Morningstar | SEB 2Q 2018 Results In Line; Shares Only Slightly Undervalued
On a comparable basis, SEB increased its operating profit for the first half of the year to SEK 11.4 billion, or by 2% from SEK 11.2 billion a year ago. For the first half of the year, net interest income posted stronger-than-expected 9% growth while fees posted 1% growth, which was partially offset by weakness in the trading income and other income lines. The cost side trended as we expected. On a net basis, the results were in line with our estimates. We maintain our fair value estimate at SEK 96 and our no-moat rating.The second quarter delivered strong results in customer-driven net interest income and positive growth in trading. Net interest income grew by 12% compared with the second quarter of 2017, driven by an increased asset loan base. In the quarter, margins on lending were stable while deposit margins improved. Fees and commissions posted 15% growth compared with the first quarter of 2018 and 3% growth compared with the second quarter of 2017, driven by security issuing and advisory fees, lending fees, net payments, and card fees. The items that affected comparability in the quarter included the sale of its  credit information service co-owned in Sweden and the divestment of SEB Pension in Denmark. Operating expenses in the quarter increased 1% compared with last year but were flat on a half-year basis. Credit losses for the first half of the year remain low at 3 basis points, while cost income is unchanged at 0.48. The return on equity for the first six months improved from 12.7% to 13.9%.
On the capital side, SEB improved  its core equity Tier 1 ratio this quarter by 30 basis points compared with last quarter's ratio at 19%. SEB’s common equity Tier 1 ratio stands at 19.3%, above the SEB estimated regulatory required level of 17%, which offers a comfortable buffer above the 150-basis-point buffer targeted by management.
Skandinaviska Enskilda Banken provides corporate, retail, investment and private banking services, as well as asset management and life insurance services. Merchant Banking provides wholesale and investment banking services to corporations and institutions. Retail Banking provides products mainly to private customers and small and medium-sized corporate. Wealth Management performs asset management and private banking activities and Life provides life, care and pension insurance. Division Baltic provides retail, asset management and private banking services in the Baltic countries. As of Dec 31 2013, Co. had total assets of SEK1,904.16 billion and total deposits of SEK821.47 billion.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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