Report
Esther Castro
EUR 446.72 For Business Accounts Only

SANTANDER: WILLING TO OVERCOME THE COR-ONAVIRUS (ANÁLISIS BANCO SABADELL)

Willing to overcome the CoR-onavirus. New T.P. of € 3.00/sh. (upside around +50%). BUY
Against a completely uncertain backdrop regarding the increase in the banking system’s NPL ratio (due to the extreme uncertainty on how big the recession will be), we try to analyse the increase in the bank’s provisions. According to our numbers, the deficit would reach some € -15 Bn (meaning Net Profit’20-21 of around 50%), which it could absorb with its PPP over the period, and it would still have a capital buffer for another ~250bps over MDA (which would give it leeway for another € +15 Bn of provisions). We expect phase-in CET1’20 to reach 12.02% BS(e), and we do not consider the possibility of a dividend being paid out in 2020. The bank is currently trading at an implied CoR of more than 400bps vs. ~150bps BS(e), which would be way too high. If there were to be a decoupling in recovery, SAN could perform better.
Underlying
Banco Santander

Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.

Provider
Sabadell
Sabadell

Analysts
Esther Castro

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