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BANKINTER: 2Q’20 RESULTS (ANÁLISIS BANCO SABADELL)

2Q’20 vs. 2Q’19 Results
N.I.I.: € 304.62 M (+4.1% vs. +6.2% BS(e) and +3.9% consensus);
Total Revenues: € 426.95 M (-14.5% vs. -16.2% BS(e) and -20.1% consensus);
Operating Profit: € 222.45 M (-5.8% vs. -6.4% BS(e) and -15.7% consensus);
Net Profit: € -21.15 M (€ 164.02 M in 2Q’19 vs. € 59.41 M BS(e) and € 62.0 M consensus);
2Q’20 vs. 1Q’20 Results
N.I.I.: € 304.62 M (-1.0% vs. +0.9% BS(e) and -1.2% consensus);
Total Revenues: € 426.95 M (-2.1% vs. -4.1% BS(e) and -8.5% consensus);
Operating Profit: € 222.45 M (-10.0% vs. -10.6% BS(e) and -19.5% consensus);
Net Profit: € -21.15 M (130.29 in 1Q’20 vs. 59.4 BS(e) and 62.0 consensus);

The bank released 2Q’20 Results below expectations in NIII and better in fee revenues (that remain strong) and trading revenues. Costs came in slightly worse than expected although not preventing the progress in PPP (with positive jaws of +2%).
The discordant note, CoR. BKT updated the framework scenario to that of the BoS. Thus, the structural CoR remains at 1Q’20 levels, i.e. around 45bps although the adjustment outlined represents additional 100bps. With the combination of both, the CoR amounts to around 145bps in the 2Q’20, far from 85bps we expected and from around 70bps of 2020 guidance, which we believe the consensus was forecasting in the 2Q. At the conference call on results, the company kept its 2020 guidance at 70bps (at the high end, i.e. abandoning the 50bps from the lower range), and thus, leaving the implicit CoR for the coming quarters at around 40bps (vs. 85bps we expected thus far).
Good performance of capital, which remains at 11.75% (in line with expectations), as we expected and vs. 11.47% in 1Q’20. Note that in the 1Q’20, BKT updated its portfolio at market prices at 51bps, which has been partially recovered this quarter (around +25bps), which along with the supporting factor (~+5bps BS(e)) and the integral Net Profit capitalisation (without dividend accrual) explain the improvement.
We believe that regardless of the company’s comments, these results could have a negative reading bearing in mind the high 2Q CoR. Conference Call at 9.00h (CET). SELL. T.P. € 3.30/sh. (-25.04% potential).