Sabadell Results 25-Apr: Margins and M&A To Lead Discussions

Sabadell results are due 25-Apr – positive margin guidance from Bankinter’s results last week are likely to lead the discussions, perhaps alongside any M&A strategy view after mgmt comments towards Unicaja in February.

• FY23 results (1-Feb) beat expectations on lower loan losses but disappointed on revenues. The news in the last quarter has been led by Sabadell’s chairman indicating an interest in tying up with Unicaja (reported in Spanish press) but then a denial of talks from the target company.
• Bankinter results last week impressed equity investors with its margin guidance – we felt credit metrics were neutral but this is still a reasonable lead indicator for SABSM where revenue expectations are just +2% this year and -2% in FY25.
• SABSM spreads are c.53bp tighter YTD (€IG banks -37bp) so a good outperformer. The equity is up a quarter since results, but this has broadly tracked the SX7P index.
• Earnings estimates are up: FY24 earnings are up 10% since results but next year’s are only 5% higher. There have been barely any revenue moves at all so this feels indicative of that loan loss surprise in 4Q23 results.

Results due 0600 (London time), conf call is 0800 at https://sabadellresultados.com/2024_01/