Renta4 | Q119 results are below our estimates across the whole account: -3% in interest margins; -4% in gross profits; -2% in net margin for lower operational costs than expected and -4% in net profits. Compared to the consensus, slightly below in interest margins and gross profits (-1% in both cases), and 1% above in net margins and net profits.
For the second consecutive quarter the improvement in the performance of the credit portfolio, which recovered the profit levels of Q118 after hitting lows in Q318, stands out. No change in the contribution to gross profits by business, where LDA amounts to 20%, corporate bank 27% and 12% from the consumer financing business.
Margins: IM/ATMal rose to 1.53% in Q119 (vs 1.5% in Q418) capturing a better performance of credit investment (2.03% in Q119 vs 1.98% in Q418) and despite a 16 base point fall in the profitability of the fixed income portfolio in levels of 2.36%. Interest margins fell 1% on quarter (vs +3% R4 and +0.4% expected by the consensus), net commissions reduced 2.4% vs Q418 (vs +2% R$ and -2% expected by the consensus) and the ROF were 17 M€ (vs 12.5 M€ R4) which means a 33% increase over Q418.
Lower operational expenditure than expected, 251 M€, which remains level in quarterly comparison (vs +5% R$ and +2% consensus).
Solvency and Liquidity. The CET1 ratio “fully loaded” remains practically stable at 11.8% (vs 11.75% in 2018).
Credit Quality. The non-performing loan ratio was 2.87% (vs 2.9% in 2018) with a coverage of 49% (vs 49% in 2018). The balance of adjudicated assets fell 17% yoy in Q119.
In the first minutes of trading in Bankinter´s shares, the share moved laterally close to zero, as investors interpreted these results neutrally. However, an hour later the share fell almost half a point, in line with other banking shares. O.P. 8.1€/share.