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IBERIAN DAILY 29 APRIL + 1Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BBVA, CAF, IAG, NATURGY, TELEFÓNICA, UNICAJA.


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 1Q’24 results to be released over the coming days in Spain.

The Ibex hits new annual highs
Friday’s gains, driven by the good earnings season on both sides of the Atlantic and some widening in sovereign yields led stock exchanges to end in positive territory, particularly the Ibex and the Nasdaq (around +4.0%). Within the STOXX 600 sectors, Household (Retail) and Technology led weekly gains, >+5.00%, whereas Chemicals (the only sector ending in negative territory) and Food (dragged down by the poor results) were the worst performers. On the macro side, in Spain, March’s retail sales climbed less than expected whereas the 1Q unemployment rate rose more than expected despite the fact that job creation rose at 3.0% YoY. In the euro zone, March’sM3 grew more than expected, with recovery of household and corporate lending. In the US, real personal outlays rose more than expected whereas the consumption core deflator reported a higher annual rate than expected. In China, industrial profits fell -3.5% YoY in March. In US business results, Aon and EXXON came in below expectations, Abbie and Colgate-Palmolive beat expectations.
What we expect for today
Stock markets would rise less than +0.5%. Currently, S&P futures are up +0.25% (the S&P 500 ended down -0.10% vs. the European closing bell). Asian stock markets are rising (China’s CSI 300 +1.38%, Japan’s Nikkei is closed).
Today in Spain and Germany we will learn April’s preliminary inflation and in the euro zone April’s economic confidence index. In US business results, Domino’s Pizza and Paramount, among others, will release their earnings.


COMPANY NEWS

BBVA. 1Q’24 results strong in Spain and with mixed performance in the rest of regions. Net Profit guidance improved. SELL.
The company obtained € 2.2 Bn of Net Profit (+19.2% vs. 1Q’23 and 17.7% RoTE implied), around +10% above expectations, with better performance in NII (+15% vs. +12% consensus), fee revenues (+31% vs. 23% consensus), but especially higher trading revenues (+36% vs. consensus). Revenues grew +18%, but there was more pressure on costs (+12% vs. +9.5% consensus) and an increase in CoR (139bps vs. 115bps in 2023). This is in line with the guidance, but means +40% in provisions vs. 1Q’23. By countries, Spain continues to lead the way, with a sequential increase in lending (+0.8%) and better performance in revenues and costs than expected. Mexico was in line in business activity (+10%) and fee revenues (+33%), but NII slowed and pressure can be seen on costs and CoR. In Turkey the performance deteriorated, with NII plummeting (-56% YoY), costs and CoR rising (77bps above expectations), and in South America credit quality also deteriorated. Solid performance in capital (12.82%; +10bps vs. 4Q’23) thanks to the organic generation. The company raised its Net Profit guidance, now foreseeing double-digit growth in Spain (vs. >2023 levels previously and around +0% BS(e ) and consensus), and also better NII performance in Spain (vs. +5% previously). In short, mixed performance. Despite the guidance upgrade, we expect a neutral market reaction bearing in mind the recent performance (+28% in the past 3 months vs. +19% sector).

UNICAJA. Results +28% above 1Q’23 Net Profit thanks to better revenues (+4%) and lower provisions (-17%). BUY
Good NII data (>+2.4%) even though lending falls -1.8% vs. 4Q’23. The COR provides a positive surprise: 25bps in 1Q’24 vs. 29 in 4Q’23. 5.4% ROTE vs. 4.1% as of 4Q’23 and 6% if adjusted for 12.5% CET1. 14.5% CET1 vs. 14.71% in 4Q’23. The key to the market reaction will lie in the conference call to be held today at 11:30 (CET). The market expects an optimistic message, either by raising its NII guidance’24 (currently single digit vs. +5.4% BS(e) and +3.3% consensus) or by pledging to do it in its 2Q’2 Results, as was the case of Bankinter. If this is not the case, we believe we could see a negative market reaction. UNI has beaten its sector in Spain in the past 3 months (>30% rise and vs. +25% peers).
RESEARCH DEPARTMENT