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Investing.com -- J.P. Morgan on Tuesday upgraded Bankinter (BME:BKT) to “overweight” from “underweight” and raised its December 2027 price target to €17 from €12.70, citing improved earnings forecasts, stronger capital generation and sustained commercial momentum.
The brokerage said the Spanish lender is positioned for “profitable growth,” with its revised view reflecting higher projected net interest income (NII), continued fee expansion, efficiency gains and lower expected loan losses.
The investment bank increased its 2025-27 earnings per share (EPS) estimates by an average of 17%, including a 30% uplift for 2027.
Adjusted EPS is now forecast at €1.15 for 2025, €1.29 for 2026 and €1.39 for 2027, compared with €1.01 in 2024.
Over 2024-28, J.P. Morgan expects EPS to grow at a 10% compound annual rate, helped by a 5% CAGR in NII, 8% CAGR in fees and a lower cost of risk of 30 basis points, down from 34bps in 2025E. The lender’s return on tangible equity is projected to rise from 17.5% in 2024 to about 19% by 2027-28.
Bankinter’s balance-sheet trajectory also supported the re-rating. JPMorgan forecasts the fully loaded CET1 ratio to reach 12.7% in 2025, 13.0% in 2026, 13.4% in 2027 and 13.8% in 2028.
Between 2026 and 2028, the bank is expected to generate roughly 170bps of capital per year before dividends, even after allocating about 20bps annually to digital investments.
With a 50% payout policy unchanged, Bankinter is projected to build around €200mn of surplus capital annually above its 12.5% target. Dividend yields are estimated at 4.5% in 2025, 4.9% in 2026 and 5.3% in 2027.
The brokerage said the midsized lender continues to outpace the market in client savings inflows. Assets under management (AuM) have grown about 50% over two years and 90% since 2022. Management recently revised its guidance for annual retail net new money to €8-10 billion, representing 5-7% of customer savings.
Inverco data cited in the report shows Bankinter’s share of net new money into in-house mutual funds rising from 3.8% in 2023 to 8.8% in 2025 (latest available). Its market share in third-party fund distribution stands at 9.2%, up about 90bps since 2023.
On revenue mix, the advisory and wealth unit is set to contribute around 13% of gross income between 2025 and 2028.
Fee income is forecast at €791 million in 2025, €862 million in 2026 and €925 million in 2027. Non-interest income as a share of total revenue is expected to reach 28.1% by 2027, up from 21.5% in 2024.
Bankinter is also projected to maintain sector-leading efficiency. The cost-to-income ratio, at 36% in 2024, is expected to stay at 36% in 2025 before improving to 35.5% in 2027.
J.P. Morgan said operating leverage from wealth management and savings from restructurings in EVO and consumer and payments units underpin the ratio.
The new €17 target price is based on a 2027E sum-of-the-parts valuation using a Gordon Growth-derived price-to-allocated capital multiple.
J.P. Morgan sees 25% upside to the shares and a 30% total return including dividends. Key risks include weaker macro conditions, lower euro-area rates, slower margin or volume growth, higher costs and elevated loan losses.