Caixabank and Sabadell cut income forecasts

Spanish banks Caixabank and Banco Sabadell cut their income forecasts for 2019 because interest rates were expected to be lower for longer than expected in the euro zone.

Caixabank, the country’s third-largest lender in terms of assets, reduced its guidance for core revenue to a growth of around 1% in 2019 from the 3% expected previously.

Sabadell, the fourth-largest lender, revised its net interest income (NII) guidance to between 0% and -1% in 2019. It had previously forecast a NII growth of 1% to 2% for 2019.

In a precursor to a rate cut, the European Central Bank said it saw rates at present or lower levels through mid-2020, a subtle change to its previous pledge to keep rates unchanged through next June.

Lending income at both banks remained under pressure in the second quarter and in the first half of the year.

Net interest income – a measure of earnings on loans minus deposit costs – at Caixabank rose 0.9% in the second quarter to €1.24 billion. Analysts had forecast a NII of €1.25 billion, according to a Reuters poll.

At Sabadell, NII rose 0.6% to €905 million against the same quarter last year. Analysts expected NII to come in at €909 million. In the first six months of 2019 NII edged 0.2% lower to €1.81 billion compared to the first half of last year, in line with analysts’ forecasts.

Original Story:Reuters | Jesús Aguado
Photo: CaixaBank Site
Edition: Prime Yield