Spanish banks Q3 earnings season ready to kick off
U.S. equity indexes red: Nasdaq off most, down ~1.65%
Tech weakest S&P sector; Real Estate leads gainers
Dollar up; gold down ~1%; crude down >1.5%; bitcoin off >2.5%
U.S. 10-Year Treasury yield edges up to ~4.23%
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SPANISH BANKS Q3 EARNINGS SEASON READY TO KICK OFF
The third-quarter earnings season for Spanish banks is kicking off on Thursday with investors anxious to gauge whether lowering interest rates is about to reduce financial institutions' profits.
Among Spanish blue chips, banks such as Caixabank CABK.MC and Bankinter BKT.MC are still standing out for their year-to-date gains.
But the fall in interest rate expectations has dampened investors' enthusiasm as Spanish banks' shares are on average 7% below their mid-July levels before the second quarter results, Citi said in a note.
"The net result is a 2024/25 estimates earnings per share cut of 1% in 2024 and 3% in 2025 on average but no changes to 2026 estimates", they added.
However, volume trends have been stronger than anticipated both on loans and deposits so far.
"With the Spanish economy growing at 2.8% in real terms and private sector leverage to GDP around -31pp below the average in Western Europe, we think the case for loan growth in Spain hasn't been this strong in years", these analysts added.
Renta 4 brokerage said that the net interest margin, which has been very strong so far amid high rates, will continue to be the main focus of the earnings and warns on some possible deceleration in quarterly comparison.
"Following the 2024 guidance upgrades made in 2Q24, we should not see further upward revisions, nor do we perceive a downside risk", they also pointed out.
(Matteo Allievi)
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