Five Days /
The market is still digesting and analyzing the implications of the new measures announced by the ECB last Thursday. Banking is clearly being the sector most benefited from the equity by the “wink Draghi to a sector which in recent months has been punished in the worst moments of Ibex in the debt crisis of 2012 when the selective reached trading below 6,000 points, “explains Joaquín Robles, an analyst at XTB.
Since last Thursday, the day of Draghi, banks recover important positions in the stock market. In these few days, People’s Bank moves more than 12% in the stock market followed by Bankia, Sabadell and Santander to recover around 10% each. Gains BBVA, CaixaBank and Bankinter are more moderate and are around 7%.
This recovery of banks on the stock market is only the beginning, as Bankinter. The analyst firm has raised its recommendation for the European sector from sell to buy “The measures taken by the ECB change the rules of the game and our vision on banks significantly improves”. In fact, Bankinter believes that the sector will rise by an average of 25% over the next twelve to eighteen months under the impetus of these measures.
The entities that more will benefit from new measures have to comply, in the opinion of Bankinter, a number of requirements. First, have a high cost or above average funding. Secondly, greater reliance on wholesale funding and / or have a “Loan – to – Deposit ratio” greater than 100% and third place, a greater relative weight of the bond portfolio maturity as this part of the asset is less sensitive to interest rates of assets ( “yield” stable and higher than the margin with clients. fourth, will enjoy positive operating leverage and fifthly, benefit entities whose weight of nonperforming assets have a greater weight on the total assets.
in Spain, Sabadell and Popular
Given these parameters, in the Spanish market, the two banks beneficiaries are Sabadell and Popular, entities whose main source of revenue comes from Spain with particular exposure to corporate business. in addition, large Italian banks, which cost funding is one of the biggest potential for improvement among large European banks. in addition to Intesa, show their favorite in Europe and present in our model portfolios for a long time, we include Unicredit listed with a P / BV of 0.5 x has an estimated ROE of only 5.0%.
in addition, opt for Deutsche Bank that he was penalized by the negative news flow, the losses recorded in 2015 (6,800 million euros) and accumulates a loss of value of 18.6% throughout the year. Deutsche Bank is trading at a more than 60% of their book value and credit risk indicators off have improved markedly since the announcement of the ECB (the 5Y CDS trading at 125 basis points from 250 basis points reached in January).
Other entities
All those who in addition to meeting most of the above parameters can be considered as candidates for purchase in the future consolidation process as Liberbank in Spain and Monte dei Paschi di Sien to Italy although only recommend these investment options for more aggressive investors and / or speculative
SPAIN. How much will rise banks on the stock market by the Draghi effect ?
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