VUK +10.63%: Rallied strongly overnight in the UK and today in Oz following a strong FY22 result that showed impressive leverage to rising interest rates. Their 2H22 profit before tax (PBT) result of £401m (£789m for FY22) was 7% ahead of consensus.
Key points to catch our eye:
- Margins were inline with optimistic guidance at 185bps, with upside here going into FY23 and beyond given higher rates.
- The loss charge was low at 9bps and helped to drive the beat. While the headlines from the UK a dire, we’re not yet seeing a lot of stress.
- Capital levels were better than expected
- They announced a further buy-back of £50m and 7.5p final dividend taking FY buybacks to £125m and dividends to 10p. 2022 total payouts of £267m are ~13% of mkt cap.
- Costs were 1% higher.
- FY23 guidance implies modest upside to consensus.
All in all, another solid bank result with the sector enjoying (for now) the benefit of higher rates. VUK remains one of the cheapest global banks trading on just 0.4x price to book (for context CBA is the most expensive on 2.5x).
MM believes VUK is dirt cheap ~$2.80
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