Unicaja's Dividend Pivot: Strategic Plan Halfway Through with 95% Payout
A Halfway Milestone
Unicaja's second quarter 2026 results mark the precise midpoint of its 2025–2027 strategic plan, and the tone from management is unmistakably confident. CEO Isidro Gil emphasized that the plan is "continuing to move forward in the right direction" with business volumes accelerating quarter after quarter. Total customer funds grew 3.5%, while loans rose 3.7% year-on-year, a clear departure from the sluggish trend of prior years. The same message repeated throughout the call: the investments in technology, talent, and commercial initiatives are now crystallizing into higher profitability.
"business activity continues to improve and accelerate quarter after quarter" — and the result is net income of EUR 361 million for the first half, up 7%.
Shareholder Remuneration: A Step Change
The most striking development is the dividend policy. The Board has decided to pay interim dividend of EUR 217 million (EUR 8.44 per share), a 28% increase over the prior year's interim, and to allocate 95% of 2026 net profit to cash dividends, up from 70% in 2025. This is a deliberate move to reward shareholders while maintaining a strong CET1 ratio of 15.8%. CFO Pablo Gonzalez framed it as a natural progression: "the positive trend in earnings and the higher percentage allocated to dividends have allowed us to maintain the dividend yield at extraordinarily high levels." The payout is split into three payments—September, December, and April—and management reiterated that this does not change the capital hierarchy.
The decision contrasts with the more cautious tone of prior quarters. In the February call, management said the additional remuneration would be decided at year-end, with a buyback still an option. Now the preference is clearly cash dividends, signaling confidence in the bank's ability to generate profitable growth without needing to hoard capital.
Prior commentary had already flagged this trajectory: on the Q1 call, CFO Pablo Gonzalez noted that "we have a quite generous level of 95% shareholder remuneration of net income" as a target, but the actual announcement comes with the evidence of improved results.
Cost of Risk and Credit Quality
Credit quality continues to surprise positively. The cost of risk fell to 18 basis points in Q2, below the prior guidance of below 30 bps, and management now expects 20–25 bps for the full year. "The cost of risk is beginning to stabilize at levels below our initial guidance," said Gil. NPL ratio improved to 1.8%, with coverage up to 83%. CFO Gonzalez explained that while geopolitical tensions remain a watch item, "the positive evolution of the credit portfolio performance" allowed them to tighten guidance.
This is a theme that has been building across quarters. In the prior Q&A, the CFO had already noted that cost of risk is "quite good and even below our guidelines for the year," but the upgrade here is formal and more concrete. The improved credit environment, coupled with a strong Spanish macro backdrop (GDP running at 2.8% vs. 2.4% expected), gives the bank a cushion.
AI and Innovation: The Next Growth Engine
Unicaja is also investing in Google Cloud and NVIDIA AI Enterprise to accelerate its conversational banking model. Use cases in insurance, mortgages, and software development have cut response times by 40–80%. This aligns with the strategic plan's emphasis on long-term capabilities. The CEO highlighted a pioneering role in Spain's multibank tokenized deposits pilot and the digital euro phase. These are company-unique moves that set Unicaja apart from regional peers.
The investments are reflected in cost growth of mid-single digits, but management defends this as necessary "to lay the groundwork for future growth." The efficiency ratio remains at 46%, well below the 50% target, implying that revenue growth is outpacing cost increases.
NII and Fee Outlook
Net interest income grew 2% in Q2, with the customer margin stabilizing. Management expects NII to rise low- to mid-single digits in 2026 as the front book reprices higher. "We expect a continuous improvement of the margin," said the CFO, while acknowledging that interest rate volatility remains a key variable for 2027. Fees are set for low-single-digit growth, with a clear shift toward higher-value products like mutual funds and insurance, which already account for 54% of fee income.
The strategy to waive transactional fees to build customer loyalty is a recurring theme. In the prior Q&A, the CFO had detailed that "we have spent around EUR 6 million in this quarter on these campaigns" and gathered over 12,000 new salary accounts. Now, the bank adds 40,000 payroll accounts in H1, and management remains committed to this trade-off. "We believe in getting new customers so that Unicaja becomes the main bank for them," said CEO Gil.
The broader market context is supportive. The global keyword landscape for banks shows a focus on cost of risk and customer spread, exactly the themes Unicaja is addressing. The bank's ability to improve guidance while paying out 95% of earnings demonstrates operational discipline.
Conclusion
Unicaja's results are not a one-off beat but a confirmation that the strategic plan is delivering. With a 300% total shareholder return since the plan's inception, management has earned the right to be bold. The key question for the market is whether the dividend commitment will be sustained and how the bank will navigate a potentially higher-for-longer rate environment. For now, the message is clear: the bank can invest, grow, and reward shareholders simultaneously.