Spanish Banks: Sustained Robust Profitability in Q1 and Strong Outlook for FY24; Stable Asset Quality

Morningstar DBRS has released a commentary discussing the Q1 2024 results on seven Spanish banks (Santander, BBVA, Caixabank, Banco de Sabadell, Bankinter, Abanca and Kutxabank). Summary highlights from the commentary include:

• Another set of very strong in Q1 driven by upward NIM, higher fees and improved net cost of risk.
• NII could still increase further.
• Stable asset quality on the back of better than expected domestic economic dynamics in 2024.

“Looking into 2024, overall profitability expectations have also improved as a result of higher for longer interest rates and growing lending volumes” notes Maria Parra, Vice President, Global FIG at Morningstar DBRS. “In addition, we expect cost of risk to remain very contained helped by the strength of the Spanish labour market and the better economic forecast for the Spanish economy in 2024 versus the sentiment at end-2023”.