EUR 100.00 For Business Accounts Only

UNICAJA: 1Q’20 RESULTS AND CHANGE OF T.P. TO UNDER REVISION (ANÁLISIS BANCO SABADELL)

1Q'20 vs. 1Q'19 Results
N.I.I.: € 140.0 M (-3.4% vs. -4.8% BS(e) and -4.1% consensus);
Total Revenues: € 254.0 M (-1.6% vs. -12.0% BS(e) and -12.4% consensus);
Operating Profit: € 105.0 M (-2.8% vs. -29.2% BS(e) and -27.8% consensus);
Net Profit: € 46.0 M (-27.0% vs. -62.5% BS(e) and -55.6% consensus);
1Q'20 vs. 4Q'19 Results
N.I.I.: € 140.0 M (-1.4% vs. -2.8% BS(e) and -2.1% consensus);
Total Revenues: € 254.0 M (+13.9% vs. +1.8% BS(e) and +1.3% consensus);
Operating Profit: € 105.0 M (+44.0% vs. +4.9% BS(e) and +7.0% consensus);
Net Profit: € 46.0 M.

Net Profit came in at € 46 M, ~30% above expectations thanks to better performance in all business lines. Operating Income fell -2% vs. 1Q’19 (vs. around -30% BS(e) and consensus), due to higher NII (-3.4% vs. -5% expected), fee revenues (+3% vs. -6% expected), trading revenues and costs (-3% vs. -2% expected).
The company has taken the opportunity to strengthen its provisions, with CoR of 48bps, 35bps stemming from Covid-19 (€ 25 M vs. € 20 M BS(e)) in 1Q’20). For 2020, the CoR as of 1Q’20 is in line with our estimate of 50bps.
The CET1 ratio increased to 14.1% (+10bps vs. 2019) and ~30bps above expectations due to a lesser impact from fair value. We expect a positive market reaction. Conference Call at 09:00 (CET).
We place our T.P. Under Revision. In our Covid-19 scenario of V-shaped recovery (two quarters of deep recession followed by moderate recovery in 3Q, strong recovery in 4Q and very strong recovery the next year, with a momentum that could last until the second year) we will cut our Net Profit/EPS’20-21e by -46%, which would lead us to cut our T.P. proportionally to levels of € 0.68/sh. (~+40% upside), and to reiterate our BUY recommendation.
In our negative scenario of more moderate U-shaped recovery (two quarters of deep recession followed by modest growth in 3Q and 4Q and strong recovery the next year and the second one; recovery in 18-24 months), we would cut our estimates by another -15%, bringing our T.P. to €~0.22/sh. (+22% upside). Since market highs on 19 February, when the Covid-19 impact began to be felt, UNI has fallen -49%, -18% vs. Ibex and -5% vs. the sector. BUY. Target Price: Under Revision.