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 10% 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 and we conclude that the bank's capital is a weakness, given the risks it bears; or CaixaBank's business model and earnings performance unexpectedly weaken. Although a positive rating action is

... in Spain, adequate capitalization, and conservatively managed funding profile all support the bank's creditworthiness. CaixaBank's powerful franchise across Spain and its dominant domestic market position, with market shares in loans and deposits of about 25%, significantly benefit its credit profile. However, compared to its closest domestic peers, CaixaBank's business remains concentrated in Spain and Portugal, while its portfolio of equity investments and insurance continues to weigh on capital. Overall, it benefits from solid earnings generation capacity, which remains a rating strength. CaixaBank's capitalization will remain adequate. We expect CaixaBank's risk-adjusted capital (RAC) ratio to reach 7.25%-7.75% over the next 24 months, compared with 7.45% at end-2022. Despite high uncertainty, we project higher...

Full Report