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Third party research

Vestjysk Bank: A strong quarter on NII and trading income - ABG

Vestjysk Bank

This is a third party research report and does not necessarily reflect our views or values

Download report (PDF)
19% CAGR in adjusted EPS for 2022-'25e
Q1e: 14% NII growth q-o-q and another strong quarter on MVA
Competitive ROE and dividend yield at '25e adj. P/E of 4.9x


Adjusted EPS CAGR of 19% for 2022-'25e

Our earnings scenario implies a 2022-'25e CAGR of 18-19% in net profit and adj. EPS, primarily driven by the positive effects of the increasing interest rates on NII. Our scenario for the forecast period is still based on loan losses being higher in Vestjysk than what we expect from its larger peers, at an average loan loss ratio of 22bp for 2023e-'25e. We also maintain a high conviction that the recent recommencement of dividends will continue, and we factor in dividend payout ratios of 30%, equalling a dividend yield of 6% p.a. Regarding the Q1 report, we mainly focus on the continued net interest income growth, as we expect 14% growth q-o-q. Apart from this, we expect the dynamics of Q1 to be low loan losses, strong market value adjustments and sluggish commission income. We expect costs to be elevated by ~DKK 10m due to one-off costs related to Vestjysk's organisational restructuring of its corporate lending branches.