BANKIA: BEST IN CLASS IN CAPITAL. CATCHING THE DPS’21 (ANÃLISIS BANCO SABADELL)
Best in Class on the capital level. “Catching†the DPS’21. BUY.Bankia is one of most capitalized banks, which gives us confidence to face a worsening Covid-19 situation. Its PPP levels are high enough to absorb provisions BS(e) (CoR of ~85bps 2020 and ~55bps in 2021). Moreover, it would have a 3.7% buffer over the MDA, which, in addition to the flexibility obtained through anti Covid-19 measures (that is Phase In vs. FL for BKIA), would allow it to absorb an additional € 5.5 Bn of provisions (NPL of ~15% vs. 7.4% 2021 BS(e)). This could be used by the bank to claim to the regulator an increase in shareholder remuneration. Thus, in addition to the upside potential (+27%), we expect a substantial DPS’21 BS(e) of €~0.23/sh. (23% yield). Thus, we expect € 700 M of dividends to be paid in 2021 (to which we add the € 350 M that would have not been paid in 2020).
Bankia is a financial institution based in Spain. Co. is primarily engaged in operations in the banking sector. Co.'s business operations are structured into seven areas: Retail Banking, Business Banking, Private Banking, Asset Management and Bancassurance, Capital Markets and Holdings. Co. offers financial products and services to various customer segments, such as individuals, small and medium enterprises, large corporations, as well as public and private institutions. As of Dec 31 2014, Co. had total assets and total customer deposits of Euro233,648,603,000 and Euro106,806,698,000 respectively.
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