Rates Impact on Iberian, Italian Banks' Income in Focus -- Sector Preview

Dow Jones10-28

By Elena Vardon

Spanish, Italian and Portuguese banks have started reporting their third-quarter results, with blue-chip lenders set to publish their figures this week and next. Here is what you need to know:

WHAT TO WATCH:

--The market will focus on the extent at which interest-rate cuts weighed on banks' net interest income--or NII, the difference between what they earn on loans and pay out on clients' deposits. Investors will seek to determine whether growth in lending volumes is still subdued and deposit dynamics offset or add to the NII decline. Keefe, Bruyette & Woods analysts expect mostly on-quarter declines in NII.

--In terms of loan and deposit volumes, "the underlying recovery trends seen in previous quarters should be confirmed, a message that we understand the groups will reinforce despite the seasonal weakness typical of the quarter," Renta4 wrote in a note to clients.

--Momentum and growth in income from fees will also continue to be closely watched as banks' asset management, savings and insurance benefit from a lower interest-rate environment. This should help soften the impact of the rate cuts on NII, particularly for Italian domestic banks, which have some of the highest gearing to fees in Europe.

--Lenders are unlikely to modify their full-year guidance at this stage. "We expect most banks will retain the original targets for this year given the impacts of the recent moves will be felt more in 2025," KBW analysts said.

--For banks with activities beyond Europe, focus will be on the effect of sizeable foreign-exchange moves during the quarter, particularly for Santander and BBVA, which have key profit centers in Mexico and Brazil.

SCHEDULE:

-Santander: Tuesday Oct. 29

-Unicaja: Wednesday Oct. 30

-Banco Comercial Portugues: Wednesday Oct. 30

-Banco Bilbao Vizcaya Argentaria: Thursday Oct. 31

-Banco de Sabadell: Thursday Oct. 31

-CaixaBank: Thursday Oct. 31

-Intesa Sanpaolo: Thursday Oct. 31

-UniCredit: Wednesday Nov. 6

-Banco BPM: Wednesday Nov. 6

-BPER Banca: Wednesday August 6

-Banca Monte dei Paschi di Sienna: Thursday Nov. 7

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

October 28, 2024 09:28 ET (13:28 GMT)

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Rates Impact on Iberian, Italian Banks' Income in Focus -- Sector Preview

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