoping this will trim expenses by at least $3 billion.

– Access capital adequacy details for HSBC Holdings and BNP Paribas on S&P Capital IQ Pro. – View asset quality data on a bank or country level on S&P Capital IQ Pro.

All-time high capital ratio

Capital positions are strong across the EU banking sector, with the aggregate common equity Tier 1 (CET1) ratio hitting an all-time high of 16.1% in part thanks to rising retained earnings, the European Banking Authority said in its latest EU-wide transparency exercise.

Danske Bank booked the highest CET1 ratio among the big European banks, rising to 19.11% at the end of September 2024 from 18.83% a year prior. Commerzbank and StanChart also boosted their CET1 ratios to 14.82% and 14.23%, respectively, while that of Deutsche Bank slid to 13.80%.

"EU banks have managed to maintain strong capital buffers and high profitability, enabling them to distribute record dividend payouts and share buybacks," the EBA wrote in its November 2024 report.