The analysis firm Jefferies has issued a positive assessment of the new strategy presented by Caixabank for the period 2025-2027. According to Jefferies, this is a “realistic” proposal that could result in shareholder remuneration of around €11.5 billion during those three years.
In their report, Jefferies analysts highlight that CaixaBank’s new plan contemplates a lower growth during the trienniumbut at the same time, the banking entity will focus on investing to expand its business. This could translate into a more moderate return of capital for shareholders between 2025 and 2027 compared to the previous period of 2022-2024, where a total return of €12 billion is expected.
Jefferies considers that, despite this decrease in the return on capital, the figures presented by CaixaBank maintain “very healthy” levels for shareholders. With an average profitability of 15% and an average annual growth of the risk-weighted assets of the 3%analysts estimate that the bank would have around 11.5 billion eurosto distribute in the form of dividends or to pay AT1 bonds in the next three years.
Solid operational and financial objectives
As for the operational and financial objectives, Jefferies believes that they are “solid and realistic.” The strategy is based on positive asset growth, although this will lead to a decrease in profitability to 15% in the first two years of the plan, before recovering and reaching 16% in 2027.
It is important to mention that CaixaBank aims to close the year 2024 with a return of 17%. Jefferies highlights that this strategy is essential to ensure sustainable profitability in the future.
Short-term challenges and adjustments to the interest rate environment
Jefferies experts point out that CaixaBank will experience certain short-term difficulties in adapting to the new interest rate environment and taking advantage of the expected growth in the economies of Spain and Portugal.
It is anticipated that in 2025 and 2026, the bank may face “negative operating jaws” due to the decline in net interest margin as a result of the planned rate cuts. However, the increase in activity is expected to materialize mainly in the last stage of the strategic plan.
Despite these challenges, revenue from services such as wealth management and insurance is expected to partially offset the pressure on net interest margin. An increase in costs is also anticipated, especially at the beginning of the period.
Risks associated with the interest rate environment
Jefferies’ analysis highlights that the projected 4% growth in loans is a realistic target. However, the greatest risk comes from a possible decrease in interest rates below 2%, which would put pressure on CaixaBank’s income in a non-linear manner.
Despite this unfavorable scenario, analysts believe that CaixaBank would continue to stand out compared to its competitors, thanks to its diversification of income (the 30% does not come from investments) and a solid business in insurance and asset management.