EUR 850.00 For Business Accounts Only

Morningstar | Jyske Bank's First-Quarter 2019 Flat; Fair Value Estimate Unchanged

Jyske Bank reported first-quarter results of DKK 610 million, flat compared with the same period a year ago. Despite this seemingly stable performance, the first quarter was a mixed bag for the group. Net interest income declined 6% as higher mortgage and leasing activities could not offset margin pressure and increased financing costs. Net fee and commission income showed weakness as well, down 8% year over year, as performance fees collected in the same period last year did not come through this time around. Additionally, higher fee expenses driven by increased leasing activities as well as higher fees related to government-guaranteed loans and the issuance of covered bonds were a drag. Core income, as management defines it, increased 6% to DKK 2,051 million vis-à-vis last year, but this was the result of value adjustments adding DKK 261 million. Excluding for this strategic balance sheet and risk management item line, income declined 7% to DKK 1,858 million. Expenses were largely in line with the first quarter last year, while a benign credit environment lead to DKK 16 million in loan impairment reversals compared with DKK 99 million reversals last year if one excludes IFRS 9 implementation effects. All in, first-quarter 2019 results correspond to a return on average equity of 7.3%, in range of our slightly below 8% full-year expectation. We maintain our fair value estimate of DKK 300 per share and no-moat rating.