Værdiansættelse af Sparekassen Himmerland A/S

Anders Peter Knudsen Damgaard & Daniel Patrick Sitch

Student thesis: Diploma thesis


In the years following the financial crisis, many financial institutions suffered severe losses and as a consequence hereof, were either supported by their governments, acquired by larger financial institutions or filed for bankruptcy. Although most financial institutions have spent the last couple of years adapting to the new environment, many are still struggling in the aftermath of the financial crisis, which is also seen by the fact that many of the listed financial institutions still have a price to book ratio significantly below 1. Due to these facts, the authors find it highly relevant to test the value of smaller financial institutions in Denmark, which could subject to either acquisitions or closure in the impending future. This thesis values Sparekassen Himmerland A/S as at 31 December 2012 and compares the calculated value to the current market value as well as the relative value according to similar banks. Sparekassen Himmerland A/S is a relatively small bank, currently ranked the 21st largest bank I Denmark. The bank primarily operates in northern Jutland, and currently has around 300 employees and a working capital of approximately 10 billion DKK. The valuation of Sparekassen Himmerland A/S has been derived by first analyzing the macro-environment surrounding Sparekassen Himmerland, followed by an analysis of the industry specific factors assessed to have an effect on the performance of the bank. Further, an analysis of the bank's internal competences and their historic financial statements are combined with the environmental analysis, thus providing the grounds for a forecast on the financial performance for the next ten years and indefinite future. The method used for the valuation of Sparekassen Himmerland, is a method presented by Goedhart, Koller and Wessels1 The thesis calculates a value of 869 mio. DKK, which, compared to the current market value as implied by stock prices (618 mio. DKK) is higher by 251 mio. DKK or 41 %. , which has been specifically derived for the purpose of valuing banks. It is the belief of the authors that the selected method is the best alternative, however, other methods of valuation are being discussed and the advantages, disadvantages and implications by using these methods are presented. The difference of the calculated value and the actual stock value cannot be specifically contributed to a single factor, however, several assumptions have a significant effect on the calculated value. Misassumptions especially relating to the future interest margins and impairment on loans will have a major impact on the proposed value. The result of the relative valuation of Sparekassen Himmerland based on price multiples for similar banks, is relatively close to the current market price, and therefore below our calculated theoretical value. This could indicate that some of the assumptions we have made are not shared by the general market. In conclusion the valuation shows an underestimated market value of 41 %, and the authors therefore believe that further due-diligence tests, including an analysis of internal material, would be suitable as the thesis indicates a current undervaluation of the bank. Supporting the calculated value is the fact that the market value of the bank in the period from 1 January - 30 April 2013 has risen by approximately 10 %, and based on the presented thesis we believe, that the market value could rise by another 30 % in the future.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2013
Number of pages116