The NII should remain strong in 2023, as we are factoring in a further 50bp rise in interest rates, and with an upside risk. We have seen very positive operating leverage, exceeding the css by 8%/12% in Europe/Eurozone.
Credit quality was one of the focal points and provisions have come in lower than expected, so that signs of deterioration are still limited.
Our estimates for provisions for 2022/2023 of 90bp is close to the 84bp of 2021. The CoR would have to increase by 4x to erode operating profits. This buffer, together with existing provisions, should provide tranquility.
Taking all this into accoumt, we have hiked our profit forecasts by 7-13% in 2022, although for 2023 the figure is just 1-2%. The sector continues to trade at a 40% discount to the market. We are neutral like the strategists, but we would highlight the resistance of profits in 2023 and the ROTE of 11% on average.