Bankinter : The Bank of Spain (BdE) is to establish a countercyclical capital buffer (CCB) to strengthen the solvency of the sector. The CCB will be 0.5% of Risk Weighted Assets (RWAs) from 4Q 2024 and may reach 1.0% in 4Q 2025 (standard level for systemic risks).
Bankinter’s research team’s opinion: Increasing capital requirements is not good news for the sector, but the impact is limited because: (1) The BdE anticipated in May the review of the regulatory framework. We believe that the requirement for a CCB is not motivated by an increase in the perceived risk on the sector. The BdE is simply following the recommendations of the Basel Committee on Banking Supervision, the IMF and the European Systemic Risk Board (ESRB). In fact, it is a measure that is in force in countries such as France or Italy, (2) the entry into force of the CCB will be gradual with a 12-month lag. Thus the Q4 2024 CCB will be enforceable as of 1/Oct/2025 and if it rises to 1.0% in Q4 2025, the sector will have a margin until 1/Oct/2026, (3) most importantly, the sector’s capital ratios comfortably exceed regulatory requirements. We detail below the CET1 capital ratio of the main banks in H1 2024: Santander (12.50%), BBVA (12.75%), Sabadell (13.48%) and Unicaja (15.1%).
In short, we believe that the BdE’s regulatory change should not significantly change the remuneration policy for shareholders. As a reference, the estimated cash dividend yield for 2024 ranges between 4.8% (Santander), 7.7% (BBVA), 8.3% (Sabadell), and 9.1% in Caixabank , which is our favourite bank in Spain. We would like to remind you that, due to regulatory compliance, we cannot give our opinion on Bankinter.
