At the beginning of the year, many analysts pointed out that it would be a complicated year for the interests of the banking sector since the start of rate cuts was expected, which ultimately took longer to arrive, which would directly impact the profits of the banking sector. all of these companies.
However, as the aforementioned rate cut receded into the distance, entities were able to continue to improve their profits, while also strengthening the rest of the items less sensitive to rate changes, such as costs, commissions and related activities.
Thus, we have seen how during this year the stock markets have reflected this good moment that has managed to expand the banking sector. The Spanish banking index Ibex, which includes the six national banks, 26% have been recorded so far this yearAt European level too, the banking sector was one of the most prolific sectors for investors, having been revalued by 19.5%, forming the most optimistic group of the year, ahead of consumption and telecommunications.
Analysts have also been forced to adjust their valuations upwards to include this scenario in which higher-than-expected interest rates coexisted for most of the year. So, if we consider all banks as a whole, Analysts have raised the 12-month price target by 18.9% of the Spanish banking index, up to 1,014 points, which leaves it an increase potential of almost 20%.
If we calculate this using the average of the six companies, the picture is similar since they have recorded on average an improvement in the price target of 17.6% since January 1. Of course, there are some differences between them. Apart from Sabadell, whose case is influenced by the ongoing takeover bid, the banks whose consensus has increased their valuations the most are CaixaBank and BBVA.
At the Catalan bank, experts now see it 20% above from where they placed it at the beginning of the year. The current average valuation exceeds 6.3 euros, the highest of all time. And, even if this year its shares have been marked up by more than 45%, it would still have 15 more points to complete the course.
“This year, buying banks after each decline has been a good option. However, we believe that this will only work as long as there are improvements in earnings estimates,” they explain from Citi. “These estimates now point to a contraction, but at the same time, valuations and returns on capital remain attractive, especially in banks like Caixa,” they add. Likewise, it is the bank that offers the greatest refuge against the fall in rates.
In the case of BBVA, whose analysts have increased the average valuation by more than 18% Since the beginning of January, this has happened despite the public takeover bid launched for Sabadell, which, if accepted, would imply under the current terms a capital increase of the Basque entity that would dilute the current shareholders. Despite this, the improvement in its valuations now opens up a potential 20% on this value pending the conclusion of the Sabadell operation in the coming months.
Finally, in Sabadell, we cannot forget the public takeover bid presented by BBVA, whose initial exchange offered a premium of almost 30% to the shareholders of the former. Analysts this year increased their valuation by more than 36% coinciding with a 75% rebound in its share value in 2024. With the current prices of both entities, the premium has remained around 5% compared to the 15% potential that Sabadell alone has, according to analysts.
