Large net profit beat from loan loss reversals… … and exploitation of deferred tax asset PBLL miss likely to send the stock down today
Net profit beat despite higher costs and lower fee income
Vestjysk reported Q3 net profit at DKK 123m, +30% vs ABGSC, driven by significantly higher-than-expected loan loss reversals and exploitation of Vestjysk’s deferred tax assets. Profit before loan losses came in 12% below ABGSCe due to total income -2% vs. ABGSCe and higher-than-expected operating costs. On the income side net interest income was in line with ABGSC at a 7% growth q-o-q while commission income came in 3% below ABGSC and 4% down q-o-q due to lower securities trading income and flat income from payment services q-o-q. Lending growth at 0.2% q-o-q was significantly lower than our expectation of ~2% growth. On capital, the CET1 ratio stood at 16.9% vs. ABGSCe at 16.3% due to significantly lower REA driven by lower market and credit risk. When assessing the deviations in the report we expect the stock to trade negative today.