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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 SA. We currently have 42 research reports from 3 professional analysts.
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Cavendish
FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi
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Canaccord Genuity
S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi
Companies: S&U plc
Edison
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
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Hardman & Co
Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web
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Liberum
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Hybridan
In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.
Companies: Regional REIT Ltd.
Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol
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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
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Kepler | Trust Intelligence
Asset managers had a poor 2022: the S&P Composite 1500 Asset Management Index was down 22% and, according to the Investment Company Institute (ICI), worldwide mutual funds fell by 20%, from $76tr to $60tr. When bond and equity markets fall, the results are unlikely to be pretty: with revenues trending down and multiples contracting, there is a double whammy to contend with. So how do valuations shape up now, after a bullish start to the new year? The first chart is my favourite chart of asset m
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