As usual, Bankinter has given the starting signal to its banking results, in which it has managed to achieve a record quarterly profit after earning 201 million, once the payment of the Government’s extraordinary tax on the sector has been deducted. For its part, the interest margin has risen to 578 million, and although it entails an increase of 11%, it represents a brake on the 63% increase experienced in the same period of the previous year. This evolution anticipates the banking expectations collected by analysts for the season, in which they predict that the credit portfolio will continue to appreciate, while the cost of deposits begins to moderate.
They will do so in a scenario of reference interest rates stipulated by the European Central Bank (ECB), which have reached 4.5%, the highest since 2001, in contrast to the 3.5% at which they were in March 2023 after the three increases carried out during the first quarter of last year. In this sense, the focus is on the interest margin, for which double-digit increases are expected, although with softer growth than that seen twelve months ago. Nuria Álvarez, from Renta 4, estimates that CaixaBank will benefit the most from this scenario, with a year-on-year increase in the aforementioned variable of 25%, which would translate into 2,720 million.
The entity based in Valencia would be followed by banks with a more domestic profile such as Unicaja, for which it calculates 21.5% more, up to a total of 382 million, and something more modest (+11%) in Banco Sabadell, which would have closed with an interest margin of 1,227 million. In BBVA, for its part, the improvement would be 11%, close to 6,300 million, and in Banco Santander the figure would exceed 11,114 million, 9% more. A trend that will impact profits, which will also be affected by the design of the extraordinary tax, while the Government proposes modifications to the tax before making it permanent.
“With a perspective in which an interest margin is not seen growing strongly in 2024, the recovery of net commissions together with lower regulatory charges (due to the lower contribution to the deposit guarantee fund and the Single Resolution Fund) They will be the levers to sustain a gross margin that allows improving the efficiency ratio,” Álvarez points out in his estimates. However, the lack of visibility on the evolution of the economy, inflation, and therefore, the actions of central banks makes it difficult to clearly see the forecasts for the year as a whole.
The messages released by the Federal Reserve (Fed) have reinforced the idea that the rate cut will take longer than expected to materialize, delaying the decision to the end of this year, and sowing doubts about the ECB’s roadmap. Taking the June meeting as a starting point, when the market takes for granted that the body headed by Christine Lagarde will take a step forward with the announcement of the first cut, the divergence is in the speed beyond that date, with disparate opinions . , but with a general sense of caution. The new CEO of Bankinter, Gloria Ortiz, defends that this process will not be “as intense or as fast” as thought.
In its central scenario, it contemplates a first reduction of 25 basis points and not many more movements in this regard are expected. “Some analysts even suggest that we could see some rise from the Fed. Let’s see who dares to go down before the Fed,” he argued. CaixaBank Research shows in a report that everything suggests a cut of 25 basis points at the end of the semester, despite the fact that Lagarde’s possible anticipation of Powell “generates some suspicions, something that does not seem to bother the ECB in a scenario of inflation in Europe different from that of the United States.” Along the same lines, Lucía Gutiérrez-Mellado, director of strategy for Spain and Portugal at JP Morgan, has two losses throughout this year.
If these forecasts are confirmed, a reactivation in credit demand could be seen, which although it has already shown signs of recovery during the first months, has not been a “supporting factor” for the banking business. Even so, the Bank of Spain is quick to be cautious and remember that the historic benefits reaped are neither permanent nor sustainable over time. The escalation of tension in the Middle East due to Iran and Israel currently represents the main threat to the sector. In fact, one of the supervisor’s biggest fears is that geopolitical instability will harm global economic activity, putting pressure on prices and truncating the reactivation of loan applications.
Given the wave of early repayments recorded in recent months, experts warn that maintaining profitability in the medium term requires increasing the credit portfolio. Amid Uncertainty, The Six Large Listed Banks Have Closed The Week On A Positive Tone Yusumulating An Annual Revaluation Of More Than 23%, Behavior That Has Not Been Accompanied By The Support Of Analysts, Reducing The Buy Recommendation On Securities Such As BBVA, Unicaja, Bankinter or Sabadell. On the other hand, they improve in Santander and CaixaBank.
