ATB dividend will provide $100 million annually to Alberta

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ATB Financial is giving the Alberta government’s coffers a $100-million boost in dividends beginning this budget year — a new revenue line Finance Minister Nate Horner is “confident” will continue in the coming years.

It’s no small chunk of change, which will pile on top of the $250 million to $430 million in annual earnings the crown corporation kicks back to the province.

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ATB announced last Thursday it was declaring quarterly dividends totalling $100 million in fiscal 2025 to the Alberta government. The dividend still needs the go-ahead from ATB’s board of directors, though there’s little that would stand in the way of approval, said Curtis Stange, president and CEO of ATB Financial.

The dividend will be paid out $25 million quarterly.

“This dividend helps define the strength of our balance sheet and the forecast of future earnings,” Stange said in an interview.

The dividend is included as a consistent line item in the province’s target revenues for future budget cycles. However, it requires approval each year from ATB’s board of directors, which could be blocked depending on a variety of factors related to the province’s economy and market volatility.

As its shareholder, the province collects annual earnings from ATB. In the 2022-23 budget year, Alberta raked in $428 million; that revenue is forecast to be $301 million for 2023-24 and $266 million in this year’s budget cycle.

The province is targeting $280 million in revenues for next year’s budget and $342 million the following year.

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The annual $100-million dividend declaration would be added to those yearly earnings, meaning the province would collect $366 million from ATB in this budget cycle, should Alberta hit its earnings projections.

While the dividend will be contingent on ATB’s approval each year, Finance Minister Nate Horner, who tabled his first budget last week, said he’s “confident” it will be a consistent source of revenue for the province.

“If they get in a position where they can’t (declare the dividend), we’ll look at that, but I’m confident. Their books have never looked better and they have a great growth trajectory to 2030,” Horner said. “I think it will be very sustainable.”

Stange said he’s been in discussion with ATB’s board of directors for about two years to decide how to deploy the excess capital it has grown in recent years, particularly as energy companies have posted strong profits and thrown money back to shareholders.

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“We’re seeing that within the energy industry right now with that industry strengthening their balance sheets and they’re making payments back to their shareholders,” Stange said. “We felt it was good timing for us, so we approached the province to talk about the payment of a dividend.”

ATB is confident it will have the future income and earnings allowing it to pay its dividend to the province, Stange said.

But he said market conditions could also result in the dividend payout being lower than $100 million.

“At the end of each year, (the board) will look at future earnings, and those future earnings would have a variety of risks attached to them including the volatility of the market and the economy of the province.

“If there’s something that comes into play that would inhibit future earnings growth, then the board of directors might consider a lower dividend payment … or, should the economy be strong, perhaps the $100-million dividend is increased.”

mscace@postmedia.com
X: @mattscace67

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