April 24, 2024 06:06 GMT
SHBA: Weak Results, Credit Has Lagged Sector, Little Here To Change That
FINANCIALS
Handelsbanken 1Q24 results look disappointing with weak revenues and rising costs. Headline loan losses are better but non-performers trended weak since the year-end. We can see downgrades from analysts here, but the equity’s been a poor performer recently anyway. The credit has also lagged the sector’s tightening and there’s little here to reverse that trend, we feel.
- Key credit metrics: CET1 is flat on Dec-23 and broadly in line with consensus (at 18.8%). Loan losses were an unexpected write-back, but recent losses have been nominal and the overall figures are small. Non-performers are higher in the period and weaker than consensus (SEK8bn vs. 7.1bn est.). NPLs are only 33bp of loans (from 25bp at Dec-23) so relatively low though this trajectory will be questioned, we feel.
- Wider results: revenues are up 2% y/y and marginally below consensus. Within this, NII missed by 3% which will concern equity investors with trading profits (lower quality) rescuing the revenue line. Costs are up 6% (consensus expected flat) so that’s a weak result against this revenue backdrop. Even that credit loss writeback couldn’t rescue the above such that net income missed by 2%. We can see downgrades from equity analysts coming here – perhaps 2-3%.
- Outlook: other than weak loan growth and eroding margins, there’s little outlook here at all, other than mgmt’s comments around its own dissatisfaction with these figures.
Conf call is 0700 (London time) at: https://edge.media-server.com/mmc/p/z479vcdp/
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