The turbulent spring that rocked the financial sector with the problems of US regional banks and the collapse of Credit Suisse ushered in a earnings season that has ended in mixed fortunes for Santander Bank and BBVA.
Since volatility spiked at the beginning of March, the Cantabrian group has corrected the IBEX 35 by more than 18 percent, while BBVA accumulates losses of 14 percent.
The two giants of Spanish banking, more protected by geographical diversification, suffered much less punishment than the 30 percent that falls Sabadell Bankthe 24 percent that is left bankinter and the remaining 19 percent caixabank.
However, the market made a much more favorable reading of BBVA’s results, while penalizing the outflow of deposits reported by Banco Santander and its problems in Brazil. This is what explains the better performance of the Basque bank on the stock market.
BBVA, better than Banco Santander
From a technical point of view, the two entities have maintained significant support and are trading above the 200-session average, so their situation is not particularly alarming. However, there are nuances to take into account.
“Technically, BBVA is a little better than Banco Santander,” said the director of analysis for Inversión magazine, Joseph Codina.
After the double fall that impacted the market with the bankruptcies first of Silicon Valley Bank and then of First Republic, Banco Santander retested the support of 3 euros, but now it needs to validate the rebound.
This will happen if the Cantabrian bank is able to exceed 3.3 euros, the key that would open the attack on the bearish guideline, which goes through 3.45 euros.
“Exceeding 3.6 cancels out any danger of correction, and then goes to close the gap in the area of 3.8 euros,” said Codina.
Below, “the shares of the Spanish bank continue to trade at the edge of 3.15 euros, the first important support, so we will see if the market is capable of sustaining it at the weekly close,” Diego Morín told finanzas.com, IG analyst.
Less intensity of punishment for BBVA
While Banco Santander still has to close the gap left by the falls, BBVA has already done this.
“First it fell back to 5.47 euros, but in the second fall it only corrected up to 6.1 euros,” explained Codina. In this way, the Basque group “did manage to close the gap with its first rebound”, an upward reaction that must be validated by exceeding 6.4 euros.
In the event that it exceeds the area of 6.5 euros, BBVA would be on its way to breaking 7 euros, thereby “nullifying any correction structure” and would set its sights on the target of 7.4-7 ,5 euros.
This is also the key area for Diego Morín. “If the purchases continue to enter the value, it is likely that we will see an approach to said resistance,” said the IG expert.
The Fundamental Catalysts
On the fundamental side, Banco Santander has plenty of room to recover lost ground. “The concerns are exaggerated, but it is necessary delivery”, Deutsche Bank analysts said. That is, the bank must confirm the improvement in the following quarters.
Along the same lines, the Credit Suisse economists maintained their objective for the Cantabrian entity to achieve a Rote profitability of 15 percent this year. Of course, they put their finger on the sore, predicting persistent pressures in Brazil and the United States, which they hope the bank can compensate with its catalysts in Europe.
For BBVA, which is currently the most profitable bank in Europe, the equation will clear up by maintaining cruising speed in Mexico and Spain, its two main markets, without losing sight of the general elections in Turkey this weekend.
An opponent win Kemal Kilicdaroglu about the president Recep Tayyip Erdogan it would push for orthodox monetary policies, which would initially hurt Turkish banks, including Garanti, the BBVA subsidiary.
Right now, the polls are very close, and as Lizzy Galbraith, a political economist at abrdn, reminds us, there is likely to be a runoff on May 28 if neither candidate gets 50 percent of the vote. Two weeks of uncertainty for BBVA.
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