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UNICAJA: 4Q’21 RESULTS (ANÁLISIS BANCO SABADELL)

4Q'21 vs. 4Q'20 Results (*)
N.I.I.: € 235.0 M (-17.8% vs. -15.0% BS(e) and -16.1% consensus);
Total Revenues: € 313.0 M (-6.6% vs. -9.1% BS(e) and -11.6% consensus);
Operating Profit: € 90.0 M (-13.5% vs. -25.0% BS(e) and -31.7% consensus);
Net Profit: € -18.0 M (€ -17.0 M in 4Q'20 vs. € -242.0 M BS(e) and € -258.0 M consensus);
4Q'21 vs. 3Q'21 Results
N.I.I.: € 235.0 M (-6.4% vs. -3.2% BS(e) and -4.4% consensus);
Total Revenues: € 313.0 M (-18.7% vs. -20.9% BS(e) and -23.1% consensus);
Operating Profit: € 90.0 M (-40.4% vs. -48.3% BS(e) and -53.0% consensus);
Net Profit: € -18.0 M (€ 54 M in 3Q'21 vs. € -242.0 M BS(e) and € -258.0 M consensus);
(*) Growth vs. pro forma 4Q’20 including Liberbank

The bank reported € -18 M of Net Profit in the 4Q’21 and € -282 M of reported Net Profit, including personnel restructuring costs (€ -377 M gross), below expectations (€ -242 M BS(e); € -258 M consensus), with weak NII and higher provisions/impairments.
In revenues we highlight the strong performance in fee revenues (+20.5% vs. 4Q’20; around +7% vs. expected), boosted by both banking fees, which continue to improve (+10% vs. 3Q’21), and by asset management (+6% vs. 3Q’21). On the negative side we stress NII, which came in at € 235 M, a disappointing level and -6.5% below 3Q’21 and vs. -4% expected. This figure was pressured by the excess liquidity on the balance sheet (€ 1 Bn AT1 issuance in 4Q’21; Liberbank’s ALCO portfolio was not reinvested and there was a strong increase in public administration deposits), which explains 80% of the drop in the margin during the quarter. That said, we also see a drop in the customer spread (-3bps on the quarter) and pressure on the new loan yield. The lending activity (+0.8% vs 3Q’21; +2.4% on the year) remains in positive territory, underpinned by mortgages (+3.4% in new loan production), and as a one-off this quarter from corporate loans. The bank also beat expectations in trading revenues (€ 21 M vs. € 13 M expected), explaining the better revenues performance than expected.
Costs (-3.5% vs. 4Q’20) and CoR (-41bps) were in line with expectations, although we see a slight deterioration of coverage to 69% (vs. 72% in 3Q’21), which UNI chalks up to cautious reclassifications.
In capital, the bank has ended the year with CET1 at 12.5% (in line with expectations), falling -110bps on the quarter, explained fully by the restructuring costs.
With all this in mind, the performance is not significantly different from the trends seen in previous quarters, but with slightly weaker revenues, which will be easy to reverse if UNI “works on” the excess liquidity on its balance sheet. The stock has opened trading today with a neutral reaction, awaiting the messages/guidance’22 from the conference call (11:30 CET). BUY. T.P. € 1.21/sh. (upside +27.84%).