CaixaBank S.A.

The stable outlook on CaixaBank reflects our view that its profitability will likely improve over the next two years, as interest rates rise and economic conditions remain supportive. We anticipate that CaixaBank will keep its focus on extracting synergies from the recently integrated Bankia and forecast that the bank's ROE will hover at about 8% over the next two years. We also expect CaixaBank will maintain adequate capital, given the risks it faces, and a RAC ratio of about 7.25%-7.75%. We could lower the ratings if: CaixaBank's financial profile deteriorates unexpectedly and we conclude that the bank's capital is a weakness, given the risks it bears; or CaixaBank's business model and earnings performance, following the full integration of Bankia in

... in Spain, adequate capitalization, and conservatively managed funding profile all support the bank's creditworthiness. CaixaBank's merger with Bankia--smoothly completed throughout 2021--has reinforced its domestic market position, with market shares in loans and deposits of about 25%. However, compared to its closest domestic peers, CaixaBank's business remains concentrated in Spain and Portugal, while its portfolio of equity investments and insurance continue weighing on capital. Overall, it benefits from solid earnings generation capacity, which remains a rating strength. CaixaBank's robust additional loss-absorption capacity (ALAC) represents a cushion for the senior unsecured debt ratings, although it would not protect holders of subordinated instruments. After several bail-inable debt issuances over the past few years, and with some further issuances expected this year and next, we anticipate that CaixaBank's ALAC buffer will stand...

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