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Investing.com - Barclays downgraded KBC Groep (BR:KBC) (OTC:KBCSY) from Equalweight to Underweight on Tuesday, while reducing its price target to EUR96.00 from EUR112.00.
The downgrade reflects Barclays’ revised earnings outlook, with the firm cutting its fiscal year 2025-2027 EPS estimates by 1-8% due to lower net interest income expectations, alongside slightly higher projected expenses and impairments.
Barclays noted its fiscal year 2026-2027 EPS projections now sit 4-6% below the pre-Q3 2025 company-compiled consensus, while the firm’s estimates show KBC shares trading at 11.1x FY27 PE compared to the EU banks average of 8.2x.
The investment bank identified several risk factors for KBC, including limited upside potential to consensus FY26 net interest income, possible bank taxes or windfall taxes as recently seen in Hungary and Belgium, and what it describes as "trapped excess capital" with no short-term prospects for targets like Ethias.
Barclays also pointed out that KBC’s diversified revenue stream provides less competitive advantage in an environment where ECB rates are at 2%, while projecting KBC’s total capital return yield estimate for FY25-27 at 17%, below the EU banks average of 23%.
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