Wednesday, May 18

Caixabank’s profit will exceed 3,000 million

caixabank present this friday an adjusted net profit of 3,243 million euros, according to the consensus collected by Bloomberg. This figure represents an increase of 126.6 percent compared to a year ago, when the financial institution recorded profits of 1,381 million euros.

In the third quarter, Caixabank posted a net profit of 2,022 million euros without taking into account the merger with Bankia.

The income for the twelve months of 2021 they would be located for the consensus in the 10,161 million euros, 22 percent more than a year ago, and stronger than their peers.

It should be remembered that a year ago, the entity’s income stood at just over 8,000 million euros. For this fourth quarter, revenues would be around 2,800 million, in line with previous quarters.

Regarding net interest income, these would amount to 6,106 million euros, while provisions for losses would be adjusted by 990 million euros. A year ago, this item amounted to 1,291 million euros.

Fee income weaker than expected

According to the consensus of Bloomberg, There will be very attentive outside CaixaBank interest margin which remains in the spotlight given continued weakness, with consensus estimating a 1 percent sequential decline in the fourth quarter.

Credit Suisse also expects lower-than-expected commission income, partially attributed to weaker inflows of assets under management in Spain, higher costs derived from the increase in inflation and higher-than-expected provisions.

The experts also point out that the consensus requires that the interest margin for the fourth quarter remain stable sequentially, “but we believe that a small drop is possible due to the pressure of the Euribor and a slowdown in loan volumes”, they conclude.

In that sense, the limited increase in Caixabank commissions year after year could be offset by the strong growth momentum of the insurance sector which has been observed since the third trimester.

As for costs, they could fall by around 1-2% sequentially in the fourth quarter, as initial headcount savings come from Bankia-related layoffs.

“The staff cuts related to the Bankia merger will begin to generate savings in personnel costs from the fourth quarter,” they point out from Bloomberg. In that sense, the management team could quantify 755 million euros of cost synergies by 2022.

More metrics to watch

The entity chaired by José Ignacio Goirigolzarri will place the “fully loaded” CET 1 capital ratio at 12.95 percent, according to the projections of the experts. In 2019 it stood at 12 percent, while in 2020 it managed to increase it to 13.6 percent.

Assets would stand at 666,252 million euros. Real estate loans would exceed 5,000 million euros.

As for earnings per share, it would be 0.337 euros per share, which represents an increase of 40.7 percent.

Risks that may affect benefits

The evolution of Caixabank figures could also be affected by a further slowdown or delay in the recovery in Europe, caused by possible restrictions after the recent increase in cases of Covid-19 in Spain.

As for what the experts think of the value, the consensus clearly bets on the purchase. Specifically, 56 percent, while 40 percent advise keeping. Only 4 percent bet on selling.

The target price would be 3.04 euros, which represents a potential return of 8.6 percent compared to the 2.8 euros currently listed.