Spanish Banks "Could deposit competition be a spanner in the wheels?" Cerezo

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Spanish Banks "Could deposit competition be a spanner in the wheels?" Cerezo

Global Research

4 June 2026ab

Spanish Banks Equities

Europe including UKCould deposit competition be a spanner in the

wheels? Banks, Ex-S&L

Ignacio Cerezo

Analyst

ignacio.cerezo@ubs.com

Assessing deposit pricing risks, CABK increasingly the go-to domestic stock +44-20-7568 4409

Though not mechanically driving outperformance as investor preferences increasingly Alvaro Fernandez-Garayzabal

concentrate on CABK, Spanish domestic banks have solidified their defensive status as Analyst

the Middle East conflict lingers, offering peace of mind both from a top-down (resilient alvaro.fernandez-garayzabal@ubs.com

macro) and bottom-up (sound volumes, gearing to rising rates) perspective. We do not +34-91-436 9622

dispute that viewpoint, but given (i) positive revenue/asset quality trends seem to be well

understood and recurrently factored in our/consensus forecasts, and (ii) banks' relatively

elevated multiples (c9x-11.5x PE27E vs sector >9x), we still believe it is pertinent to

explore potential areas of downside that could reverse that positive vibe around the

space. As loan growth settles at a higher pace, all incumbents (+fintechs/neobanks) step

up commercial efforts and with two out of six listed banks seeing a sequential cost tick

up in 1Q, we explore risks of competition eroding the historically high profitability banks

are extracting from their deposit bases (>150bp margin, c50% of customer spread).

Top-down prospects add comfort about deposit growth recurrence...

Split 75%/25% between households and NFCs, Spanish deposits have grown by c4%

p.a. over the past 20 years and are currently running at 5.5%, still outpacing loans at c3-

4%.