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

3Q'19 vs. 3Q'18 Results
N.I.I.: € 144.0 M (-3.4% vs. -1.8% BS(e) and -2.0% consensus);
Total Revenues: € 291.0 M (+19.8% vs. -6.6% BS(e) and -3.7% consensus);
Operating Profit: € 139.0 M (+58.0% vs. -14.4% BS(e) and -5.7% consensus);
Net Profit: € 42.6 M (+15.1% vs. +9.2% BS(e) and +18.9% consensus);
3Q'19 vs. 2Q'19 Results
N.I.I.: € 144.0 M (-2.7% vs. -1.1% BS(e) and -1.4% consensus);
Total Revenues: € 291.0 M (+23.3% vs. -3.8% BS(e) and -0.8% consensus);
Operating Profit: € 139.0 M (+63.5% vs. -11.4% BS(e) and -2.4% consensus);
Net Profit: € 42.6 M (-19.0% in 2Q'19 vs. -23.2% BS(e) and -16.3% consensus);

In its 3Q’19 results, UNI has generated € 43 M of Net Profit (+15% vs. 3Q’18), in line with the consensus estimates and slightly above our estimates. Performance in Operating Income has been substantially better (€ 139 M, +58% vs. € 75 M BS(e) and € 83 M consensus), explained exclusively by higher trading revenues (€ 43 M vs. €~2 M BS(e)). The bank has taken advantage of this extraordinary income to make a provision of € 40 M for restructuring costs pending and to increase NPLs provisions related to the portfolio sales announced in the 2Q’19 to be completed.
Excluding this factor, core performance was in line with expectations, although with lower NII (€ 144 M, -2.7% vs. 2Q’19 and vs. -1.4% expected), impacted by the smaller contribution from the ALCO portfolio (due to portfolio sales) and lower growth in volumes due to seasonality. Fee revenues (+4.8% vs. 3Q’18) came in as expected, and remain underpinned by banking fees (+13.5% vs. 3Q’18). Operating costs (-4%) were in line and the CoR (15bps vs. 10bps BS(e)) includes one-off impairments, excluding which they would have come in as expected. Lastly, the CET1 ratio (13.3%) improved by 40bps, above our estimates.
We expect a neutral market impact, given that the core performance shows some weakness that we were already expecting. BUY. T.P. € 1.28/sh. (upside +56.48%).