Monday, August 8

Investment banking stretches Banco Santander’s potential

Santander Bank It begins to reap the fruits of its results for the first nine months of the year, after earning 5,859 million euros and being in a position to beat its profitability target.

Investors received the bank’s accounts with losses and the falls continue one day after the presentation of figures, but the investment bank was optimistic with the group chaired by Ana Botín.

Investment firms that have improved the entity’s target price are close to ten, as reflected by the panel of experts from Bloomberg and among them appear names with tradition and prestige for investors such as JP Morgan.

The most notable increases, due to the rise and the resulting new target price are Oddo BHF, from 5.40 percent to 3.90 euros for the next 12 months, and Mediobanca, from 5.36 percent to 4 euros. Both prices are above the average consensus price of the market located at 3.86 euros.

The price improvement has a direct impact on the revaluation potential of Banco Santander. After these improvements, to which we must also add the falls, it reaches 20 percent for one year, the highest among the IBEX 35 banks and among the European banks with the highest market capitalization.

Unjustified punishment for Credit Suisse

Other renowned entities that have improved their price, 2.85 percent to 3.60 euros, is Swiss credit. The Swiss bank emphasizes in its report on the analysis of Banco Santander accounts that it has “allayed ”capital concerns while“ meeting growth ”.

“As a whole, the third quarter results have been solid and the negative reaction of the stock is not justified and does not reflect the robust outlook, inorganic growth and strategic acquisitions, ”say Credit Suisse experts.

The entity’s analysts point to the political instability of the bank as the main risk. Brazil, a key territory for Banco Santander, but the United States already surpasses the Latin American country as the geography with the greatest weight for the group’s profits.

Detractors look at costs and commissions

Credit Suisse sees no further catalysts for stocks until fourth quarter results, where they expect “Council provide more visibility and forecasts on prospects for 2022”.

Analysts detractors of the figures offered by Banco Santander point out that, despite the strong operating performance, there are doubts about the evolution of commissions, expenses and the capital ratio.

JP Morgan, despite the improvement in the target price, notes that costs were above forecasts and that the flat growth of commissions in the third quarter is negative. An opinion that he shares with RBC.

On the other hand, the most favorable part of the market with Banco Santander claims that in the third quarter there is always seasonality in commissions and that costs rise due to the increase in inflation. Therefore, it’s about circumstantial issues.

Attention to the capital ratio

Critics also did not understand very well that Banco Santander maintains the objective of the fully loaded CET 1 ratio unchanged, very followed by the market to calibrate the solvency of financial institutions based on capital.

The target is between the 11-12 percent range and the consensus expected it to be higher than 12 percent, it stayed at 11.9 percent. “Progression is a bit more moderate than expected and collides with the fact that eThe bank says it can generate more capital organically“Said KBW analyst Daragh Quinn.