The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0652 GMT - UBS Group's first-quarter results show the benefits of its strategy of offloading noncore and legacy assets it acquired from Credit Suisse, Jefferies Joseph Dickerson and Theo Massing say in a research note. The Swiss banking giant booked gains as it exited some positions in the noncore business, and it reduced the unit's risk-weighted assets by about a fifth compared with the prior quarter, Jefferies says. This supported the bank's common equity Tier 1 capital ratio--a key measure of financial strength--, which stood at 14.8% at the end of the quarter and exceeded consensus expectations of 14.4%, Jefferies says. There was strength in UBS's main business units as well, notably in its global wealth management and its personal and corporate businesses, Jefferies says. (adria.calatayud@wsj.com)
0647 GMT - UniCredit posted a strong trading print with all key items beating expectations, Jefferies says in a note after the Italian lender posted first-quarter results. "Core line were all ahead but strong trading income also helped," analysts Marco Nicolai and Joseph Dickerson write, pointing to a 20% profit beat. The lender guided for 2024 distributions to be in line with 2023's EUR8.6 billion and above that for 2025 and 2026, also committing to return or deploy the excess capital by 2027. Shares should react positively to this, they add. (elena.vardon@wsj.com)
0636 GMT - UBS Group's first-quarter results are better than they look and offer enough to support the shares, KBW analysts Thomas Hallett and Andrew Stimpson say in a research note. The Swiss banking giant's key operating divisions outperformed expectations mildly, but it was its noncore unit that delivered a significantly better-than-expected performance, KBW says. This, together with signs of pressure on net interest income in its key global wealth management business, might take some shine off things, KBW says. Unsurprisingly, UBS wasn't able to provide much detail on the additional potential capital buffers under new regulatory proposals in Switzerland, but a faster pace of unwinding of its noncore assets boosted its capital position and is positive in light of concerns about future requirements, KBW says. (adria.calatayud@wsj.com)
0634 GMT - UniCredit's first-quarter update was solid, JP Morgan says in a note after the Italian lender posted results and raised its total capital distribution guidance to align with 2023's EUR8.6 billion in payouts. It confirmed that it intends to deploy or return excess capital no later than 2027 with bigger distributions in 2025 and 2026 than in 2024 if it doesn't do M&A transactions. Though analysts expected the group to be more specific on exceptional buybacks, the guidance implies upside to estimates. "Whilst revenue targets were not raised, the strong performance points to further upside, with slightly higher deposit pass-through more than offset by stronger fees," they write. (elena.vardon@wsj.com)
0611 GMT - Societe Generale's removal of its regulatory headwinds' guidance is making investors nervous, Berenberg says in a note, pointing out that the French lender's shares have underperformed the sector since its 1Q results. "This could imply greater-than-expected regulatory headwinds, which could consume the released capital from any further asset disposals," analyst Michael Christodoulou writes, adding this could limit distributions. The fact that the bank guides for a CET1 ratio around the 13% target at year-end, without specifying the potential hit from new headwinds, could raise investor concerns about their scale, such as those from the ECB's on-site inspections. The revenue target for 2024 seems achievable but expectations beyond that look optimistic, he adds. Shares have fallen almost 10% since May 3 open and last closed at EUR24.21. (elena.vardon@wsj.com)
0534 GMT - The BBVA and Sabadell story probably has more to run, RBC Capital Markets says in a note after the Spanish lender rejected its larger peer's merger proposal saying it undervalues its potential and that it can create value for shareholders with its standalone strategy. "In our view, BBVA will likely have some wiggle room on price, and SAB probably has not fully closed the door to future negotiations, although the two parties currently seem a long way away from finding middle ground," analyst Benjamin Toms writes. The all-share offer now looks less attractive, given BBVA's share price has slipped. He expects a partial unwind of the 9% rise in Sabadell's share price seen since last week when the offer was put forward. (elena.vardon@wsj.com)
0346 GMT - Chinese brokerage firms may deliver stronger operating performances from 2Q given the stronger market momentum in Hong Kong and China since April, says Lawrence Chen, an analyst at CCB International. Chen notes that aggregate sector profit contracted 26% on year in 1Q while revenue declined 21% with weakness across investment income, securities underwriting and interest income. CCB lowers its 2024-2025 profit forecasts for the sector by 9%-10% to account for expectations for revenue to drop 4%-5%. CITIC Securities remains its top pick for its strong product spectrum, overseas presence and ample liquidity. The stock is last at HK$12.82. (monica.gupta@wsj.com)
0237 GMT - DBS stands to gain from higher wealth management fees and Treasury income, UOB Kay Hian analyst Jonathan Koh says in a research report as the brokerage lifts its 2024 earnings forecast for the Singapore bank by 8%. Management expects double-digit growth for fee income driven by wealth management and cards, the analyst notes. Also, DBS' net interest income should be modestly better than 2023 levels, aided by the full-year impact of its consolidation of Citi Taiwan, while growth in total income should be above its previous guidance of mid-single digit, the analyst says. The brokerage raises the stock's target price to S$40.70 from S$39.32 with an unchanged buy rating. Shares are 0.3% higher at S$35.91. (ronnie.harui@wsj.com)
0212 GMT - CIMB Group could see a slight sequential expansion of its net interest margin in 1Q, driven by lower deposit costs in Malaysia due to less intense fixed-deposit competition and higher loan repricing in Indonesia, Hong Leong IB analyst Chan Jit Hoong says in a note. These offset NIM compression in Singapore and Thailand, he says. Sequential non-interest income could remain robust, supported by solid trading and forex results, he says. However, CIMB's risk-reward profile is balanced, with share price performing well in recent months and foreign shareholding at a five-year high of 32%, potentially capping further upside. he says. Hong Leong raises its target price for CIMB to MYR6.80 from MYR6.55, rolling over its valuation year to 2025, while maintaining a hold rating. Shares are 0.3% higher at MYR6.78. (yingxian.wong@wsj.com)
0106 GMT - Westpac's 1H FY 2024 net interest margin of 1.94%, excluding notables, was ahead of Jarden's and consensus estimates, with a key driver being moderating mortgage competition, say Jarden analysts Carlos Cacho and Jeff Cai in a note. Meanwhile, the stabilization of core NIM at 1.80% was a highlight, with guidance suggesting it should remain flattish ahead, says Jarden. "That said, the better-than-expected results were arguably overshadowed by unanswered questions on the outlook, namely the outlook for costs in FY 2025," says Jarden, which keeps an overweight call on Westpac's stock. (alice.uribe@wsj.com)
0101 GMT - ASX's futures volume growth saw a surprisingly strong rebound in April after a weaker month in March, say Jarden analysts in a note. For April, futures volume growth was up 44% compared to the previous corresponding period--the highest monthly growth rate since the end of the global financial crisis. Jarden upgrades its 2H FY 2024 forecast for ASX's futures volume growth to 8% from 5%. But with still-soft revenue momentum elsewhere across cash equities, capital raisings and interest income, it lifts its FY 2024-2025 EPS projections by just 0.4% and 0.2% respectively. Overall, Jarden sees limited value appeal in the stock, and maintains a neutral rating. (alice.uribe@wsj.com)
0052 GMT - ANZ's 1H FY 2024 results were slightly disappointing given elevated expectations from the market after peers' results, say Jarden analysts Carlos Cacho and Jeff Cai in a note. While cash profit, for example, was in line with expectations, the result was driven by materially lower bad and doubtful debts, as opposed to other levers that may be viewed more favorably. There was also a headline miss on margins, but the ex-markets result of 1.63% was broadly in line or slightly better than consensus views. "That said, the result largely confirms our expectations of moderating margin pressure and benign credit conditions continuing," says Jarden. (alice.uribe@wsj.com)
(END) Dow Jones Newswires
May 07, 2024 04:20 ET (08:20 GMT)
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