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The group posted a strong set of results, once again driven by a further net interest margin recovery. Further out, the management is confident that the group will manage to protect its margin and grow the top line. This confirms our view that the improvement in the Spanish banks’ profitability is largely structural.
Companies: Bankinter (BKT:BME)Bankinter SA (BKT:MCE)
AlphaValue
The second quarter trends showed slower deposit repricing, better cost control and a stable cost of risk, translating into upgraded 2023 profits guidance. Further out, in the absence of management comments, we continue to expect profitability to normalise driven by net interest margin attrition. The commercial development in consumer finance and corporate lending should also translate into an above-inflation cost expansion as well as an increase in the though-the-cycle cost of risk.
As expected, the first quarter results confirmed that SVB-driven market fears were undeserved. Interest rate hikes have remained strongly supportive, and the group has increased its market share in deposits.
This strong set of results came as no surprise and the upbeat guidance for 2023 already seems largely factored in to the consensus expectations. The sustainability of the net interest margin in 2024 is a key question in our view. On the plus side, we can’t rule out a positive ruling on the windfall tax which has been challenged by the Spanish banks.
The quarter enjoyed a substantial increase in the net interest margin while efficiency remained under control and asset quality trends showed no signs of deterioration. It remains to be seen to what extent BKT and its peers will be able to secure such gains over the long term whereas the government has moved pre-emptively, and depositors will likely ask for their share.
BKT posted a strong set of results, enabling management to upgrade its full-year guidance for 2022. We see limited risks for 2023 even if the macro-economics have deteriorated. It remains to be seen if the Spanish government will draw its windfall profit tax. However, it is already priced in the share price.
The first-quarter results came in above expectations driven by a record low cost of risk. Management reiterated its guidance not only for 2022 but also for 2023. Not only is the Ukraine invasion not expected to derail the group’s profit trajectory but it could boost this on an 18/24-month perspective as interest rate hikes percolate through to the top line.
BKT managed to beat consensus expectations on stronger revenue generation and accessorily a lower tax rate. This year, the group is expected to enjoy ongoing strong top-line expansion, controlled costs inflation and likely stable cost of risk.
The Q3 operating trends suffered from seasonality but showed an accelerated cost of risk normalisation, thus enabling management to reiterate its mid-term guidance.
The quarter showed ongoing strong commercial momentum fuelled by market share gains and supportive capital markets, in a context of stable revenue margins and efficiency. On the other hand, the cost of risk did not enjoy provision recoveries, which could come as a disappointment.
We are initiating coverage of Bankinter with an Add recommendation. BKT is Spain’s sixth-largest bank. It was founded in 1965 as an industrial bank through a joint venture by Banco de Santander and Bank of America. It was listed on the Madrid stock exchange in 1972, at which time the bank became fully independent of its founders and transformed itself into a commercial bank.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Bankinter. We currently have 49 research reports from 2 professional analysts.
Proposed share-for-share merger with Northgate
Companies: Redde Northgate PLC
Arden Partners
Lowland Investment Company’s (LWI’s) unconstrained, multi-cap investment policy differentiates it from most peers in the AIC UK Equity Income sector. It offers investors broad market exposure, outside of the large, traditional ‘income stocks’ at a 13% discount to NAV. The underperformance of small- and mid-cap companies versus larger peers has slowed and a turnaround would be very positive for LWI. Portfolio returns are already benefiting from acquisition activity, spurred by low valuations, and
Companies: Lowland Investment Co PLC
Edison
Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.
Companies: Foxtons Group Plc
Zeus Capital
PCI Pal’s FY23 results show revenue growth of +25% to £14.9m, gross profit growth of +31% to £13.1m at a margin of 88%, and an outlook confirming robust momentum in H1 24. The FY23 results are as expected following the August trading update, and FY23 Total Annual Contract Value (TACV) is +23% yoy to £16.4m, with ARR +14% yoy to £12.6m due to £3.1m of contracts in deployment. We expect ARR will increase +35% and +31% to £17.0m and £22.2m in FY24 and FY25, as management lands and expands following
Companies: PCI-PAL PLC
Cavendish
Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3
Companies: Tetragon Financial Group Limited
Vp’s full year update highlights sector-leading results, once again benefiting from the diversity of its end markets and the quality of its specialist businesses. With results expected to be broadly in line with expectations, we trim our FY24 PBT forecast by c.5% to £39.0m, a shade below the FY23 outturn (£40.2m). We consider this an impressively resilient performance set against a mixed market backdrop. Under new leadership, a strategic refresh is underway and management is confident in long
Companies: Vp plc
Equity Development
On 9 January last year, we set out our ten top stock picks for 2023, for what turned out to be another relatively poor twelve months for UK equities due to two wars, stubbornly high inflation and further tightening of monetary policy. This was even as other major markets, such as the US, largely recovered in the year. In the 2023 calendar year, the AIM All-Share index fell 8.2% and is still 42% off its 2021 high. From the release of our 2023 top picks note, the average total return (assuming div
Companies: PTAL GHH IGP MSLH PINE NXQ EQLS NXR AXL
Vector Capital is an established commercial lending group, focused on secured short-term and bridging loans in the property sector. This morning, the group has reported full year results to 31 December 2023, illustrating the challenging market backdrop. While underlying trading was robust, with good demand being seen for new loans, provisions for bad debts relating to historical loans of £728k in the year led to a decrease in PBT to £2.1m (WHI est. £2.4m, FY22 £2.8m). Looking ahead, although VCA
Companies: Vector Capital PLC
WHIreland
Companies: Equals Group Plc
Canaccord Genuity
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