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BANKIA: 3Q'19 RESULTS (ANÁLISIS BANCO SABADELL)

3Q'19 vs. 3Q'18 Results
N.I.I.: € 502.0 M (+1.4% vs. +1.5% BS(e) and +1.8% consensus);
Total Revenues: € 875.0 M (+1.2% vs. -3.7% BS(e) and -3.1% consensus);
Operating Profit: € 417.0 M (+2.5% vs. -6.5% BS(e) and -6.4% consensus);
Net Profit: € 176.0 M (-23.1% vs. -28.1% BS(e) and -23.6% consensus);
3Q'19 vs. 2Q'19 Results
N.I.I.: € 502.0 M (-2.7% vs. -2.6% BS(e) and -2.3% consensus);
Total Revenues: € 875.0 M (+2.0% vs. -2.9% BS(e) and -2.3% consensus);
Operating Profit: € 417.0 M (+3.7% vs. -5.4% BS(e) and -5.2% consensus);
Net Profit: € 176.0 M (-9.8% in 2Q'19 vs. -15.6% BS(e) and -10.3% consensus);

Despite core results coming in -1% below expectations (NII+fee revenues-operating expenses), the company’s 3Q’19 results show great weakness on the revenues level. Thus, NII fell -2.7% vs. 2Q’19, in line with expectations, but slightly below the consensus estimate, where the only positive reading lies in the growth seen in non-doubtful loans, which rose by +0.2% vs. 3Q’18 and vs. -0.4% (BSe), and which was not offset with the NIM squeeze to levels of 1.72% vs. 1.75% as of 1H’19. Thus, the higher trading revenues (€~100 M vs. some € 50 M expected, leaving the ALCO portfolio at € 23.5 Bn, -6.5% vs. 1H’19) offset the higher provisions (lending and generic). With this in mind, on the Net Profit level, the results were fully in line with the consensus (slightly above vs. BS(e)).
Capital generation came in at +10bps on the quarter (leaving the FL CET at 13% as of 9M’19 vs. 12.91% as of 1H’19). We do not expect a good market reception. Conference call at 12.30 (CET). SELL. Target Price: € 2.07/sh (upside 16.65%).