Renta 4 | The results for Q4 2024 have shown a net interest margin slightly above expectations (+1% versus r4 estimated and consensus), and income from services -1% versus R4 estimated and +4% versus consensus. Gross margin was in line with R4 estimated and 2% higher than expected by the consensus. Net profit was 4% higher than R4e and 9% higher than the consensus, mainly due to lower provisions and the extraordinary impact of €67 million from the sale of a JV with Global Partners and Erste.
Highlights of the results: 1) Net interest income -1.9% year-to-date in 4Q24 (versus -3% year-to-date R4 estimated and consensus) and +9.8% year-on-year 2024 (+9.5% year-on-year R4 estimated) in line with the high single-digit growth guidance, 3) NPL ratio closes at 2 .6% (versus 2.7% 9M24) and cost of risk of 27 b.p. 4Q24 annualised versus 2024 guidance close on 30 b.p. (versus 25 b.p. 3Q24 and 28 b.p. R4 estimated), 4). Revenues from services (which include banking fees, asset management and protection insurance) grow by +4.6% year-on-year in 2024 (versus +2.8% year-on-year in 9M24) versus low single-digit growth guidance in 2024, 5). Operating expenses closed the year up +4.9% year-on-year versus a growth guidance of <+5% year-on-year, and 6) CET 1 ‘fully loaded’ without the IFRS 9 transitional period stands at 12.4% (versus 12.2% in 9M24) without the impact of the share buyback programme.
On the other hand, the entity’s Board of Directors has approved the distribution of a final cash dividend to be paid in April, which brings the total charged to 2024 to a payout of 53.5%. It has also approved the sixth share buyback programme for a maximum amount of 500 million euros.
Having exceeded all the 2024 targets, in 2025 the bank expects net interest income to show a fall to a mid-single digit (versus -2.4% R4 estimated) and income from services to grow to a low- to mid-single digit (+3% R4 estimated). Operating costs are estimated to grow by c.+5% year-on-year (versus +3.5% R4 estimated) and a controlled risk profile with a CoR<30 bp (versus 30 bp R4 estimated). They maintain the capital target, with a CET 1 in a range between 11.5% – 12.25% (versus 12.44% R4 estimated), with the upper part of the range being the reference for the payment of additional dividends. And they reiterate the dividend policy for 2025.
The positive figures, exceeding estimates and with a good reading of the evolution of revenues, the announcement of shareholder remuneration and 2025 guidance aligned with the interest rate scenario and its Strategic Plan should be enough for a positive reaction in the share price. However, despite the good performance of the share price, a negative response cannot be ruled out, with an earnings guidance that the market could interpret as insufficient. The conference will be at 11:30 a.m. Overweight. P.O. €6.74/share.