Handelsbanken: sänkt fair value till 107 kronor

AKTIE: Vinsten första kvartalet föll bara 16 procent och även om kreditförlusterna under resten av 2020 blir lika stora som under finanskrisen kommer Handelsbanken fortsätta vara lönsam (22 april 2020).

Morningstar Equity Analysts 2020-04-22 | 17:09
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Analyst Note |  Apr 22 2020 

Narrow-moat Handelsbanken reported a good first quarter considering the coronavirus. Operating profit declined 16% to SEK 5,142 million, which is in line with the 15% decline we modeled for 2020, although we don’t want to read too much into one quarter, especially as COVID-19 primarily affected the latter part of this period. Adjusting for a profit-sharing provision write-back last year as well as currency effects, the decline was only 3%. We maintain our fair value estimate of SEK 107 per share and narrow-moat rating. We believe Handelsbanken is one of the better run banks in Europe with a prudent underwriting process as evidenced in its low loan-loss ratio during the global financial crisis. A performance we believe is more likely, than not, to repeat itself this time around. Shares offer an attractive entry point with about 30% upside.

Net interest income increased 4% year over year on good volume growth while net fee and commission income grew 7%. On a sequential basis, which during the COVID-19 pandemic may be a better gauge, both line items grew 2% and declined 2%, respectively. Corporate volumes saw an increase of 2% versus year-end 2019 as businesses rushed to secure funding while household lending grew about 1%, both supporting net interest income. Net gains and losses on financial transactions were affected by a deferred capital contribution to Handelsbanken Liv, its pension subsidiary, of SEK 152 million as well as credit and derivative valuation adjustments owed to increased market credit spreads. These effects can be directly correlated to COVID-19. Additionally, the bank booked SEK 538 million in loan-loss provisions, of which SEK 440 million are an overlay to account for the COVID-19 impact. Operating expenses declined 1% to SEK 5,506 million on a sequential basis.

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