CaixaBank celebrates this Friday its shareholders meetingInitially scheduled for April 3, at a time when banks are being severely punished on the stock market in fear of a triggered default. The entity led by Jordi Gual comes to this meeting with investors with their backs well covered by analysts: it is the only Ibex financier with a purchase recommendation and its bullish potential it is 45%.
Specifically, the market consensus grants CaixaBank a target price of 2.24 euros per share, from the 1.5 euros that the value is currently around. It is true that, like the rest of the sector, their titles have been ‘pounded’ with losses of 44% so far this year. But this drop is the least dramatic of that recorded by the six banks listed on the Ibex 35, with losses of 48% for Bankinter or BBVA, of more than 50% in Santander or the crash they suffer Bankia and Sabadell, with falls of 60% and 75% respectively.
CaixaBank is also the only Ibex bank that maintains a average ‘buy’ recommendation. Specifically, of the 26 analysts who follow the stock, 16 advise ‘buying’ their securities, compared to 7 who recommend ‘hold’ and with only 3 ‘sales’ tips (also the lowest figure in the entire sector).
Avalanche of good advice
Since the entity presented its results on April 30, the avalanche of ‘buy’ recommendations has been unstoppable. Specifically, 19 analysts have reviewed their perspectives on the entity since that date. And of all of them, 14 maintain or upload their advice to ‘buy’ and the rest recommend ‘keep’.
In other words, the entity has not registered a single ‘sale’ council since it published its accounts for the first quarter, with a profit of 90 million euros, 83.2% less after provisioning 400 million against the coronavirus crisis.
This Friday’s board will ratify these accounts, as well as the proposal for a new dividend policy adapted to the crisis. CaixaBank has already announced the reduction of remuneration charged to 2019 until 0.07 euros gross per share (from the 0.15 euros originally planned), just one day before the ECB recommended that the sector quarantine these shareholder ‘premium’ policies.
This will be precisely one of the hot spots on the board’s agenda. But experts agree that the message of the president of the entity, Jordi Gual, and of the CEO, Gonzalo Gortázar, It will be in line with a defense of solvency that requires a review of the remuneration policies of the entire sector.
Solvency as a priority
At this point, CaixaBank again has the support of analysts, who agree that the entity arrives well loaded with liquidity and solvency to face the crisis and to maintain, despite the dividend cut, the Foundation social work without excessive alterations although it faces fewer resources with which to operate.
Nuria Álvarez, analyst at Renta 4 Banco, insists that the entity has also modified the remuneration charged to the financial year 2020, going to a pay-out (part of the profit that goes to dividends) of 30% compared to the previous 50%. However, he points out that “the idea is that it distributes in the future excess capital above a CET1 of 12% in an extraordinary way, although, logically, this distribution will be conditioned to the return of the macroeconomic situation to normality and will not take place before 2021 ”.
Aiming to increase your mattress liquidity and guarantee your solvency levels, the group’s senior management also renounced the variable remuneration for the current year. And it all adds up to protect a capital ratio that remained intact at the end of March, with CET 1 at 12.01%, from 12.03% at the end of 2019. “The cut in the dividend adds 32 basic points and compensates for the negative impact of the markets ”, explains Rafael Alonso, analyst at Bankinter.
The expert points to the balance resistance capacity In the face of the crisis, since “the investment portfolio is well diversified, the capital ratio is in the high range of the sector, the liquidity ratio is at all-time highs and the risk indicators are still good.” At the moment, the late payment de CaixaBank remains stable at 3.6% with coverage of 58%. Alonso insists that “the solvency and credit quality metrics are solid, but the macro panorama is challenging,” especially in terms of profitability.
To avoid major ills and offset the expected drop in the mortgage and consumer business, the sector is now focused on the business credit. According to the latest updated data, CaixaBank has already granted 14,000 million euros to companies aside from lines endorsed by the ICO. Within the latter, the entity has already granted 97,000 loans involving about 8,500 million euros of financing.