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IBERIAN DAILY 30 JULY + 2Q'21 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: AEDAS HOME, BBVA, CAIXABANK, ECOENER, GRUPO CATALANA OCCIDENTE, OHLA, RED ELECTRICA, REPSOL, VISCOFAN.


At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 2Q’20 results to be released over the coming days in Spain.

MARKETS YESTERDAY AND TODAY

A market satisfied with the Fed
The European market rallied after the Fed’s accommodative message (for the time being the tapering seems far) and the stabilisation of the Chinese stock markets (although a new wave of regulatory risk is liable to return at any moment). Thus, in the Euro STOXX, Automobiles and Basic Resources were the best-performing sectors whereas Travel&Leisure and Real Estate ended with the biggest drops. On the macroeconomic level, in Spain, the 2H’21 unemployment rate fell slightly less than expected, remaining above 15.2% while July’s preliminary inflation rose more than expected, standing at Feb’17 levels. In Germany, July’s unemployment came in better than expected, with the unemployment rate falling to 5.7% and July’s inflation climbing above expectations to 3.8% (high since 2008). In the euro zone, July’s economic climate index improved more than expected thanks to the good performance of the manufacturing sector. In the US, the 2Q’21 GDP came in below expectations, dragged down by the contribution of inventories (temporary effect), although with very dynamic private consumption. As for the rest of data, weekly jobless claims moderated slightly less than expected and pending home sales slowed down in June, in line with expectations. In politics, today marks the end of the debt ceiling suspension, and an agreement is expected between Democrats and Republicans to avoid a shutdown of the administration. In Japan, June’s preliminary industrial output came in above expectations. In US results, Amazon released disappointing sales for the first time since 2018, and although it beat expectations in profits, this shows that online consumption would be reversing after the pandemic. In the rest, Hilton Worldwide, Mastercard and T-Mobile beat expectations, with Merck coming in below.
What we expect for today
European stock markets would open with losses after Thursday’s rally in Asia dissipated, Amazon’s results were released and Covid-19 cases spiked. Currently, S&P futures are down -0.9% (the S&P 500 ended -0.12% lower vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 17.70). Asian markets are sliding (China’s CSI -1.3% and Japan’s Nikkei -1.7%).
Today in the euro zone, Spain and Germany we will learn the 2Q’21 GDP, in the euro zone July’s preliminary inflation and June’s unemployment rate, in the US the 2Q’21 job costs and June’s personal income and outlays. In US business results, Linde, Caterpillar, Procter&Gamble and Exxon Mobile among others, will release their earnings.


COMPANY NEWS

BBVA. 2Q’21 Results. BUY
The company has obtained € 1.29 Bn of recurring Net Profit (vs. €-516 M in 2Q’20 and € 1.03 Bn in 1Q’21), +47% vs. our estimate and +65% vs. the consensus, thanks to higher fee revenues (+26%; +10% vs. expectations) and lower provisions, which fell by -53% vs. 2Q’20 and vs. around -30% expected. With respect tot he consensus, the improvement is also due to higher trading revenues (in line BS(e)). Reported Net Profit, € 701 M, includes restructuring costs in Spain (€~-700 M) and the capital gains from the sale of the US subsidiary (€+103 M). NII fell by -0.9% vs. 2Q’20 (+1.5% vs. 1Q’21), around -2% below our estimate although in line with the consensus, with strong recovery in Mexico and weakness in Spain and Turkey. Fee revenues improved +26%, a very positive performance considering the difficult comparison with 2Q’20. Costs increased by 5.1% vs. 2Q’20, also as a result of a demanding comparable basis, although they stand in line with the previous quarter and meet expectations (+5.3% BS(E) and +3.7% consensus). The quarter continues to be affected by currency depreciation: adjusted for exchange rates, core revenues would have increased by +9.7% vs. 2Q’20 and Operating Income improved 11% vs. last year (and vs. ~5.3% reported). In credit quality, the ~80bps CoR came in below expectations (125-130bps BS(E) and consensus and 117bps in 1Q’21). As expected, the company has set a CoR’21 guidance of ~110bps (vs.