Værdiansættelse af Sparekassen Sjælland-Fyn A/S

Abstract

This thesis aims to determine whether Sparekassen Sjælland-Fyn would be an attractive acquisition target for Spar Nord Bank A/S, based solely on the theoretical fair value of Sparekassen Sjælland-Fyn A/S as of 28-04-2023.
The valuation of Sparekassen Sjælland-Fyn is based on a strategic and financial analysis. The analysis builds the foundation of the forecasting of future performance and capital requirements. The forecast is then used to determine the possible dividend payout, which determines the fair value, through a discount dividend model.
The strategic analysis concluded that the banking industry is highly competitive with only a minor way to differentiate. The industry is also susceptible to regulatory change and market volatility. Sparekassen Sjælland-Fyn differentiate themselves, by offering personal and direct contact with their financial advisors, furthermore by being local and supporting the local community. The financial analysis shows that the banks has decreased its expenses, while maintaining growth in their income. It also concludes that the bank has a solid foundation in terms of liquidity and capital.
The forecasting of future performance shows that income grows at a higher rate than expenses, which increases the net income through the forecasting period. This growth derives partially from an increase in deposits, loans, and bonds. These affect the banks risk and causes the capital ratio to slowly decline, which in return will require the bank to reinvest capital to maintain a solid capital foundation.
The evaluation of Sparekassen Sjælland-Fyn estimates its shares to have a value of 239,92 DKK per share, which is a premium of 19,72%. This shows that Spar Nord Bank A/S can make a bid above the market value, and potentially still have an upside.
It would be interesting to explore which synergies Spar Nord would receive if they would acquire Sparekassen Sjælland-Fyn. It would also be interesting to explore, how a change in capital requirement or a change in the required rate of return on equity would change the valuation of the commercial bank. The valuation is made on premise of a base case. It could therefore be interesting to see what the fair value would be, if the loan loss provision would be higher than anticipated and with a smaller growth.