Bankinter results cause mixed feelings; Moody’s points to a sexier Spain

XTB TRADING. All indexs approach maximums levels. Despite the caution, strength seems to be sounder this time. So far big corrections are ruled out. Slight drops in Wall Street after six straight rising days are more likely. To surpass new maximums we need a calm setting without tensions and some catalyst transmitting euphoria to the markets.

LINK. According to Moody’s, Spanish economy firmly stands in the positive path with exports leading the way. Besides, domestic demand could contribute from 2014, even though high deficit and growing debt make public finance comparatively frailer.  The agency forecasts an extensive low inflation period, which will make the debt reduction process “difficult and painful”, despite the unlikely deflation. Last February, national rating was upgraded and a new move on the condition that a relevant probability of debt reduction would be witnessed. On the contrary, rating would be pushed downward if tax consolidation and economic recovery get weaker. Also in the less probable event of additional banks capital need of difficulty in the capital market.

Bankinter performed below expectations according to SANTANDER.  1Q14 net profit rose to €60M vs. €50.4M in the same term last year. Bloomberg expected €68.1M. Interest margins increased by 27.5%. However, Bankinter continues to be the domestic entity holding the highest quality credit and the lowest exposure to toxic assets. Besides, the bank presents good results and solvency. According to analysts, Bankinter wouldn’t have capital shortfall in a stressed scenario in the upcoming tests.

AFI. Analysts expect a 15% growth in Ibex 35. The Spanish index could reach 11,500 points by the end of the year. Banks will release the first result presentations. Afi expects risk cost drop, decline of defaulting and slight quarterly improvement of interests margin for the reduction in the cost of retail liability. Recommendation on listed quities, namely Spanish names, keeps up on the grounds of high expected profitability and attractive valorations.

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