Q3: Low-quality beat, NII peak in sight?

SEB published excellent results although this was a low-quality beat driven by the trading result and the release of provisions. With excellent profitability and capital generation, SEB will continue to distribute its excess capital through buybacks in order to reach its 100-300bp buffer target by end 2024. One negative development came however from a comment from the management on NII potentially peaking in the coming quarters as policy rates are expected to top out in Q4, volume growth comes u

Q2: NII momentum continues, loan losses remain muted

SEB delivered another excellent Q2 with momentum continuing in NII on the back of rising deposit margins, more than offsetting a decline in Swedish mortgage margins and the slight volatility in corporate deposits. Fee income and trading results also surprised positively while cost inflation was a bit higher than anticipated. Loan losses were almost insignificant marked by additional overlays made on property management. The distribution of excess capital through buybacks continued while targets

An excellent Q1, maintaining deposit margins going forward remains a question

SEB realised an excellent Q1 on the back of a continued rise in deposit margins. The question remains on whether this can be maintained in the future given the current change in deposit behaviour and the potential competition for deposits between banks. Cost of risk was mild as macro-economic headwinds did not damaged asset quality.

Q4 2022: Strong progress on NII, a beat on trading

SEB reported a solid Q4 with the bulk of the growth driven by the increase in the NII thanks to higher deposit margins and stronger volumes. The beat on the top line was nonetheless mostly due to increased trading as all the other elements were mostly in-line with consensus. The excess capital situation has stopped normalising due to the substantial capital generation induced by the quarterly results. The management will continue to execute buybacks in order to reach its target of a 300bp regula

An excellent Q3 built on higher NII

SEB realized an excellent Q3 with a strong beat on both income and the net result. As for its peers, this was built on NIM improvements although volume growth was also good. Cost inflation remained in-line with expectations while the CoR increased to reflect the macroeconomic uncertainties. Excess capital distributions are set to continue and should remain supportive of the valuation.

A solid quarter built on NII tailwinds

SEB realized a good quarter with a changing growth mix more turned towards NII development. Profitability was however slightly undermined by lower efficiency due to costs as well as provision build-up. Management expects NII to continue to benefit from a rising rate environment in the coming quarters and has thus maintained its targets. The excess capital situation lingers and buybacks should continue.

Strong revenue growth and disciplined cost inflation allows for record efficiency

SEB delivered strong results in Q1 22 thanks to a very positive surprise on NII and fees, while the slight rise in costs constituted a welcomed unexpected event too, resulting in a record low cost/income ratio. Management increased its provisions, resulting in an 8bp cost of risk, to account for a potential impact from a deterioration in the coming macro-economic environment. Despite a rise in RWA, SEB was still overcapitalised but management indicated that buy-backs are likely to continue indef

Healthy results despite profit-taking

SEB released its Q4 21 earnings this morning. Earnings showed substantial revenue growth and a considerable results improvement, both slightly above consensus. Total income growth was driven by the strong performance regarding fees and, more especially, in AM. NII was slightly higher while trading income faltered. The CET1 ratio declined due to RWA inflation but the buffer remained solid at 590bp above requirements.

Much better than expected

SEB released last Wednesday its Q2 21 numbers. These were all better than expected be it at the total income or the total expenses level as well as the loan losses level. Regarding total income, numbers were also better than expected across-the-board (NII, fees/commissions or trading income). We will revise upwards our EPS going into 2021 and 2022 even if part of the beat could not be considered as a normal level. The CET1 ratio was about 850bp above capital requirements.

Strong capital but a high degree of uncertainty is looming...

SEB released this morning its numbers for FY2020. These were better across-the-board aprt from the level of loan losses. In terms of financial targets, management is targeting a 100–300bp CET1 buffer vs 150bp previously but the CET1 ratio is 160bp higher qoq at the same time. Management is paving the way to SBB once the Swedish FSA’s recommendations on capital distribution are dismissed (+ a 50% pay-out ratio).

Volatile share price, but steady and high ROE

It’s been a volatile month for SEB with the market being spooked by an update on the AML saga (which didn’t really tell us anything new) and regulators urging banks to retain capital for just a little longer. In terms of estimates we expect a good Q4 but have made few changes elsewhere, and have taken down the 2020e DPS to SEK 4.1 as normalisation will have to wait until Q4/21 at the earliest. We stick to Buy and our SEK 94 target price.

Update on German tax case

SEB published an update on the German tax reclaim case yesterday German subsidiary DSK Hyp AG requested to repay withholding tax Total EUR 425m (excl. accrued interest), roughly SEK 2.0 per share SEB plans to fight the case, does not plan to make provision for the claim

Update on German tax case

SEB published an update on the German tax reclaim case yesterday German subsidiary DSK Hyp AG requested to repay withholding tax Total EUR 425m (excl. accrued interest), roughly SEK 2.0 per share SEB plans to fight the case, does not plan to make provision for the claim

Solid earnings and a robust capital position

The Q3 EPS of SEK 2.2 was slightly above our estimates and SEB continued the solid momentum on pre-provision profit. With loan losses trending down this should translate into improved ROE as well, especially if SEB can distribute some of the current SEK 46bn capital buffer it has over its capital requirements (SEK 25bn if we assume a full 2.5% CCyB). Our estimates are lifted ~2% and SEB now trades at a P/E '21e of 9.5x which still looks attractive. We reiterate our Buy rec.

A cautious tone...

SEB reported a mixed set of Q320 results. Both total income and expenses were better than expected but loan losses were above expectations underlying an increase in stage 3 loans (and stage 3 impairments). Given Swedbank and SHB’s better results, the market will be disappointed. More surprisingly, SEB mentioned that some authorities including the US authorities has asked the bank to provide information concerning measures against money laundering.

Facilities by ADF - Ramp up gaining pace

ADF has released its interim results that are in line with the August trading update and the Group remains on track to hit full-year forecasts. The H1/24A Adj EBITDA was £2.5m, which was a 57% decline YoY and a 67% increase versus the prior half, demonstrating that the period remained impacted by last year’s strikes but that the ramp up in production is evident. The Group saw a continued recovery over the summer months and expects a strong second half of the year. Its valuation remains compellin

Zeus Industrials Round-Up - 13 September 2024

The UK industrial sector continues to show promising signs of recovery, with manufacturing PMI reaching a 26-month high of 52.5 in August as all survey indicators but one expanded. Economic data has also been encouraging, with UK pay growth cooling to a two-year low and inflation rising only slightly in July – supporting the case for further interest rate cuts this year by the BoE.

Morning Note – 16 September 2024

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JMG is trading on a wide discount relative to its history…

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Facilities by ADF - An Autotrak-tive acquisition opportunity

ADF has raised £10m at 50p in an equity placing to acquire Autotrak, the market leader for portable roadway hire in the UK film and TV sector. This moves ADF closer to its medium-term targets of being a one-stop-shop provider of premium serviced production facilities to the UK film and TV industry and generating £100m of revenues. Our base case has EPS accretion of c.12% and our upside case shows nearly 20%. The valuation looks compelling, given it trades on an FY25E Adj P/E of just 5.5x vs equi

THE MONTHLY January 2020

The Office for National Statistics (ONS) is due to publish its most up-to-date survey on share ownership in mid-January, which identifies the beneficial owners and decision- makers of the stock market. Hardman & Co has worked together with the share analysis service, Argus Vickers, to jointly produce its own survey, which anticipates the conclusions of the ONS survey but goes into much greater detail. Our work does not use a sample of 200 quoted companies as the ONS historically has, but rather

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JAM’s outperformance puts it in the spotlight as a low-cost, core option for US equities…

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Morning Note – 10 September 2024

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Ambitious winds of change

M&G’s FY 22 results were strong. It was also the opportunity for new CEO Andrea Rossi to depict clearly his strategy for the upcoming months. While the impetus is clear and the objectives are ambitious, we rather believe in a structural improvement of the business (driven by the higher rates environment) than a commercial one.