Upgraded guidance despite asset quality deterioration

The group posted a good set of results characterised by stronger net interest income growth, better cost control and a slower cost of risk normalisation, thus enabling the management to upgrade its full-year RoTE objective to above 11%. On the negative side, asset quality deteriorated markedly, translating into significantly reduced solvency.

Full profitability potential not visible before 2025

The fourth-quarter results were depressed by non-recurring charges. The updated business plan shows that the profitability will remain depressed by investments and legacy charges over the next three years, whereas the full profitability potential will not become visible before 2025 or 2026.

Stronger top-line resilience and provision recoveries

The bottom line largely exceeded expectations driven by the stronger top-line resilience and loan provision recoveries. Although the next quarters could continue to enjoy further provision recoveries, the expected interest rate hikes should support the top-line trajectory.

Excess capital accumulation

The quarter enjoyed the ongoing recovery in revenue margins and net provision releases further boosted by a portion of the announced tax gains. The question is not at what pace profitability will recover but instead at what pace will it normalise? In the meantime, the group is accumulating excess capital that will be returned to shareholders.

All signals on green

The group made a strong start with net interest margin recovery and loan provision recoveries, thus enabling management to upgrade its guidance for the year. The £1bn tax credit expected in Q3 will be the icing on the cake. In that context, we suspect that the cautious stance on future capital distribution only aims at not upsetting the regulator.

Faster cost of risk normalisation

The lockdowns continued to weigh on the top-line performance, but the state’s supporting measures have proven so successful that the quarter enjoyed provision recoveries and the cost of risk is expected to almost fully normalise as soon as this year. However, 2021 will remain a transitory year as the top-line is expected to recover only progressively.

Capital Access' Hot Off The Wires - The Day Ahead

Today's news & views, plus announcements from AZN, LLOY, WEIR, TATE, GFTU, INCE, DELT, SOLG, HYVE

Cenkos: Healthcare Sector - Ward Round

Weekly round-up of AIM-listed healthcare news. Venture Life Group, GENinCode, Kromek, Alliance Pharma, Polarean Imaging, Benchmark Holdings, Ondine Biomedical, Verici Dx, Faron Pharmaceuticals, Avacta Group, Abingdon Health, Open Orphan, Belluscura, Hutchmed (China), Oxford Biodynamics

Earnings in line, NAV ahead, caution being exercised

Urban Logistics REIT (“ULR”) has delivered a solid FY22 performance – deploying capital apace and driving strong returns through active asset management. Earnings and dividend are both in line vs SCMe. EPRA NAV is 190p (+7% vs SCMe); as yield compression came as a bonus. Caution is being exercised in deploying remaining capital, which impacts FY23e earnings only. We upgrade EPRA NAV by 14-20% incorporating some (but not all) recent yield compression. We increase our Target Price to 210p (FY23e E

In line final results, market headwinds impact AuM

Finals are in line on management fee earnings, but an unexpected performance fee drives a 6% earnings beat and a higher dividend. Recent market conditions have been challenging and have impacted AuM, down 12% in Q1 so far (vs pf incl. Majedie). We update our model, driving a 8-11% reduction in our earnings estimates. We think that the current 8x Mar-23e PER is already more than pricing in further forecast risk. We note a 6%+ prospective dividend yield generously covered by earnings with signific

LIBERUM: Alternatives Daily

Hybridan Small Cap Feast 22/06/2022

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Visum Technologies seeking admission to The AQSE Growth Market. The Company's business is to own and operate an "on-ride" video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Due 30 June. LifeSafe Holdings, a fire safety technology business with innovative fire safety p

Cenkos: Marlowe Plc -- Record organic growth

Marlowe delivered an impressive set of FY22A results, with underlying organic revenue growth of 9%, Adj EBITDA margins up 240bps to 18.6%, and Adj EBITDA of £54.4m (ahead of our £50.7m forecast). We make minor updates to our FY23E forecasts (Adj Diluted EPS increases 1% to 49.6p) and release new FY24E forecasts. Given the strength of Marlowe's business model, its defensive nature (non-discretionary products and services; 85%+ recurring revenue), the group's continued positive momentum (including

LIBERUM: Alternatives Daily

LIBERUM: Alternatives Daily

Hybridan Small Cap Feast 23/06/22

Dish of the day Joiners: No Joiners Today. Leavers: No Leavers Today. What’s cooking in the IPO kitchen? Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Company is proposing to change its name to Fiinu Group plc. Fiinu intends to be a provider of a consumer banking product, the Plugin Overdraft ®, which is designed to provide customers with an overdraft facility without having to change their current account or request an overd

Morning Note – 28 June 2022

NextEnergy Solar Fund - NAV Grows 15% in FY 22

NextEnergy Solar Fund’s (NESF) full-year results show a 15% growth in NAV resulting from better pricing and new asset growth. The fund has been working hard to diversify its asset growth opportunity with battery storage in the UK and more international exposure through its commitment and co-investment opportunity with the NPIII private fund. From a strong start the fund is showing continued progress into the current year.

NextEnergy Solar Fund - NPIII Now Has Over 1GW of Assets

Continued expansion at NPIII provides NESF with further geographical diversification as the private fund reaches more than 1GW of international PV assets. This adds to NESF’s moves in battery storage to build a more diversified portfolio, minimising exposure to any single asset type.

Premier Miton Global Renewables (PMGR): Diversified income and growth from renewable energy listed equities

Morning Note – 29 June 2022

Prospects for an independent R&Q

On 1 April 2022 R&Q announced a recommended (175p/share) acquisition by its major shareholder, Brickell PC Insurance Holdings LLC (Brickell). The price represented 1.8x tangible net asset value and a 20% premium to the unaffected market price. That was accompanied by news of Brickell’s commitment to provide US$100m of new equity. This transaction was prompted by the results of in-depth review of the group’s legacy insurance portfolio initiated by new management in Q4 2021. This reflects the ne