Sparekassen Sjælland-Fyn: Q4 first impression - Strong underlying result led by tight cost control - Nordea

Sparekassen Sjælland-Fyn reported Q4 PBLL of DKK 105m, DKK 18m (21%) above our estimate. The strong performance was driven by a solid beat on the costs, which was DKK 16m (7%) below (better) than our estimate, mainly due to lower-than-expected amortisation and depreciation costs. Net interest income was roughly in line with our estimate, while lending was flat q/q and 2% below our estimate. Fee and commission income was DKK 156m, we estimated DKK 157m. Management proposes a DKK 6 dividend per share, same as our estimate, which corresponds to a payout ratio of 25%. Regarding the more volatile items, market value adjustments came in at DKK 8m, DKK 5m ahead of our estimate. Meanwhile, Sparekassen only booked DKK 1m in loan loss reversals versus our estimate of DKK 18m in loan loss reversals. The total management buffer was increased by DKK 7.5m to 219m, i.e. stronger underlying asset quality improvement than what i nitially suggested. Overall the report was strong, yet roughly in line with our expectations on key income items. We expect to make positive EPS revisions to our estimates following today’s announcement of around 5%. The share price has performed strongly in recent weeks, up ~30% YTD. We expect the share to trade above peers following today’s report.