Sparekassen Sjælland-Fyn

Country:
Sector:
Market cap (m):
Denmark
Financials
DKK 1,518.57
Bloomberg:
Reuters:
Website:
SPKSJF DC
SPKSJF.CO
Share price (close):
DKK 87.40

Latest Reports

Commissioned Research: 2019 guidance looks conservative
Sparekassen Sjælland-Fyn's Q4 profit before loan losses was DKK 25m, DKK 5m (18%) below our estimate. This was negatively impacted by costs of DKK 218m, which were DKK 11m (5%) above our estimate. On the positive side, net interest income came in at DKK 142m, DKK 8m (6%) ahead of our estimate. Loan losses were also DKK 7m better than expected. Both fee income and market value adjustments were as we had expected. The proposed 2018 DPS was DKK 2.5; we had expected DKK 2.07. Sparekassen Sjælland-Fyn guides for 2019 pre-tax profit of DKK 180-210m, which looks conservative, in our view; we estimate DKK 269m. We lower 2019E-21E EPS by 5-6% to reflect lower NCI, dividends and market value adjustments. Our new fair value range is DKK 70-105 (76-115). Marketing material commissioned by Sparekassen Sjælland-Fyn.

Analysts: Jakob Brink
Commissioned Research: Q4 2018 first impression: Better NII, weaker costs
Q4 2018 profit before loan losses was DKK 25m (DKK 5m weaker than our estimate). Net interest income was the main positive, exceeding our estimate by 6%, owing to higher income from bonds and better-than-expected lending and deposit margins. However, costs were DKK 11m higher than our estimate, driven by "one-off" costs of DKK ~17m related to marketing, IT and severance pay. The proposed 2018 DPS of DKK 2.5 was better than our estimate of DKK 2.07. The 2019 pre-tax profit guidance of DKK 190-210m is very conservative, in our view; we estimate DKK 291m. – Marketing material commissioned by Sparekassen Sjælland-Fyn

Analysts: Jakob Brink
Commissioned Research: Asset quality remains a top priority
In Q3 2018, Sparekassen Sjælland-Fyn lowered its risk appetite in certain market areas, owing to intense competition, which has made risk/reward unattractive. The cautious stance on risk continued into Q4, we understand. We hence lower 2018E lending growth to 4% (4.5%) y/y, also assuming that the off-boarding of troublesome clients has continued to progress very well. Mainly due to a DKK 21m cut in our Q4 2018E market value adjustments, due to the widening in mortgage spreads, we lower 2018E EPS by ~15%. As we reduce 2019E lending growth to 5% (7%), owing to the company's cautious risk appetite, we also cut 2019E-20E adjusted EPS by 7-8%. Our fair value range is now DKK 76-115 (84-125).

Analysts: Jakob Brink
Commissioned Research: Asset quality and costs better than expected
Sparekassen Sjælland-Fyn's Q3 2018 profit before loan losses was DKK 69m, 25% better than our estimate and up 77% q/q. The major positive surprise was market value adjustments of DKK 25m, DKK 18m higher than our estimate, due to strong performance on sector shares. Another positive surprise was total costs, which were 4% below our estimate. This was mainly driven by amortisation and depreciation on intangibles and PPE, which that came in at DKK 11m, DKK 5m (31%) better than our estimate. On the negative side, activity was slightly below our expectations, which resulted in a 2% miss on NII and a 5% miss on commission income. Owing to the beat in the quarter, we lift our 2018E adjusted EPS by 19%, while we lower 2019E-20E adjusted EPS by ~2% to reflect the weaker NII and NCI trends. Our new fair value range is DKK 84-125 (DKK 88-128) per share. Marketing material commissioned by Sparekassen Sjælland-Fyn.

Analysts: Jakob Brink
Commissioned Research: Still early days of strategy plan
We expect focus in the Q3 report to be mainly on how the bank is progressing with its long-term strategic plan, as it is still in the early phase. We estimate Q3 to be hurt by slightly weaker activity in the quarter and lingering margin pressure, which on the other hand is offset by strong underlying growth. We therefore expect to see net interest income and net commission income to rise 0-2% q/q, respectively. We believe that market value adjustments will likely normalise after the bonds took a beating in Q2. This brings Q3 2018E total income up 7% q/q, while we expect costs to be flat q/q. We leave our 2018E adjusted EPS roughly unchanged, but we lower our 2019E-20E by 2-3% owing to lower loan growth in 2018E and higher Tier 3 costs in 2019E-20E. Our Gordon growth model-based fair value is at DKK 88-128 (90-131). Marketing material commissioned by Sparekassen Sjælland-Fyn.

Analysts: Jakob Brink
Commissioned Research: A likely takeover target?
In our view, Sydbank was surprisingly quiet during the Nordjyske Bank transaction. We think M&A is a necessity for Sydbank, as recent quarters have shown that no further efficiency gains can be harvested and revenues are still under pressure. We believe Sparekassen Sjælland-Fyn could add significant value for Sydbank. We estimate a 14-15% ROI for Sydbank if it acquired Sparekassen Sjælland-Fyn at a 100% premium. We leave our estimates and fair base case value range unchanged at DKK 90-131. Marketing material commissioned by Sparekassen Sjælland-Fyn.

Analysts: Jakob Brink
Commissioned Research: It's harvest time
In recent years Sparekassen Sjælland-Fyn has merged with Sparekassen Faaborg, and raised capital via an IPO in 2015 and a rights issue in 2018. The bank has also reduced its credit risk and expanded its branch network. All these projects have, in our view, reduced the prioritisation of cost control. We find potential for the bank to optimise costs as branch openings are set to stop. Moreover, we expect to see income support from the branch network over the coming years as recently opened branches mature. Both cost efficiency and profitability are also key parameters of the 'New Ways' strategy plan, launched in November 2017. We arrive at a base-case fair value range of DKK 90-131, depending on the applied cost of equity and level of normalised loan losses. Marketing material commissioned by Sparekassen Sjælland-Fyn.

Analysts: Jakob Brink

Equity analysts

Senior Analyst, Sector Coordinator

Key persons

CEO: Lars Petersson

CFO: Jens Trane

Chairman: Thomas Kullegaard

Numbers
Nordea
DKKm
2015
2016
2017
2018
2019E
2020E
2021E
EPS (rep.)
0.00
12.23
15.41
8.53
12.99
14.69
15.83
EPS (adj.)
n.a.
8.29
13.00
5.89
11.25
12.63
13.62
DPS
3.00
3.05
0.00
2.50
3.25
3.67
3.96
NII growth
-8.0%
-17.8%
-1.8%
-1.9%
18.3%
5.0%
3.4%
Staff costs growth
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Total expenses growth
5.1%
3.9%
5.0%
7.6%
0.4%
1.4%
1.2%
Operating profit growth
-22.2%
1.7%
57.5%
-42.4%
94.1%
15.5%
7.9%
Net profit to equity growth
-19.8%
-25.2%
56.8%
-39.6%
91.0%
12.3%
7.8%
Loans to the public growth
-2.2%
7.3%
11.5%
4.2%
5.0%
4.0%
3.0%
BIS III CT1-ratio
10.0%
9.9%
10.7%
13.0%
13.5%
14.0%
14.6%
BIS II Trans. T2-ratio
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Leverage ratio
7.9%
7.9%
8.5%
9.6%
10.2%
10.8%
11.4%
Nordea Markets estimates published on Feb 8, 2019
Source: Company data, Nordea estimates
Per share data and multiples
Nordea
DKK and %
2015
2016
2017
2018
2019E
2020E
2021E
P/E
n.a.
8.7
7.4
9.4
6.7
6.0
5.5
P/E (adj.)
n.a.
12.8
8.7
13.6
7.8
6.9
6.4
P/BV
0.00
0.67
0.67
0.52
0.52
0.48
0.45
P/TBV
0.0
0.7
0.7
0.5
0.5
0.5
0.5
Dividend yield
3.1%
2.9%
0.0%
3.1%
3.7%
4.2%
4.5%
RoE (adj.)
8.1%
5.4%
7.9%
4.2%
7.0%
7.2%
7.3%
RoTBV (adj.)
8.9%
5.9%
8.5%
4.4%
7.3%
7.6%
7.6%
C/I (adj.)
-71.0%
-74.8%
-75.3%
-86.4%
-74.5%
-72.0%
-70.6%
NII-margin (adj.)
6.1%
4.9%
4.4%
4.0%
4.5%
4.5%
4.5%
Payout ratio
n.a.
24.9%
0.0%
29.3%
25.0%
25.0%
25.0%
LLR /Impaired loans
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
LL-ratio
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
Nordea Markets estimates published on Feb 8, 2019
Source: Company data, Nordea estimates

Source: Thomson Reuters