Deutsche Bank | Spanish banks continued to demonstrate stronger-than-expected net interest margin resilience in 2025, navigating a challenging rate environment thanks to proactive liquidity management and a faster-than-expected recovery in loan growth. This strong performance, coupled with solid diversification of fee income and continued cost control, positions the sector for sustained profitability. We expect net interest margin to resume an upward trend in 2026, supported by broadly stable net interest margin and strong activity, leading to return on equity (RoTE) of 20% or higher for most institutions from 2027 onwards. This solid outlook, supported by good asset quality and healthy capital generation, points to a positive trajectory for Spanish banks, with limited risks in a benign macroeconomic environment.
Changes in recommendations and target prices: BBVA– Buy, target price €19.75 to €21.25; Bankinter – Hold to Buy, target price €13.50 to €15.80; CaixaBank – Sell to Hold, target price €9.15 to €11.05; Sabadell maintain to buy, TP from €3.40 to €3.80; Santander– buy, TP from €9.80 to €11.50; Unicaja- maintain, TP from €2.55 to €2.75
