J.P. Morgan upgraded Spanish lender CaixaBank (BME:CABK) to “overweight” from “neutral” and raised its price target to €11.41 from €9.40, representing 27% upside from the €9.01 price as of November 18.
The brokerage increased earnings per share estimates by 8% on average for 2025-27, projecting adjusted EPS of €0.77 for 2025, €0.84 for 2026, and €0.95 for 2027.
Analysts forecast an 11% EPS compound annual growth rate from 2025-28, with return on tangible equity rising to 20% by 2027 and 21% by 2028.
The Madrid-based bank, which controls 35-40% of Spain’s payroll market, is positioned to capitalize on favorable economic dynamics including 2.8% real GDP growth and a labor market that added 564,000 jobs in the past year, according to the brokerage citing Bank of Spain and National Statistics Institute data. Spain’s resident population grew by approximately 475,000 year-over-year as of September 2025.
J.P. Morgan projects net interest income will climb from €10.65 billion in 2025 to €12.09 billion in 2027, a 7% CAGR, reaching €12.78 billion by 2028.
The analysts attribute one-third of growth to lending volumes, another third to roll-over of receiver swaps, and 20% to additional liquidity and debt portfolio roll-over.
The bank’s structural hedge position presents significant upside. Between third quarter 2025 and end-2028, €33 billion of bonds yielding 0.98% will mature, 150-180 basis points below current five-year and ten-year Spanish government bond yields, potentially boosting NII by €540 million to €750 million.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Additionally, €47.5 billion of receiver swaps with 1.5% blended yield maturing before end-2028 could add approximately €440 million when reinvested at current 5-year euro swap rates of 2.44%.
CaixaBank’s commercial performance has exceeded targets, with annual loan growth reaching 6% at end-September versus the approximately 4% target for 2024-27, while customer deposits expanded at 6% annually, double the 3% target. J.P. Morgan forecasts 4% loan and deposit CAGRs for 2025-28.
The lender is expected to generate approximately 220 basis points of capital annually over 2026-28 before dividends and buybacks.
J.P. Morgan forecasts a €2.3 billion final dividend for 2025 (3.5% yield) plus the outstanding €0.5 billion buyback (0.8% of market cap).
Beyond 2025, the bank is anticipated to return 75% of 2026-28 earnings totaling €15.4 billion (24% of market cap), with total 2025-28 shareholder distributions reaching €18 billion (29% of market cap).
The analysts’ 2025-28 net profit estimates stand 5% above Bloomberg consensus on average, widening to 8% for 2027-28, largely from higher NII projections.
Under the current forward curve suggesting 20 basis points higher short-term euro rates by end-2027, the NII advantage versus consensus would widen to 5-8%, according to the report.
CaixaBank trades at 9.6 times 24-month forward price-to-earnings, with projected dividend yields of 5.7% for 2026 and 6.6% for 2027.
