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BANKINTER: 4Q’19 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'19 vs. 4Q'18 Results
N.I.I.: € 314.97 M (+13.3% vs. +12.2% BS(e) and +10.8% consensus);
Total Revenues: € 509.87 M (+9.0% vs. +6.8% BS(e) and +6.7% consensus);
Operating Profit: € 225.52 M (+4.5% vs. -0.8% BS(e) and +1.0% consensus);
Net Profit: € 106.27 M (-13.4% vs. -14.5% BS(e) and -16.1% consensus);
4Q'19 vs. 3Q'19 Results
N.I.I.: € 314.97 M (+2.3% vs. +1.4% BS(e) and +0.1% consensus);
Total Revenues: € 509.87 M (-5.6% vs. -7.5% BS(e) and -7.6% consensus);
Operating Profit: € 225.52 M (-13.8% vs. -18.2% BS(e) and -16.7% consensus);
Net Profit: € 106.27 M (-21.5% in 3Q'19 vs. -22.4% BS(e) and -23.9% consensus);

Has released better 4Q’19 results than expected thanks mainly to a better performance in core revenues (NII + fee revenues). Thus, the top end of the P&L statement has shown greater strength than expected, with lending growth of around +9%, in line with expectations (+5.5% in BKT excl. Evo Banco) and a very slight drop in the client spread (1.99% in 4Q’19 vs. 2% in 3Q’19 and 1.97% BS(e)), despite factoring in a repricing of the Euribor, which would go deeper in negative territory, and therefore benefiting from the tiering system.
The most positive surprise came in fee revenues, which grew +15% vs. 3Q’19 (underpinned by the growth seen in BKT excl. Evo Banco) and vs. 8% BS(e) and vs. +5.8% consensus, thanks mainly to a good performance in asset management and CIB.
Likewise, the bank has shown excellent cost control, where the seasonality typical of the quarter would explain the increase. Total costs would reach € 284 M (+12.8% vs. 4Q’18 and vs. +13.3% BS(e) and vs. +11.4% consensus). As we expected, as in previous quarters, the slight rise in LDA’s costs is explained by the growth process undertaken. All this leaves clearly positive jaws for the quarter.
Lastly, in provisions, we estimate that the CoR has performed very well, standing at 23bps (vs. 19bps BS(e)), which is still below the company’s guidance for the cycle of ~30bps. Also, the rest of provisions (mostly lawsuits) have remained in line with expectations and within the quarterly run-rate range (€~30 M). We expect a good market reception. BKT has met all of its targets. Conference call at 9:00 (CET). SELL. T.P. € 7.32/sh. (+20.44% upside).