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IBERIAN DAILY 01 FEBRUARY + 4Q’22 RESULTS. HIGHLIGHTS AND PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BBVA, CAIXABANK, IBERDROLA, METROVACESA, REPSOL.


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 4Q’22 results to be released over the coming days in Spain.

Transition period ahead of the Fed meeting
The European stock markets ended flat ahead of the Fed meeting, recovering after it was known that labour costs in the US slowed in 4Q’22. Thus, within the Euro STOXX, the best-performing sectors were Banks and Autos, whereas Basic Resources and Energy saw the bigger drops. On the macro side, in Germany, unemployment fell unexpectedly once again in January, whereas December’s retail sales contracted unexpectedly. In Spain, the minimum wage will be increased by 8.0% in 2023 after the Govt. reached an agreement with unions. In the US, labour costs slowed in 4Q’22 more than expected, whereas the Conference Board consumer confidence for January and the Chicago PMI fell unexpectedly. Lastly, home prices fell in YoY terms less than expected. In China, the Caixin manufacturing PMI recovered less than expected and remains below 50. On the geopolitical front, doubts remain in Europe about providing fighter jets to Ukraine after J. Biden’s refusal to provide F-16s. In the Euro zone, the GDP grew unexpectedly in 4Q’22 despite labour costs, weaking confidence and rising interest rates. In US business results, Pfizer, Mc Donald’s and GM came in better, Exxon in line and Caterpillar worse.
What we expect for today
European stock markets would open with slight gains, with basic materials and energy recovering in a session that will be in the air until the Fed’s decision. Currently, S&P futures are down -0.3% (the S&P 500 ended +0.8% higher vs. the European closing bell). Volatility in the US dropped (VIX 19.40). Asian markets are rising (China’s CSI 300 +0.58% and Japan’s Nikkei +0.1%).
Today we will learn in the Euro zone January’s final manufacturing PMI and January’s preliminary inflation, in the US January’s ADP private employment survey and the ISM manufacturing index. Also, the Fed will hold its meeting. In Brazil, the Bank of Brazil will also hold its meeting. Lastly, the OPEC+ will also meet today. In US business results, Meta (Facebook), T-Mobile, McKesson, WestRock and Universal, among others, will release their earnings. In debt auctions: Germany (€ 5 Bn in bonds due 2033).


COMPANY NEWS

BBVA. Positive 4Q’22 results, with strength in Spain and operating slowdown in Mexico. Improved yield. BUY
The company has obtained € 1.58 Bn of 4Q’22 Net Profit (+17.6% vs. 4Q’21), around +5% above consensus expectations (+0.5% vs. BS(e)), mainly due to lower provisions (-6% vs. consensus; CoR 91bps) in Mexico and Turkey. Operating Income rose +24.4%, with +19% in revenues and +13% in costs, both in line. By areas, Spain posted a surprising NII figure, offset by the prudential rise in CoR. Mexico and Turkey (+13% and +40% in Net Profit vs. consensus) were underpinned by lower provisions. On the negative side was the performance from the corporate centre and LatAm (adjustment for hyperinflation). Positive capital performance (12.61%; +16bps vs. 3Q’22 and vs. -15bps expected). BBVA has announced a DPS’22 in cash of € 0.43/sh. (+39% vs. 2021; 6.5% yield) and a share buyback plan (unexpected) totalling € 442 M (1.1% yield), improving total remuneration. We expect a positive reaction, bearing in mind the unexpected buyback announcement.