The Q1/23 revenues and earnings were clearly above expectations as higher interest rates and modest default rates created a perfect market for banking. A new Lithuanian bank tax has been adopted but we foresee limited earnings impact. We raise our estimates and Fair value.

Siauliu Bankas (SAB) is still trading below reported 2022 book value despite posting a ROE close to local peers LHV and Coop pank (CPA). Worries in the bank sector have pressured bank shares, but we see little reason to worry about SAB. We believe the ongoing acquisition of INVL AM & Insurance will be earning accretive in 2025.

We believe the deal to buy INVL Asset Management and Life Insurance business is a win for the buyer, Siauliu Bankas (SAB) and the seller, INVL Invalda (INVL). SAB has ambition to become universal bank competing for the TOP3 bank choice position in the market. The deal is expected to be closed by the end of 2023 and be earnings accretive in 2025. This makes SAB even more alike LHV and CPA and hence the valuation gap should decrease.

Q3 revenues and earnings were above estimates. In our view, Siauliu Bankas’ discount to LHV and Coop Pank (CPA*) is incomprehensible. We continue to see a substantial upside in SAB.

Our Siauliu Bankas (SAB) narrative has been “excess cash will be paid out as dividends” – we were wrong. It now seems like the excess cash will be used to accelerate loan growth. In this case, being wrong was “ok” as the share appreciated and increasing loan growth could be positive.

Siauliu Bank (SAB) is once again trading at a significant discount to the book value, mainly due to the overall negative stock market sentiment. We believe the company will reach its 2022 targets implying the discount to book is too high.

The announced ownership change is likely to improve growth prospects in the long-term, and the capital structure in the mid-term. The Q4/21 report was above on revenues and in-line on profits. The share trades at a substantial discount to peers.

The Q3 report was in-line with our forecast excluding one-offs (above including). We are puzzled by the valuation spread to Estonian banks, which we highlight in this report by comparing key metrics. We raise out Fair value per share to EUR 0.88.

The Q2 profit was in line with our forecast, and we reiterate our dividend forecast. We find the valuation spread to Estonian banks listed peculiar which implies an upside in the SAB share.

Following the better than expected Q1/21 profits and lower loan provisions, we raise our dividend forecast and factor in an extraordinary dividend for this year. We believe the valuation gap to the Baltic peer banks is too high, implying an upside for the Siauliu Bankas (SAB) share.