Stock market: Why did CaixaBank’s share fall by 5% after the presentation of the strategic plan? | Financial markets

Banks are preparing strategies to protect their accounts in the event of a rate cut. This is the goal of the strategic plan presented by CaixaBank for 2027, in which it aims to accelerate business growth through increased fee income and stable interest margins. After the presentation, it was the turn of investors and analysts to evaluate it. After its shares hit highs on November 4, investors accelerated profit harvesting in a scenario in which the prospect of the ECB accelerating rate cuts to prevent a freeze in the eurozone economy is gaining momentum. Although the company lost 5% today, CaixaBank has accumulated a 46.4% overvaluation for the year, the third-largest bullish reading in the Ibex 35 index.

Although analysts are positive about the proposals announced by the organization, experts believe that the goals of the capital are now less clear. Morgan Stanley analysts believe the plan is generally sound, but shareholder compensation policies are slightly below estimates. According to a statement from the organization, CaixaBank now expects to distribute between 50% and 60% of profits, which contrasts with its previous estimate pay 60%. Following the idea that all capital above the 12.5% ​​CET1 ratio will be distributed, Morgan Stanley analysts estimate that the total distribution capacity will exceed €14 billion. Analysts at the US bank reiterate their overweight recommendation and keep their price target unchanged at 6.5 euros, above the Bloomberg consensus of 6.3 euros. Compared to current levels, the company could rise another 18.8%. Morgan Stanley is emphasizing a target for profitability improvement (ROTE) above 16% by 2027, higher than the US firm’s estimate of 13.5%.

KBW analysts are moving in the same direction. The New York-based investment bank believes CaixaBank’s plan largely meets expectations and demonstrates a greater emphasis on growth. Analysts highlight that the target ROTE is better than expected and confirms CaixaBank’s low rate sensitivity. This is especially important in a context where the market expects the decline in the price of money to accelerate. Market consensus has confirmed that a lower rate scenario would change the balance between the income banks earn on loans and the income they pay on deposits. In line with what Morgan Stanley analysts have noted, KBW stresses that capital allocation targets are less clear. Unlike the previous strategy, which established pay 60%, now set at 50-60%. US bank analysts reiterate their Overweight recommendation and set a price target of €6.78. KBW believes it may take some time for the market to fully digest the presentation.

Among the most bullish analysts, Citi reiterates a buy recommendation and a €6.8 target price. “As expected, CaixaBank has increased the capital distribution threshold,” the organization notes. Analysts have downplayed stock market declines in recent days as the bank outperformed European indices over the past three months. Citi said CaixaBank’s offer to protect itself from rate cuts is “reasonable and broadly in line with expectations.” Among the main medium-term risks, analysts highlight a weak GDP recovery, higher-than-expected growth in non-performing loans and provisions, political risks that affect earnings and significantly increase the cost of capital, as well as fiscal and financial risks. mortgage debts. The government is negotiating with various political parties over the implementation of the 2025 budget, and tax on banks, energy companies and SOCIMI is one of the issues causing the most friction. The Treasury has reached an agreement with the ERC, Bildu and BNG to approve a new tax on financial institutions.