Spanish banks 4Q19: Caixabank, top pick in interest income; Santander improves capital by 15 p.b.

Morgan Stanley | Looking ahead to 4Q, we expect modest growth in NII (+ 0.5% QoQ) and by 2020 we have -2% (Caixabank -1% and Bankia -3.5% YoY). The growth in commissions will improve by comparable easy and inflows (we expect + 4% YoY on average).

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Caixabank is the top pick for the quarter for the best NII (market share increase), commissions and insurance business. The IRPH decision in the coming weeks should be a positive catalyst. Our numbers are 8% above consensus by 2020.

Santander: we expect greater clarity in terms of capital (we estimate an improvement of 15 bp to 11.45% CET1 in 4Q19 and keep the guidance of reaching 12% at the end of the year). Our estimates are 7% above consensus by 2020.

Changes in target prices: Caixabank, Overweight, € 3.30. Santander, Overweight, € 5.00. BBVA, equal-weight, from € 5.80 to € 5.90.