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CAIXABANK: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÁLISIS BANCO SABADELL)

1Q'20 vs. 1Q'19 Results
N.I.I.: € 1.2 Bn (-3.0% vs. -0.8% BS(e) and -2.9% consensus);
Total Revenues: € 1.983 Bn (-6.0% vs. -1.0% BS(e) and -2.0% consensus);
Operating Profit: € 796.0 M (-12.0% vs. -1.3% BS(e) and -3.5% consensus);
Net Profit: € 90.0 M (-83.1% vs. -22.7% BS(e) and -31.0% consensus);
1Q'20 vs. 4Q'19 Results
N.I.I.: € 1.2 Bn (-2.5% vs. -0.3% BS(e) and -2.4% consensus);
Total Revenues: € 1.983 Bn (-0.6% vs. +4.7% BS(e) and +3.6% consensus);
Operating Profit: € 796.0 M (-2.9% vs. +8.9% BS(e) and +6.5% consensus);
Net Profit: € 90.0 M (-79.5% in 4Q'19 vs. -6.4% BS(e) and -16.4% consensus);

The NII in 1Q’20 results came in totally in line with the consensus (-3% vs. 1Q’19) due to the NIM squeeze on the more negative Euribor levels although worse than our estimates (-1% BS(e)). The greater-than-expected squeeze in customer spread (2.13% in 1Q’20) and the lower contribution of ALCO explain the worse performance. However, as we expected, fee revenues saw +7.7% growth vs. 1Q’19 (thanks to asset management and investment banking mainly) and above +4.4% expected by the consensus. The negative reading, lower revenues from associated companies, are explained by the environment of economic slowdown and by an adjustment of YE2019 results that is being carried out this year.
Very good performance in costs, which were reduced by -1.3% vs. 1Q’19, in line with expectations, thanks to the efficient implementation of its structure reduction plan, which began in 2019. It quantifies the impact of Covid-19 at €-400 M (CoR of 84bps), which is above expectations for 1Q’20, but in line with the forecast for the end of the year, that is € 1.5 Bn; CoR of 70bps, and within CABK’s guidance’20 of between 60bps and 90bps. The company abandons the current plan, and gives a single target of costs’20