CaixaBank increasingly confident of beating 2027 lending income target

CaixaBank SA's conviction that it will exceed its lending income target in 2027 is strengthening as more certainty develops around the trajectory of interest rates.

Spain's largest domestic lender had projected net interest income (NII) — the difference between what banks earn from interest on loans and other assets and what they pay for deposits and other funding — of €11 billion in 2027 when it announced its current strategic plan in 2024. The bank had upgraded its NII guidance for 2027 in recent quarters to €11.5 billion as its outlook improved.

Many European lenders have seen a gradual decline in NII — CaixaBank's largest source of revenue — in recent quarters as eurozone interest rates were cut by 200 basis points in a year.

"Clearly, the bottom in interest rates is here to stay and that makes us more confident to give you guidance," CFO Javier Pano said during the bank's third-quarter earnings call. "We were mentioning that €11.5 billion mark for NII 2027, we see [a] very clear upside to that currently."

CaixaBank's NII rebounded in the third quarter after three consecutive quarterly drops, growing 1.4% to €2.67 billion during the period and marginally beating analysts' expectations, according to data from Visible Alpha.

The bank said it improved its NII guidance for 2025 to a decline of roughly 4% from its previous guidance of a mid-single digit drop.

CaixaBank's NII in 2026 will be "clearly above" its 2025 figure, though it is currently unwilling to provide a specific target, Pano said. It had guided NII to fall in 2025 and 2026 in its strategic plan.

The impact on NII from the continued negative repricing of CaixaBank's loan book, as lower interest rates feed through to variable-rate loans, will be partly offset by healthy loan growth over the last year and coming quarters, said Pano. CaixaBank's loan book grew 6.7% to €368 billion in the 12 months to the end of September.

The strongest growth was observed in consumer lending at 10.5% and business lending at 7.9%.

"[These] are the two most attractive margin opportunities in the market," CEO Gonzalo Gortázar said. "That's where we're growing market share."

Investment of deposits in high-yielding sovereign bonds and hedging will also cushion the impact of negative repricing. CaixaBank added €2.7 billion to its fixed-income portfolio in the third quarter, which now stands at €77 billion, while adding another €5 billion in structural deposit hedges for a total of €58.5 billion.

CaixaBank announced a 0.3% annual drop in profit to more than €1.44 billion in the third quarter, if Spain's banking tax were accounted for on a quarterly basis in 2024, marginally beating analysts' expectations, S&P Global Market Intelligence data shows. Revenue fell yearly by 0.4% to €4.08 billion, beating expectations by almost 2%.

CaixaBank's shares were 0.3% higher in early afternoon trading.

Visible Alpha is a part of S&P Global Market Intelligence.