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

CaixabankCaixabank: 7.8xP/E and double digit total yield

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.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.