EUR 100.00 For Business Accounts Only

IBERIAN DAILY 05 SEPTEMBER (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BANKING SECTOR.

The Ibex remains below 9,500 points
European stock markets saw a decreasing performance with few macroeconomic references and with the US closed for Labour Day. Thus, in the Euro STOXX, Technology and Automobiles were the only sector seeing clear gains, whereas Industrial and Travel&Leisure ended flat and Utilities and Real Estate led losses. On the macro side, in the euro zone September’s Sentix investor confidence index dropped more than expected. In Spain, August’s unemployment rose by 24,826 people after 5 months of drops, with the drop pace remaining at -7.6% YoY. In China, the Caixin Services PMI fell more than expected in August. Separately, the developer Country Garden has paid the coupons on 2 bonds in dollars hours before their maturity, thus avoiding default. In Japan, real household spending fell two times more than expected in July.
What we expect for today
European stock markets would open flat with some bearish bias. Currently, S&P futures are down -0.10% (the S&P 500 was closed yesterday). Volatility in the US rose (VIX 13.82). Asian stock markets are mixed (China’s CSI 300 -0.59%, Japan’s Nikkei +0.09%).
Today in the euro zone and Spain we will learn August’s Services PMI and in Brazil July’s industrial output. In debt auctions, Spain will place € 5 Bn in 6M and 12M t-bills.


COMPANY NEWS

BANKING SECTOR
According to the press, at a meeting held between the acting Minister for the Economy, Nadia Calviño and the top representatives of Spanish financial institutions, she would have confirmed that if the current coalition administration remains in power they do not plan to extend the tax on the banking sector beyond 2024. Note that this tax came into force at the end of 2022 and is aimed at levying the revenues of the banking sector obtained in 2022, starting to collect in 2023 and 2024. All the financial institutions have already included in their 1Q’23 accounts the annual impact from this new tax. Positive news, as this would correct the statements made by the Minister last Thursday (31/08), when she did not rule out the possibility of extending the tax through 2025. We expect a positive market reaction today although cautiously as we do not rule out that the possibility of extending this tax or a new version from 2025 could be discussed over the coming weeks/months by both a potential PSOE coalition or PP administration in view of the investiture debate to be held at the end of September. Our estimates and those of the consensus consider that the tax will be maintained through 2024. If extended, this would mean an annual impact of around -15% on domestic banks’ profits, and around -5% on Santander and BBVA.