Santander loses its pulse against BBVA and is already the most bearish bank

The future of the Ibex 35, which is roughly in the hands of five stocks, is less and less defined by what it can do Santander bank. Its weighting within the index is about to fall below 9%which marks minimum levels not seen since 2020 due to the crash caused by Covid, although if this recent episode were ignored it would be the lowest rating of the entire 21st century.

Investors seem to have rebalanced their positions between the two most international banks in the country and Banco Santander, which It has fallen by 5% since the presentation of the results on July 28, it opened a gap of almost 9 percentage points against BBVA, which added 6% in five sessions. Enough to reverse the previous situation and for Santander to become the red lantern of the sector over the year, with losses of 19% against 15% left by BBVA.

The financial sector, until July the one that weighed the most on the Ibex with 26%, has taken a back seat since investors have wanted to return to seeking refuge and this necessarily involves buying utilities. National electricity and gas companies, led by Iberdrola, regained their leading position this summer and again account for a quarter of the index’s weight. Iberdrola alone accounts for 15.4% of the total. The maximum level was reached in 2020, when it touched 20%.

A priori, the disposals that affect Banco Santander could be justified by a rotation of the portfolios of major international investors. Five of the ten main institutional shareholders of the entity chaired by Ana Botín have reduced your exposure to the bank over the past month. BlackRock decided to do so last Friday, although it retains the top position among institutional investors, with 4.15% of the capital; yesterday Bloomberg took over the sale of Crédit Agricole (with 1.28%); and on July 19, Capital Group retained 0.76% of the capital after the sale.

Analysts see, despite the decline, excess capital and revenue growth for 2023

The rise in interest rates has already begun in the euro zone – with the latest hike announced by the European Central Bank of 50 basis points two weeks ago – is a very clear tailwind for the sector. The thing is that in In recent months, investors have decided to favor banks with greater exposure to Spain -such as CaixaBank and Sabadell- to the detriment of those most exposed to emerging markets -Santander and BBVA-.

This led Santander Bank to increase its upside potential up to around 70% twelve months in advance, knowing that its fall on the stock market was not accompanied by a deterioration in the estimates of analysts, who place their price target above 4 euros. The average national bank has an upward trajectory of 50%. In the case of BBVA, it is 46%.

The bank presented last week a profit of 4,894 million euros in the first half, 33% more than the same period in 2021. In the second quarter alone, income from “interest reached 9,550 million euros, or 16% more”, specifies JP Morgan, which estimates that “they will continue to increase in the coming quarters, taking advantage of the rise in interest rates and the increase in activity”. levels”.

“The momentum is about to happen and we think it’s only a matter of time. Patience in Brazil (first market for the bank) which offers geographic diversification has proven to be very useful and we are already looking at 2023,” they say of Credit Suisse.

Moreover, the side step that Botín took to abandon the offer on Banamex (the Mexican subsidiary of Citi for which it made an offer) opens the door, it is said to Bloomberg intelligenceto what “this excess capital” impact at any given time on shareholders.

bank tax

Santander will have to pay nearly 730 million euros in interest and fees over the next two years to comply with the new rate announced by the governmentWhat will tax 4.8% of bank income. In the case of the entity chaired by Ana Botín, this rate will represent 2% of pre-tax profit, and 359 and 373 million euros per year, according to the calculations of Bloomberg.

This is the lowest percentage in the sector for the benefit of the group, despite the fact that it represents a quarter of the collection to which the State aspires. It is exceeded only by CaixaBank, in total amount, with almost 1,000 million over the two yearsalthough in his case, it’s about 12% of the profit.


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