CaixaBank reports solid Q2 with 9% profit beat, upgrades guidance

CaixaBank reported strong second-quarter attributable profit of €1,482 million, exceeding consensus by 9%, largely driven by lower impairments, a positive one-off gain, and robust other revenues. The Spanish bank also surpassed expectations across pre-tax profit, total revenue, and customer loan and deposit growth, while maintaining a solid CET1 capital ratio. Consequently, CaixaBank upgraded its full-year 2025 guidance for cost of risk, service revenue growth, and return on tangible equity, signaling an improved outlook despite anticipating net interest income to bottom out in Q2 2025.

Analysis

CaixaBank reported a strong second quarter, with attributable profit of €1,482 million surpassing consensus estimates by 9%. This outperformance was driven by lower-than-expected impairments, which came in at -€264 million versus a -€321 million forecast, and a one-off €22 million gain that boosted other revenues. While the headline profit beat was significant, core net interest income (NII) provided a more nuanced picture, declining 6% year-over-year and highlighting persistent margin pressure, as evidenced by an 11 basis point contraction in customer spreads. The bank showed robust business momentum, with both customer loans and deposits growing 4% quarter-over-quarter, beating consensus by 3%. In response to the strong results, management upgraded its full-year 2025 guidance, now targeting a Return on Tangible Equity (ROTE) above 16% and an improved cost of risk of approximately 25 basis points. However, the bank maintained its guidance for a mid-single-digit NII decline in 2025, explicitly flagging the second quarter of 2025 as the cyclical low point, with a meaningful recovery not anticipated until the second half of 2026.

Key Decisions for Investors

• The strong earnings beat and upward revisions to 2025 guidance for ROTE and cost of risk reinforce the positive operational thesis for current holders, showcasing effective cost and credit management.
• Investors should closely monitor net interest income trends and customer spreads, as management has signaled a protracted recovery with a trough not expected until mid-2025, a factor that may temper near-term performance expectations.
• While the 50-60% dividend payout remains secure, future capital return potential should be weighed against the higher-than-expected growth in risk-weighted assets, which could exert pressure on the CET1 capital ratio.