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Patris Daily - 24 October 2018 - Part 2

24 Oct 2018

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OUR TAKE ON THE LATEST MACRO DATA:

Eurozone: October European Commission’s measure of consumer confidence

Consumer confidence increased to -2.7 in October, from -2.9 in September (vs. consensus -3.2), after declining over the two prior months, in spite of the fall in equity markets and the clash between Italy and the EU. The index remains at a high level, consistent with consumption growing at a solid pace (even though this index has overstated consumer spending growth in the past).

The slight rise posted by consumer confidence is also positive for the other confidence indices to be released by the European Commission (due on 30 October).

GLOBAL HIGHLIGHTS:

BPI: The bank disclosed a 3Q18 consolidated net income of €163.0mn (+4.4%q/q and +31.1%y/y). Net operating income before impairments and provisions reached €137.2mn in 3Q18 (+14.1%q/q and +3.5%y/y). Operating revenues stood at €253.4mn (+9.6%q/q and +4.5%y/y).

The NPE ratio reached 3.8% (vs. 5.1% as of the end of 2017). Common Equity Tier 1 ratio stood at 13.1% (vs. 12.3% in December 2017).

Customer deposits increased by 6.9% since the beginning of the year to €20.7bn. The net loan portfolio rose by 5.7% over the same period to €22.9bn. Loans to companies in Portugal rose 3.0%q/q to €7,887mn (+12.0% ytd), while loans to individuals increased 4.0%q/q to €1,475mn (+11.4% ytd). Looking only to the activity in Portugal, operating revenues increased by 7.4%q/q to €186.1mn (+5.8%y/y). Financial margin increased by 2.3%q/q to €108.0 (+11.9%y/y), while commissions fell by 3.0%q/q to €66.9mn (-1.2%y/y). Net income from financial operations stood at €6.2mn in 3Q18 (vs. €6.4mn in 2Q18 and €8.0mn in 3Q17). Net operating income before impairments and provisions rose by 12.2%q/q to €69.9mn (+5.4%y/y). Net income reached €101.9mn (vs. €104.1mn in 2Q18 and €64.6mn in 3Q17). 9M18 recurring net income in the activity in Portugal increased by 20%y/y to €165.2mn, consistent with a ROTE of 8.6% (vs. target of >10% in 2020). Consolidated ROTE reached 17.7%. (BPI’s filing on CMVM)

Iberdrola: The group reported 9M18 revenues of €26.3bn. Net income reached €2.096bn (Bloomberg)

Sabadell: The bank decided to tap Rothschild for the Solvia Desarollos sale. The sale of real estate developer Solvia Desarrollos Inmobiliarios will be done this year, according to Vozpopuli (Bloomberg)

OHL: The group mandated Lazard to seek new markets, work on a divestment plana nd develop new businesses and corporate restructuring. According to the same source, OHL does not dismiss the possibility of a new investor taking a stake or of a merger (Bloomberg)

CaixaBank: The bank is negotiating the sale of two portfolios that include mortgage-backed loans from small- and medium-sized companies valued at €800mn and €600mn, respectively, according to Vozpopuli (Bloomberg)

DIA: DIA has hired Rothschild to redefine strategy and gain back investor’s confidence, Expansion newspaper reported (Bloomberg)

Unicredit: The bank sells €101mn Russian NPL portfolio to EOS group (Bloomberg)

Atlantia: The group may consider separating its Autostrade business into a new holding company in a plan to get the F2I fund to buy a stake, according to Sole 24 Ore (Bloomberg)

Saipem: 3Q18 adjusted net reached €11mn (vs. consensus €39.9mn). 3Q18 revenue stood at €2.26bn (vs. consensus €2.01bn). 3Q18 EBITDA reached €277mn (vs. consensus €245.3mn). Saipem confirmed 2018 guidance (Bloomberg)

Bayer: the group failed to persuade a California state judge to set aside a jury’s verdict in the first trial over allegations that its Roundup weed killer causes cancer. Bayer said it plans to appeal the ruling (Bloomberg)

Vinci reported revenue for the 9-month period of €31.4bn, 9M19 like-for-like sales +3.3%, 9M18 concessions revenue of €5.62bn, 9M18 contracting revenue of €25.6bn and 9M18 order book of €32.8bn (Bloomberg)

STMicroelectronics: 3Q18 net income stood at $369mn (vs. consensus $326.8mn). 3Q18 gross margin reached 39.8% (vs. consensus 40.1%). 3Q18 net revenues $2.52bn (vs. consensus $2.50bn). The group sees 4Q18 net revenue growing about 5.7% and guided to a 39.8% gross margin (vs. consensus 40.1%) (Bloomberg)

KPN: 3Q18 adjusted EBITDA from continuing operations reached €585mn (vs. consensus €580mn). 3Q18 revenue from continuing operations stood at €1.40bn (vs. consensus €1.39bn) (Bloomberg)

WHAT TO WATCH TODAY: On the data front, focus should be on the October flash Markit PMIs for Germany, France, the Euro area. In EM, Mexico releases bi-weekly CPI numbers.

Boeing, AT&T and UPS report quarterly earnings before market opens, while Microsoft and Ford will do so after market closes.

The US Federal Reserve releases its latest Beige Book today (19:00). We will have MPC meetings today in Sweden and Canada.

Germany sells €3bn Bobl 0% October 2023. In the US, Treasury will issue around $5bn across the 5-year sector, as well as $19bn across the 2-year FRN sector.

In Portugal, Sonae Indústria reports 3Q18 results after market close.

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