The Spanish banks have suffered a very outstanding correction in the first days of August, after the strong increases they had registered in recent months.
Javier Molinasenior market analyst for eToro, says that «despite the positive evolution of the Spanish banking sector in the first half of 2024, investors should keep in mind that Stock prices may already be reflecting this improvement.«. In his opinion, during the first half of 2024, «the Spanish banking sector has shown a solid performancewith a general upward trend in most key financial indicators. Although each entity has its own particularities, the main financial figures of the largest banks by capitalization offer a clear picture of the situation.» In this sense, he highlights that «the profit growth has been remarkablewith year-on-year increases ranging from 16% to 37%. These results reflect solid revenue generation and effective cost management, which has enabled the entities to maintain profitability in a competitive environment«. About him interest marginone of the main metrics of the sector, indicates that «it has experienced a average growth of 15%favored by greater credit activity and an improvement in the conditions of global financial markets.» In this sense, he adds that «the interest rateswhich have remained at favorable levels for the sector, have been a key factor in this positive performance.» On the asset qualityconsiders that «it has remained stable, with Controlled bad debt ratios and, in some cases, decreasing. However, a trend has been observed increase in provisions for bad debtswhich indicates that the entities are preparing for possible future challenges in the macroeconomic environment. Even so, the average non-performing loan ratio does not exceed 3%». In summary, Javier Molina assesses that «the Spanish banking sector has maintained a Positive evolution during the first half of 2024benefiting from a favorable operating environment and diversified business strategies that have improved both efficiency and profitability.» Their conclusion is that «these results highlight the sector resilience in the face of macroeconomic challenges and its ability to continue generating value for shareholders.» However, it states that «after the strong revaluation of its shares, The sector may have entered a consolidation phasewhich requires a careful analysis by investors on the right moment to make decisions in the market.»
A NORMAL TECHNICAL CORRECTION
For their part, the Technical analysts point out that the correction is normaldue to the very strong increases that these values have registered not only in 2024, but in recent years. Therefore, the corrective movement falls within the stock market parameters, since the values always move in a sawtooth pattern, and they usually fall faster than they rise. In this sense, Finding attractive entry points in the different Spanish banks can be a good option for investors who continue to trust in the evolution of the sector in the medium and long term.
THE DECLINE OF THE EURIBOR
At a fundamental level, there are several reasons to justify the fall. Firstly, the decline of the Euribor has been more pronounced in recent days, which affects the interest margin of the banks. As the CEO of CaixaBank acknowledged yesterday, Gonzalo Gortazarthe The increase in interest margin «has come to an end»as banks face a scenario of falling interest rates in the coming quarters. Thus, observing the evolution of this indicator for see at what levels it can stabilize It can also be an interesting clue when considering entering these stocks.
BBVA'S HOSTILE TAKEOVER AND SHARE REPURCHASES
On the other hand, the Hostile takeover bid launched by BBVA against Banco Sabadell This is particularly affecting their share prices, as both banks have cancelled or postponed their share buyback programmes until this operation is completed. Neither does it have a share buyback programme in place. Santander Bankwhile CaixaBank and Unicaja Yes, they do have active buyback programs, which can support their prices in the current corrective scenario. In any case, the next sessions and weeks will offer more clues about the stock market future of the sector. Time will tell if the August 'sales' have been an opportunity to buy at more attractive prices, or if the strong revaluations of the banks have come to an end.