Last updated: 12:37 / Tuesday, 20 October 2015
Preview 3Q15

Mirabaud Offers Grim Outlook on the Spanish Financial Sector

Mirabaud Offers Grim Outlook on the Spanish Financial Sector
  • Spanish banks will present weak revenues
  • Possitive Commissions yoy, but bleak Asset Management ones due to summer activity
  • Asset Quality will keep improving

According to Fabio Mostacci, Senior analyst at Mirabaud Securities Spain, the Spanish financial sector will present weak revenues and a lower net income on a qoq basis. “We expect that this upcoming quarter will not deviate meaningfully from the general trends seen during previous quarters. In general terms, we expect good asset quality trends to be partially offset by declining NII due to weak volumes, continued pressure on loan pricing and declining contributions from the ALCO portfolios. In other words, we anticipate that the market perception of a lack of core revenue growth will be confirmed.”

Although they are expecting that deposit repricing will fuel growth in net income, analysts at Mirabaud, anticipate “a sequential decline for all of the banks we cover. This is mainly due to lower contribution from ALCO portfolios following the decision of most of the banks to sell part of the exposure and crystallize capital gains in Q2, and/or to swap part of the portfolios to reduce duration risk.”

They predict that commissions should confirm the positive trend on a year – on – year basis, but sequential growth should be negative due to seasonality and to the weak market performance throughout the summer, which negatively affected asset management commissions. "As for other revenues, we expect trading income to substantially decline towards normalized quarterly run rates following exceptionally high levels over the last few quarters."

Mirabaud also anticipates asset quality to keep improving on the back of the supportive macro backdrop and pick up of real estate prices.  Given that in 1S15 many banks frontloaded a sizable part of their expected provisioning effort for the year,  Mirabaud expects that the sequential decline of provisions should be meaningful.

Spanish banks will present their results according to the following list: