The defense sector seems the brightest star of the parques this 2025. With a general rearma from Europe led by Germany and an industry that has to grow to aggregate rhythms to be able to absorb the massive demand of orders, the sky of the war firms seems unlimited. However, while all eyes They are put in companies like Rheinmetall, The reality is that there is a surprise guest at the stock market party of Europe that even overcome the euphoria of the war: Spanish banking.
The European Defense Stock asks are located at 37.78% so far this year (as indicated by the Europe Defense and Aerospace Index) and European banking quotes in 27%. However, Spanish banking as a whole rises 43% So far from 2025. This revaluation occurs at a time that, a priori, the sector would not have to be precisely on a honeymoon. After two years of climbing in interest rates (and therefore improvements in net interests, NII) the ECB has already begun a flexibility path that should conspire against the profitability of the entities. However, that has not prevented banks from looking at the firms of the war and sneaking into the ‘Olympus’ of the great European increases.
Commerzbank and Sociéte Générale lead the increases of the old continent, with 59% and 56% movements, respectively. However, unlike German and French entities, the Spanish have agreed to rise as a whole. Sabadell 49%shoot, followed by Santander With another 49%. But it is that CaixaBank accumulate advances of 44% and BBVA 44%. Unicaja does 43% and Bankinter 42%. It is not that a specific firm has taken off, but they seem to have become a uniform block.
As analysts think, Spanish banking is positioned in Europe as One of the great winners of a new cycle. Already in the era of the increase in interest rates it occurred, although in that case he shared the stage with the Italian entities. At that time, the entire southern bank coincided in great exposure to interest rates (revenue from credit business against payments for loans such as deposits). Now it seems to value a different phase in which Spanish banking is to convince the market that it has done its duties to, with the impulse of interest rates, star in a new era.
Their high contributions, despite allowing them to improve the defense sector as a whole, still leaves one or more steps behind the great champions. The bad companies that are being positioned as Indra in Spain (+60%). Out of our borders are Rheinmetall (+131%), Leonardo (+ 87%), Thales (+82%) or Saab (+65%). In any case, as a whole, Spanish banking, rising almost with one voice, it is being imposed as a sector, while European banking is the segment with the best performance in Eurostoxx 600 (in which the military industry is not as such), with an increase of 21% for the entire financial sector.
But what is happening exactly for the bank to be one of the great winners in a context of minors interest rates? And why the Spanish bank appears at the head of this whole process? The reality is that the main analysts that cover these companies value the preparation of these two years and the soft landing that these companies seem to be undertaking.
The advantage of European banks
To understand this phenomenon, the general health of European banks must be attended first. From Funcas they explain that a priori the scenario might seem negative. “With the inflation in descent a rhythm of flexibility (although slower) could be expected.” This position “should be translated into An increase in pressure on net income by interest in a context of economic perspectives and in itself mediocre and with increasing risks. “The ECB has already cut interest rates five times leaving the deposit rate by 2.5% compared to the maximum of 4% where it was at the beginning of 2024.
However, from the function itself they explain that if the focus on the results and expectations of companies this new reality is a lower impact against positive trends. “We hope that there are benefits promoted by still high interest rateswith still favorable financing costs, but added to an increase in commissions income and a greater volume of loans. “
According to the institution, the type cuts will remove 30,000 million euros from a tacada. However, in that same period the credit “It will increase 3.1% by 2025 and 4.2% in 2026“This contrasts with a period of practically total stagnation. This phenomenon will be especially good in Spain where the economy roars with more force than in the rest of the continent, promising greater economic activity and, therefore, in the credit.” Spain will be the brightest point of the entire EU. “
Spain is the best positioned
From S&P global clearly highlight this point alleging that “The macroeconomic environment will be favorable, With a growth of Spanish GDP almost twice the average of the eurozone. “In that sense, they add to the idea that the child NII will be compensated with greater loans” active coverage and recovery of business growth will limit the negative impact on the income of a gradual decrease in interest rates.
Scope comments that this credit boom is exacerbated by two phenomena. On the one hand, an increase in the “demand for consumer credit and a parallel rebound of mortgage loans as the real estate market recovers, financing costs decrease and banks make the conditions of loans more flexible.” In that sense, the Mortgage Association explained that they expect the mortgage signature to exceed the already good figure of 2024 (when the types began to fall) and that it reached 423,761. From Scope they comment that, regardless of mortgages, “LLoans to companies will be supported for economic growth and loan refinancing during the era of Covid. “
S&P global explains that with all this the bank can maintain A powerful Roe of 11.4% Thanks not only to the greater loan activity, but have taken advantage of these years to arm and become more insensitive to this metric and strengthen in others. This would have been possible with active coverage. McKinsey spoke in his latest report of this coverage strategy that is using banking in general as the entities have been going to mass to the derivative market to acquire swaps linked to interest rates.
“Banks in 2023 were found at a time when the aggressive movements of The central banks left a great margin For important losses. “In that sense” we have seen how the negotiated volume of derivatives of interest rates in euros has multiplied by 3.4, according to the same international association of swaps and derivatives. “
For its part, S&P Global points out a key factor, a structure purified by a decade of crisis that allows Spanish banking to convert all that potential into return for shareholders. “Spanish banks have a great efficiency advantage that they have achieved after large settings and cuts in the last decade.” In that sense, “sayss with great potential to keep payments to shareholders and strengthen their capitalization while meeting the new capital requirements. “
But how to express this feeling in figures? The reality is that the general sensation provided by all benefits forecasts is that although a slight setback can be given in the benefits, the reality is that this 2024 and 2025 imply the absolute confirmation that the banks of the bank enter a new dimension. The Spanish bank won in 2024 about 30.8 billion euros for a tight net benefit among the six main firms in the sector. In 2025 and 2026 the consensus of Bloomberg analysts hopes this It is reduced up to 29,500 million and 30,000 million respectively.
However, despite this 4% drop they expect from one year to another palece taking into account that what It will win in 2025 will still be 30% higher to the figures prior to the increase in interest rates (2022). At that time, 20,349 million euros were barely achieved. In fact, it is no longer just that they all win much more than in the pre -Era, but some will have the ability to continue increasing their profits even with the descents of types. This is the case of Santander and Bankinter.
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