UmweltBank - Earnings momentum remains constrained
UmweltBank’s (UBK’s) FY19 earnings (based on preliminary results) were broadly flat compared to the prior year and in line with our expectations, as higher earnings before admin expenses and taxes were largely offset by the increase in G&A costs (cost-income ratio of 39.2% vs 32.7% in FY18). High costs related to investments in IT infrastructure and the introduction of new products coupled with persistent market headwinds (low interest rates and weak wind capacity additions in Germany) suggest UBK’s earnings recovery is likely to occur after FY20 (company FY20 PBT guidance is €36m). As a result, we have lowered our earnings forecasts and valuation by c 5–15%.UmweltBank AG is a Germany-based bank that provides financial services focusing on the ecological sector in Germany. The Bank offers online banking, loans, real estate credit, project financing, insurances, investment advice and investment management. It also co-finances various environment projects.
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