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Investing.com - Morgan Stanley resumed coverage of Banco de Sabadell SA (BME:SAB) with an Equalweight rating and a price target of EUR3.50 on Tuesday.
The investment bank expects Sabadell’s third-quarter performance to align with industry peers, forecasting net interest income (NII) to increase 0.6% quarter-over-quarter in Spain, excluding TSB operations. Morgan Stanley attributes this growth to improving deposit mix and volume growth offsetting competitive loan pricing pressures.
Fee income is projected to grow 4% year-over-year but decline quarter-over-quarter due to seasonal patterns, while provisions are expected to remain low. The bank’s recently divested TSB unit should see sequential NII improvement now that the ISA season has concluded and mortgage prepayments have normalized.
Morgan Stanley acknowledges Sabadell’s short-term yield support and notes the stock trades at approximately 10% cheaper than domestic peers on a 2027 price-to-earnings basis, excluding special dividends.
The firm cites uncertainty around the bank’s plans for remaining excess capital and its fair valuation in a European context as key factors behind the Equalweight rating.
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