EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BBVA, COLONIAL FERROVIAL, REPSOL, SIEMENS-GAMESA.

MARKETS YESTERDAY AND TODAY

Consolidation on European equity markets
European stock markets closed with slight losses after attempting to exceed the resistance level marked by Feb’20 highs, as the industrial Dow Jones and the S&P 500 in the US hit new all-time highs. Thus, in the Euro STOXX the best-performing sectors were Travel & Leisure and Telecoms, whereas Banks and Energy ended with the biggest losses. On the macro side, in the euro zone the Eurogroup bet on keeping stimulus measures in place as long as necessary, until recovery is clear. Separately, Germany, France, Italy, Portugal and Spain (for 15 days) joined the countries to suspend vaccination using AstraZeneca’s vaccine. Meanwhile, in Germany, virologists warn that infections are increasing exponentially. In the US, March’s Empire manufacturing index rose more than expected.
What we expect for today
Stock markets would open flat with some bullish bias. Currently, S&P futures are flat (the S&P 500 was up +0.6% vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 20.03). Asian markets are rising (CSI 300 +0.40%, Japan +0.52%).
Today in Germany we will learn March’s ZEW index and in the US February’s import prices and February’s industrial output. Debt auctions: Germany (€ 5 Bn in bonds due 2023).


COMPANY NEWS

BBVA, BUY
The company has called an AGM for 19 and 20 April (1st and 2nd call). Among the proposed agreements we highlight: A DPS’20 of € 0.059/sh. (15% payout; 1.3% yield) on 29 Apr (ex date: 27 Apr). A share buyback and cancellation programme covering up to 10% of shares outstanding (~667 M shares; 10% market cap). An interim DPS’21 to be paid in cash of up to 35% of its 1H’21 Net Profit (adjusted for one-offs), conditional on the ECB restrictions being lifted, which is expected for late September.
Both the DPS’20 and the share buyback were already known. The surprise stems from the proposal of the interim DPS’21, which will mean resuming its remuneration policy prior to the pandemic (35-40% payout of Net Profit in two payments), which we expected, in any event. Based on our total € 0.0115/sh. estimate (2.4% yield), the interim DPS announced could reach ~€ 0.06/sh. (~1.3% yield). Thus, and in line with the cash criterion, the dividend yield to be collected in 2021 would total ~2.6% in addition to the share buyback (totally or partially; ~10% yield), the execution of which would start after the lifting of the ECB’s restrictions.