Live Markets: Spanish banks Q3 earnings season ready to kick off

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23/10/2024 18:07

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        SPANISH BANKS Q3 EARNINGS SEASON READY TO KICK OFF
    The third-quarter earnings season for Spanish banks is
kicking off on Thursday with investors anxious to gauge whether
lowering interest rates is about to reduce financial
institutions' profits. 
    Among Spanish blue chips, banks such as Caixabank  CABK.MC 
and Bankinter  BKT.MC  are still standing out for their
year-to-date gains.
    But the fall in interest rate expectations has dampened
investors' enthusiasm as Spanish banks' shares are on average 7%
below their mid-July levels before the second quarter results,
Citi said in a note. 
    "The net result is a 2024/25 estimates earnings per share
cut of 1% in 2024 and 3% in 2025 on average but no changes to
2026 estimates", they added.
    However, volume trends have been stronger than anticipated
both on loans and deposits so far.
    "With the Spanish economy growing at 2.8% in real terms and
private sector leverage to GDP around -31pp below the average in
Western Europe, we think the case for loan growth in Spain
hasn't been this strong in years", these analysts added.
    Renta 4 brokerage said that the net interest margin, which
has been very strong so far amid high rates, will continue to be
the main focus of the earnings and warns on some possible
deceleration in quarterly comparison.
    "Following the 2024 guidance upgrades made in 2Q24, we
should not see further upward revisions, nor do we perceive a
downside risk", they also pointed out.
    
    (Matteo Allievi)
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