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.

Small EPS beat and closes door on 2019 DPS

Q3 EPS SEK 2.2, 4% ahead of ARCe and 6% ahead of cons. ROE 11.7% Revenues largely in line, costs 3% below and loan losses slightly higher BoD confirms previous decision to not propose dividend during 2020 Report slightly ahead of expectations, expect share to trade in line

Estimates up, valuation down. Upgrade to Buy

We have only made marginal changes to our estimates ahead of Q3, lifting EPS for 20-22 by ~2%. For Q3 we expect a small improvement q/q on NII and fees combined with lower loan loss provisions to improve the EPS to SEK 2.1. Since our downgrade in July the valuation has improved and at P/E ’21e 9.5x and P/B 1.05x with ~11% ROE for 2021 we think risk/reward looks good. We upgrade to Buy (Hold) and lift our target price to SEK 94 (92).

Mixed P&L, but strength in diversification

SEB delivered a mixed Q2 report as NII came in low, losses came in high while it once again showcased the strength of its diversified income mix with a SEK 3.5bn trading line. Though loan loss provisions were well above our estimate, implied guiding for H2/20 was more upbeat. Our EPS estimates are mostly unchanged after the report. With a SEK 30bn management buffer, growth and dividend capacity remain very strong as well. We stick to Hold and SEK 92 TP.

Higher loan losses stronger than decent trading income

SEB released this morning its numbers for Q2 20. While posting a decent CET1 ratio level (at 17.8%), the underlying numbers were mostly weak with a sharp decrease in NII qoq and a sharp increase in loan losses (above expectations and Q1 numbers). We are comfortable with our Sell recommendation on the company (despite the fact that we will increase EPS on the back of higher trading income).

EPS beat on trading, but NII and losses miss

Q2 EPS SEK 1.62, in line with ARCe and 19% above consensus NII and loan losses on the weak side, but trading line comes in big Shows strength of diversified business, but quality slightly lacking Beat tempered by NII miss, but we see report as overall slightly positive

So far so good

The group posted a strong set of results showing faster and stronger-than-expected net interest margin expansion and no signs of a deterioration and above all anxiety on the asset quality front. It remains to be seen if the UK government will allow banks to hold on to the benefit of interest rate increases and if the UK economy proves as resilient as expected.

Sustainably robust results which we expect to trigger distributions

Legal & General disclosed strong HY 22 results, albeit in line with the consensus’ expectations. With most of the metrics improving on a yoy and sequential basis, we believe that the strong solvency position, in an environment with (sustainable?) higher yields, should trigger capital distributions to shareholders at the year-end.

And another layer of distributions

Aviva unveiled a fair operating result. While, in line with the insurance industry, Aviva saw a strongly negative impact from financial assets revaluation, the solvency position improved materially, yielding additional capital distributions. Once distributions cease, we believe that Aviva could be a takeover target.

Review of Electricity Market Arrangements - REMA Could Bring Benefits

Last week, the UK government published the consultation paper on its Review of Electricity Market Arrangements (REMA). Any change potentially represents uncertainty in a market that has been wary of changes with a number of shares falling after early details of possible reforms were flagged in the press. We review the possible changes and conclude that while there is some risk, from what we can see at present the likely outcomes could be either minimal or beneficial for investors in clean energy

Cenkos:Duke Royalty Ltd -Record revenues keep on rolling

Cenkos:Duke Royalty Ltd -Record revenues keep on rolling

SHORE CAPITAL - H&T Group (HAT) - House stock at 411p

Hybridan Small Cap Feast 09/08/22

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group exports

H&T Group (HAT) - House Stock, 411p - Golden oldy … celebrating 125 years

Hybridan Small Cap Feast 21-07-2022

Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen? Unigel Group, intends to join the Aquis Growth Market. Unigel Group is a pioneer in the field of thixotropic gels for the fibre optic cable industry. The Company is also a supplier of laminated steel tapes to the fibre optic cable industry in the US. Thixotropic gels and laminated steel tapes are essential components to the rapidly growing global fibre optic cable market. The Group export

Robust AUMs in a challenging environment

Great results posted by M&G, which recorded very resilient AUMs. The firm managed to outperform the consensus despite the tough environment. While the management avoided any capital plans comments, the resilient solvency position leaves great prospects while the current share buyback is still far from being completed.

Zeus: Technology Quarterly review - August 2022

This quarter’s key observations • Subsector performance: Marketplaces was by far the best performing subsector from an aggregate share price perspective (up 19.9%) vs. an average –5.2% for the other five subsectors. UK Digital Media was the worst performing subsector with a -12.4% aggregate share price move. • Valuation trends: UK Managed Services saw the largest EV/ EBITDA derating (-2.1x) and is now on the lowest EV/Sales multiple (1.5x FY1) and second lowest average EV/EBITDA (11.3x FY1

NextEnergy Solar Fund - Fund Secures CfD Wins

NESF has boosted its effective electricity price hedging with the winning of 86W under the UK’s CfD renewable support scheme. This provides an index-linked 15-year income stream providing a strong underpinning to the fund’s earnings.

Morning Note – 1 August 2022

Purplebricks (PURP LN) - New team: new strategy

Purplebricks full year results provides the detail behind its May pre-close update (i.e. 40,141 instructions; £70m revenue; £8.8m EBITDA loss and £43.2m cash) and details Purplebricks’ plan to return to operational cash generation.

Q2 2022 Activities Update

Trident Royalties Plc (AIM: TRR) has, this morning, provided an update on its activities undertaken during the quarter ended 30 June 2022. Most of the elements of the update had already been announced in another busy quarter for the company as management finessed existing contracts. Momentum remains powerful with a 155% QoQ (15x YoY) increase in net revenue to $5.7m. The contributory components of this were varied with Koolyanobbing comfortably ahead of our forecasts whilst the gold offtake port