Spanish companies Banco Bilbao Vizcaya Argentaria (ES:BBVA) and CaixaBank SA (ES:CABK) reported their second-quarter earnings for 2023 last week. Both banks posted higher quarterly profits driven by improved lending income, which surpassed analysts’ estimates. The banks foresee this positive trend persisting throughout the year.
Analysts have expressed a favorable outlook on these stocks, rating them as Buy. CABK is projected to have a potential upside of approximately 28%, whereas BBVA demonstrates the potential for around 16% growth in its share price.
Let’s dig deeper into the numbers.
Banco Bilbao Vizcaya Argentaria, S.A. (BBVA)
BBVA, headquartered in Spain, is a leading financial institution that provides a wide array of services, encompassing retail banking, private banking, asset management, and other related solutions.
BBVA reported its Q2 and first-half earnings for 2023 on July 28. The company’s profit for the quarter increased by 24% to €2.03 billion, surpassing analysts’ estimates of €1.83 billion. The profits were primarily fueled by the stronger lending income in its main markets, Mexico and Spain, effectively countering weaknesses in its operations in Turkey. The bank’s net interest income jumped by 25.5% to €5.8 billion.
The increase in earnings played a significant role in elevating BBVA’s return on tangible equity ratio (ROTE) to 16.9% in June, up from 16.3% in March.
Post-results, a few analysts have re-confirmed their ratings on the stock. Two days ago, analyst Ignacio Cerezo from UBS reiterated his Buy rating, suggesting growth of 26.7% in the share price.
Similarly, Morgan Stanley analyst Alvaro Serrano is also bullish on the stock and confirmed his Buy rating with a forecast of 25% upside potential.
BBVA Share Price Forecast
According to TipRanks, BBVA stock has a Moderate Buy rating with a total of 10 recommendations from analysts. It includes four Buy and six Hold ratings. The average price target is €8.56, which is 16.6% higher than the current price level.
CaixaBank, S.A.
BBVA’s rival CaixaBank also published its Q2 earnings last week, on July 28. The bank’s net profit grew by 48% to €1.28 billion as compared to the same period last year. The figure beats the forecast of €1.16 billion by analysts. Along with the improved lending business, the profits were also well supported by its insurance business.
CaixaBank’s net interest income grew by a whopping 61% to €2.44 billion. The bank additionally mentioned that recent commercial trends indicate potential growth beyond their projected 30% increase in net interest income for 2023.
Furthermore, the bank disclosed its plan to initiate a 500 million euro share buyback program for the remainder of 2023. This program is designed to allocate capital exceeding the 12% threshold.
Three days ago, Citigroup analyst Borja Ramirez Segura reiterated his Buy rating on the stock, projecting an increase of 48% in the share price.
CaixaBank Share Price Forecast
CABK stock has a Moderate Buy rating on TipRanks, backed by seven Buy and four Hold recommendations. The average price target is €4.76, which is 28.5% higher than the current price level.
Conclusion
BBVA and CaixaBank have both exhibited robust performances in their recent financial results and expressed optimism for the rest of 2023. Moreover, analysts hold a bullish outlook on their stocks, foreseeing further growth in the near future.
