EUR 100.00 For Business Accounts Only

IBERIAN DAILY 16 OCTOBER + 3Q’24 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: BANKING/ENERGY SECTOR, OHLA, TALGO.

The Ibex continues to lead Europe, far from the Euro STOXX corrections
European markets saw a decreasing performance, led by the sharp drop in oil prices and ASML’s disappointing 3Q results. The Ibex stood out once more, ending near 12,000 points. In the STOXX 600, Telecoms and Media were the best-performing sectors vs. the drops of Technology and Energy. On the macro side, in the euro zone, August’s industrial output climbed unexpectedly. In Germany, October’s ZEW rose more than expected thanks to the lower inflation and the expected rate cuts although the current situation component fell again. In Spain, September’s final inflation confirmed the preliminary data of 1.5% YoY, with the core data coming in at 2.4%. In Italy, G. Meloni plans to raise up to € 3.5 Bn in new taxes to banks and insurers. In US business results, Bank of America, Goldman Sachs, Citigroup and State Street beat expectations.
What we expect for today
Stock markets would open with drops >0.5%, dragged down by Consumer Goods and Technology. Currently, S&P futures are flat (the S&P 500 ended -0.4% lower vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.5%, Japan’s Nikkei -1.8%).
Today in the UK we will learn September’s general and core inflation and in the US September’s import prices. In US business results, today Morgan Stanley, US Bancorp and Prologis will release their earnings.


COMPANY NEWS

BANKING/ENERGY SECTOR
According to the press, in order to comply with the European fiscal regulation, the government would be preparing a fiscal reform to include the permanence of the tax to the banking and energy sectors. The Ministry expects this rule to be approved in 2024. The administration will try to include it through an amendment to the Draft whereby a complementary tax is set to ensure a minimum global taxation for multinational groups and large domestic groups. Some energy companies such as Repsol, Endesa, Iberdrola o Naturgy would be trying to halt this government plan, threatening to freeze their investmetns if this tax is extended.
News without impact for the banking sector. The market was taking for granted that the tax would become permanent and even though in the spring’24 its reformulation was studied with a lower possible impact it was never considered. Note that the tax accounts for around 15% of the annual profits of domestic banks and around 5% in the case of Santander, and we and the consensus in general have assumed it in our estimates. Negative news for the energy sector although of limited impact, awaiting to see the final definition and whether deductions are included to investments in energy transition such as energy, as some parliamentary groups requested. Note that for 2024e, against 2023 results, the estimates on the impact without investment deductions would be as follows: Iberdrola € 160 M (0.21 market cap; vs. € 216 M previously in 2023, 3% Net Profit’24e), Naturgy € 100 M (0.4% market cap; vs. € 165 M previously, 5% Net Profit’24e), Endesa € 202 M (1% market cap; vs. € 208 M, 11% Net Profit’24e) and Repsol € 350 M (2.5% market cap; vs. € 445 M previously; 10% Net Profit’24e).