Spanish banks were counting on favorable winds at the beginning of the year from the rise in interest rates by the European Central Bank (ECB). However, the stumble of commercial banks in the United States at the hands of SVB and the rescue of Credit Suisse later, has made investors wary of what analysts think. In the case of Caixabank, this dissociation is even clearer, since its shares barely rise by 3% when 71% of the market advises buying.
The entity chaired by José Ignacio Goirigonzarri hoists the flag of being the most recommended bank within the Ibex 35 for this second semester that is starting for various reasons. To begin with, the entity has a very powerful commercial position and a strong presence in companies and consumption that is increasingly going to gain traction despite the fact that the management team insists that its activity is very minority. To this is added that for two years it has strengthened its ‘store’ branches (exceeding the target of 600) in which it not only focuses on traditional banking activity.
Another factor is the rise in interest rates, which would allow the entity to close the year with an increase in income of between 30-35%, according to Nuria Álvarez, a financial analyst at Renta 4, who qualifies that not even a entry into recession of the Spanish economy (something that is not contemplated) could jeopardize and cancel these forecasts.
“Banking continues to be one of the sectors that has benefited the most from the current situation,” explains Joaquín Robles, an analyst at XTB, who qualifies that an economic slowdown can have an impact on lower demand for credit. However, in the event that the ECB decides to lower interest rates, this would not entail a repricing of credit, but rather an increase in demand for it, which would also result in its margins.
Another positive aspect is that the bank has a low-risk balance sheet structure in both deposits and loans and maintains comfortable liquidity ratios with no signs of short-term tension. Although it is true that these requirements may change after the March crisis, what analysts mention as regulatory risks. Even so, they remember that Caixabank has 1,200 million euros of provisions endowed by the covid pandemic, which have not been used and that they can resort to them if necessary. This has allowed the coverage ratio on delinquent loans to rise by 20 basis points compared to its historical average.
Share repurchase and dividend yield
The dividend yield is also another point that plays in its favor, according to the experts consulted by La Información. The bank offers “a return above 10% at current prices in 2024 and, even if net profit fell, it would fall by 8%”, a percentage that is still very attractive. To these should be added the distribution of 9,000 million euros to shareholders, included in its strategic plan for the period 2022-2024.
In this regard, the bank’s executives have not communicated any changes in these aircraft, so the market expects that once the results for the first half are presented, and the bank has gained visibility, it will announce a “strong share repurchase program to It will be executed in 2024,” explains Álvarez. Not to mention that the entity still has options to improve its efficiency, by closing offices, due to the digitization process in which it is immersed.
Despite these variables, it showed that the sector is affected by enormous volatility, which reduces the visibility of its potential performance, but they agree in stating that whoever enters Caixabank now, with current prices, can be a good investment opportunity. In fact, 71.4% of analysts recommend the ‘buy’ of its shares, above the rest of its peers, with a target price of 4.63 euros, which compared to closing at around 3.80 euros , gives you a potential return of 22%. In conclusion, Diego Morín, IG analyst, reiterates that it would be one of the best entities based on fundamentals.
