FINANCIALS: Sydbank Results Preview: Spreads Have Tightened Into Results

Sydbank (SYDBDC: A3 pos) results are due 21-Aug. Peer laterals have been solid recently and spreads are tighter than the peers over the last month, so there’s a degree of expectation built in, even though the equity is weaker. Danish asset quality and the revenue outlook under the changing curve shapes are likely to be focus areas.

• 1Q24 results (1-May) were ahead of consensus with a 3% revenue beat driving an 11% net income beat. Credit stats were in line with expectations, bar CET1 which was a little better. Guidance language looked a little more positive to us.
• Today’s Jyske results are a solid lateral, Sydbank bought a small competitor (Coop Bank) for c.USD50m equivalent, a <2% deal with the deal closing on 1-Jul. Danske and Spar Nord both upgraded guidance during the period and peer results have been solid, too.
• Spreads have done well through recent volatility, beating the peers by 8bp over the last month alone but the equity has been a marginal underperformer, so expectations feel very mixed across the capital stack.
• Revenue expectations were pushed ahead 2% (and 1% for FY25) after results, moving earnings up 5% (and 1%), so that improved guidance language has been taken to heart.

Results are expected at 0730 (London time) with a conf call due later in the day.