Deutsche Bank has adjusted its view on Spain's banking sector, increasing price targets and promoting several lenders following what it describes as robust earnings resilience and a more favorable growth outlook, according to analyst Alfredo Alonso.
The brokerage upgraded Bankinter from "hold" to "buy," setting a new target price of €15.80, up from €13.50. Banco Sabadell was also moved to "buy" from "hold," with its target raised to €3.80 from €3.40. CaixaBank was re-rated to "hold" from "sell," and its price target was increased to €11.05 from €9.15.
BBVA and Banco Santander maintained their "buy" ratings. Deutsche Bank lifted BBVA's target to €21.25 from €19.75 and raised Santander's target to €11.50 from €9.80. Unicaja Banco kept a "hold" rating, with its target nudged up to €2.75 from €2.55.
Alonso told clients that Spanish lenders have exhibited higher-than-anticipated net interest income resilience through 2025, navigating a challenging rate environment by proactively managing liquidity and benefiting from a faster-than-expected recovery in loan growth. He highlighted that fee income diversification and continued cost discipline have bolstered the sector's profitability profile.
Looking forward, Deutsche Bank expects net interest income to return to an upward trajectory in 2026, supported by broadly stable net interest margins and strong activity. The brokerage also projects returns on tangible equity (RoTE) to reach or exceed 20% for most institutions from 2027 onward, driven by solid asset quality and sustained capital generation.
Alonso characterized the macroeconomic backdrop as benign and signaled that he sees limited risks to the sector's projected path.
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The research-led upgrades and target increases reflect Deutsche Bank's assessment that Spanish banks are better positioned than previously expected to translate resilient net interest income, diversified fees and disciplined costs into improved returns over the next several years.