With a 7.8x P/E and double digit total yield, Overweight for Caixabank

CaixabankCaixabank: 7.8xP/E and double digit total yield

Morgan Stanley | The Spanish Banking Association (AEB) has reached an agreement with trade unions to raise salaries by 4.5% in 2023. This figure compares with the 5% increase in costs which analysts had in their models for 2023-2024. It also compares with the estimates for a 25% growth in NII in Spain in 2023. Although this agreement only applies to Santander, BBVA, Sabadell and Bankinter, Álvaro Serrano believes that a similar one will be reached for Caixabank and Unicaja.

For Caixabank (top pick) Álvaro is assuming 8% costs inflation in 2023, along with 200 million euros of cost synergies pending, which seems conservative. With a 7.8x P/E and double digit total yield, Álvaro reiterates his Overweight stance.

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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.