Vestjysk Bank: Solid growth in the banking business - ABG
This is a third party research report and does not necessarily reflect our views or values
High growth in fees and commissionCosts falling more than expected from synergiesCapital deductions made for the expected dividends
Strong performance on fees and costs
Profit before tax in Q2’22 came in at DKK 94m which is 23% below ABGSCe since we expected loan loss reversals of DKK 25m compared to the actual reversals of DKK 16m. This could be a result of the uncertain times for pig farming. NII came in at DKK 195m in line with ABGSCe. Fee and commission income looked good with a q-o-q increase of 8% (2% below ABGSCe) primarily driven by loan transaction fees and payments services as expected but also from an increase in securities trading. Q2 was another quarter of losses on market value adjustments net after dividends of DKK 73m (26% above ABGSCe) compared to a loss of DKK 46m in Q1’22. Cost came in 10% lower q-o-q and 2% lower than ABGSCe primarily driven by synergies from the DJS merger resulting in a cost/income ratio of 73.3%. CET1 ratio came in at 16.2% vs. ABGSCe estimate of 17.2% due to Vestjysk having made a deduction for the expected dividends.
Campaign towards new customers starting off goodLending volumes increased 3% q-o-q compared to our expectation of 1.5%. The growth is driven by new customers from Vestjysk’s campaign towards new corporate customers as well as higher activity from the existing customers which is a positive sign for the initiated growth strategy. On the other hand, deposits decreased 5.2% q-o-q.
Solid core operations should give positive reactionBased on the solid lending growth and strong performance in fees and commissions as well as costs, we expect a positive reaction, as the loss on market value adjustments was expected. Vestjysk maintained its FY guidance of PTP in the interval of DKK 600-650m.
Läs mer på ABG Sundal Collier
Strong performance on fees and costs
Profit before tax in Q2’22 came in at DKK 94m which is 23% below ABGSCe since we expected loan loss reversals of DKK 25m compared to the actual reversals of DKK 16m. This could be a result of the uncertain times for pig farming. NII came in at DKK 195m in line with ABGSCe. Fee and commission income looked good with a q-o-q increase of 8% (2% below ABGSCe) primarily driven by loan transaction fees and payments services as expected but also from an increase in securities trading. Q2 was another quarter of losses on market value adjustments net after dividends of DKK 73m (26% above ABGSCe) compared to a loss of DKK 46m in Q1’22. Cost came in 10% lower q-o-q and 2% lower than ABGSCe primarily driven by synergies from the DJS merger resulting in a cost/income ratio of 73.3%. CET1 ratio came in at 16.2% vs. ABGSCe estimate of 17.2% due to Vestjysk having made a deduction for the expected dividends.
Campaign towards new customers starting off goodLending volumes increased 3% q-o-q compared to our expectation of 1.5%. The growth is driven by new customers from Vestjysk’s campaign towards new corporate customers as well as higher activity from the existing customers which is a positive sign for the initiated growth strategy. On the other hand, deposits decreased 5.2% q-o-q.
Solid core operations should give positive reactionBased on the solid lending growth and strong performance in fees and commissions as well as costs, we expect a positive reaction, as the loss on market value adjustments was expected. Vestjysk maintained its FY guidance of PTP in the interval of DKK 600-650m.
Läs mer på ABG Sundal Collier