Vestjysk Bank: Better growth outlook, synergies more visible

Vestjysk Bank: Better growth outlook, synergies more visible - ABG

Q3e NII up q-o-q, costs down and improved credit quality
We see higher lending growth in 2022e-2023e
Fair value range up to DKK 2.9-5.8 (2.8-5.6)

On 12 October, Vestjysk Bank (VB) upgraded its guidance for 2021 net profit to DKK 950m-1,050m (DKK 900m-1,000m previously). Excl. one-offs related to the takeover of DJS at the start of 2021, the new guidance is for DKK 650m-700m (DKK 575m-625m). The guidance upgrade was due to high customer activity in Q3 and lower loan losses. We see Q3’21e NII up by 2.4% q-o-q, helped by 1% sequential lending growth and corporate deposit re-pricing from July. We expect commission income up 18% y-o-y (incl. DJS Q3’20), and trading income could be high at DKK 25m in Q3e, helped by sector shares. We expect Q3’21e costs of DKK 261m, which is down 12% y-o-y adj. for DJS and merger costs; this is driven by synergies rolling in. We expect net loan loss reversals in Q3’21e of DKK 20m, despite prices for pork meat being down 29% since the peak, as credit quality appears to be improving overall. We expect CET1 to grow 50bp q-o-q, to 18.4%, due to Q3e net profit.

2023e adj. EPS is up 4% (see page 3). We increase our fair value range for VB to DKK 2.9-5.8 (2.8-5.6), including M&A. VB is trading at a 2022e adj. PE of 7.7x, and the share could see support from the M&A angle related to the 73% ownership in VB of Arbejdernes Landsbank.

Vestjysk Bank: Better growth outlook, synergies more visible - ABG

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Börsläget den 10 december, 2024

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Vestjysk Bank: Better growth outlook, synergies more visible - ABG

Agnes Michanek pekar ut vägen framåt

Börsläget den 10 december, 2024

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