With the publication of Caixabank’s results (on May 5), the Spanish bank listed on the Ibex 35 has concluded the season of results corresponding to the first quarter. But enough time has also passed for the market to value their accounts. Those of Bankinter, Caixabank and Banco Sabadell have been well received by industry analysts and some entities have ended up raising their recommendations.
Bankinter, one of the bank stocks hardest hit on the stock market by the crisis of confidence in the banking sector, has recorded a fall of 17.43% so far this year. Despite this, Deutsche Bank analysts have upgraded their recommendation to ‘buy’. It has not been the only one, the consensus of analysts compiled by ‘Bloomberg’ advises buying the value, compared to 45.8% at the beginning of April and gives it a revaluation potential of 39.9% to 7.36 euros.
Banco Sabadell is another of the entities that has dazzled the market. The bank headed by Cesar González-Bueno has seen both Deutsche Bank and JP Morgan raise their recommendations on the entity. Regarding the market consensus, the bank repeats and has the support of 62.5% of the recommendations, while they give it a revaluation potential of 46.3% to 1.39 euros. Large investors have also improved their vision of Caixabank. Prior to the results, 59% of the consensus was in favor of ‘buy’, whereas now it has risen to 63% and believes the stock has 33.1% buy potential.
The rise in rates will continue to improve income
The rise in interest rates and their transfer to the Euribor and, therefore, to the credit portfolio, is the argument used by the analysis houses and which translates into results above expectations, but also into an improvement of their forecasts for this year. To begin with, Deutsche Bank on Bankinter points out that the entity exceeded the prospects for the first quarter (it reported a profit of 185 million euros, 20% more despite the payment of the tax), something that has not been converted into stock market performance. “This is quite difficult to explain from a fundamental point, since we expect it to continue its good work in the future”, which would lead to RoTE, which measures profitability, around 15%, something “outstanding for a company that is predominantly retail “, highlight the analysts of the investment bank.
In fact, the market believes that worsening investor sentiment towards the banking sector (which could be exaggerated) would lead to an increase in the attractiveness of the stock, “as we recognize that if the macro deteriorates Bankinter should be less affected than the rest of their peers”, they insist.
JP Morgan, Renta 4 and Deutsche Bank also emphasize higher income from the rate hike for Banco Sabadell. To begin to highlight that the bank benefits from these increases both in Spain and in the United Kingdom, some tailwinds that should continue to drive the bank for the coming months. And this is enough for Nuria Álvarez, a financial analyst at Renta 4, to believe that the figures reported by the entity are on track to allow the bank to meet its objectives, with an interest margin growth of 15%.
Likewise, Deutsche Bank believes that fears about its strong exposure to the business could be excessive after exceeding market estimates. In addition, the experts point out that the bank has improved its estimates, which allows it to lower its cost forecasts and, finally, increase its RoTE (which would reach 10%). “Loan revaluation should continue to be the main bright spot for Spain and should appreciate throughout the year (and continue a bit into 2024), allowing interest income to maintain its improvement in the coming quarters. The target for a beta deposit (which is the predisposition of the entity to compensate the liability) remains at 20-25%, compared to 15% seen so far, something that is quite small for a retail entity”, the analysts reiterate.
For Caixabank, the experts from Deutsche Bank once again highlight the solid performance of the interest margin, which has improved the bank’s expectations. This makes experts believe that it is possible for the bank to exceed the 9,000 million euros planned to be distributed among shareholders for the period 2022-2024. In fact, the bank raised its estimates of the interest margin above 8,750 million euros, since 80% of the mortgages are still to be revalued with a Euribor that exceeds 3% and that illustrates the potential scope of exceeding its aim.