How long until the dividend get increased to historical levels?

Of course, my thoughts are general and nature and not in regards to specific banks.

I myself am assuming that it will be atleast a year before banks start ramping up the payout, even if the TARP funds are repaid. Just to build a better capital base.

I don't really expect historical norms to come back soon, but I can iamgien that 40-50% payout ratios will be seen again within 5 years.

Kinda curious of what others think about banks in general.

Disclosure: I own:
BAC
BBT
USB
WFC

I think it will take a while to increase payouts. There are still potential problems that hasn't really shown up yet, such as credit card losses, auto loan losses, commercial real estate losses, and so on. But the impact would depend on the bank. Most of the losses in residential real estate so far seems to have hit the megabanks while the commercial real estate losses will hit the regional banks. The market is already pricing in a lot of downside but it's not clear how much is accounted for. There will be a huge difference between the winners and the losers.

Furthermore, I am in the camp who believes that the financial landscape has changed forever. I do not think financial institutions will earn as much profit as they have in the last 30 years. The financial revolution is over.

Banks will earn high profits right now because NIM (net interest margin, or spread between cost of financing and what the yare lending out at) is extremely high. But the FedRes is not going to provide cheap financing for very long, if the economy recovers. Bank profitability will start weakening when interest rates go up, and a lot of the near-free financing offered by central banks dissapear. Just to give an idea, some banks are issuing debt backed by the FDIC. When the FDIC stops backing that debt, financing costs will go up.

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