solovaloreaggiunto
Forumer storico
Per Rott e Negus
RAiffeisen A very attractive risk/reward
TP: EUR30.5 • Upside: 47%
Cheap valuation, cash dividends and a double-digit ROTE
News flow on Ukraine/Russia will continue to influence the share price in the coming months, but RBI's investment proposition is in our view very compelling. RBI offers a) an attractive valuation (2016e P/E of 5.7x vs 9.9x for the sector; 2014e P/TBV of 0.73x), b) a 10.4% B3 FL CT1 ratio (rising to 11.2% in 2016e) which protects shareholders against dilution, c) an ROTE of 9.7% in 2015e and 11.7% in 2016e and d) an attractive dividend yield (4.9% on average for 2014-16e). We reiterate our Outperform rating and EUR30.50 target price.
Solid Q2 14 results
RBI reported a Q2 net income of EUR183m vs a cons. estimate of EUR136m. The quarter was characterised by stable NII q/q (NII in H2 will decline due to lower NII from derivatives); very good cost control (-8% y/y) and stable LLPs q/q (cost of risk 143bp). Management guidance for 2014 of lower operating costs vs 2013 and of LLP in a EUR1.3bn-1.4bn range was unchanged. We slash our 2014e earnings estimate as we factor-in a EUR240m charge in relation to Hungarian FX mortgages (EUR160m for bid-ask spread and unilateral changes in interest rates in line with guidance and a further EUR80m for a likely conversion of such loans into HUF), but increase our forecasts for both 2015e and 2016e by 2% (higher NII and lower operating costs).
Risks are under control
Net exposure to Ukraine fell by EUR190m q/q to c.EUR0.7bn (EUR513m equity, EUR660m intragroup funding and a risk transfer guarantee from the Republic of Austria of c.EUR500m) and a recent central bank audit found no need for additional capital; Russia posted another satisfactory result with no material asset quality deterioration (EUR101m net income and an 18% annualised ROTE) and management does not foresee any significant impact from the recent sanctions. The group's gross NPL ratio increased by 10bp q/q to 10.7% with coverage stable at c.65%. Solvency is in our view high enough to withstand severe shocks and management expects the bank to pass the AQR/stress test without difficulties. The residual EUR750m participation capital should be repaid before the year-end.
RAiffeisen A very attractive risk/reward
TP: EUR30.5 • Upside: 47%
Cheap valuation, cash dividends and a double-digit ROTE
News flow on Ukraine/Russia will continue to influence the share price in the coming months, but RBI's investment proposition is in our view very compelling. RBI offers a) an attractive valuation (2016e P/E of 5.7x vs 9.9x for the sector; 2014e P/TBV of 0.73x), b) a 10.4% B3 FL CT1 ratio (rising to 11.2% in 2016e) which protects shareholders against dilution, c) an ROTE of 9.7% in 2015e and 11.7% in 2016e and d) an attractive dividend yield (4.9% on average for 2014-16e). We reiterate our Outperform rating and EUR30.50 target price.
Solid Q2 14 results
RBI reported a Q2 net income of EUR183m vs a cons. estimate of EUR136m. The quarter was characterised by stable NII q/q (NII in H2 will decline due to lower NII from derivatives); very good cost control (-8% y/y) and stable LLPs q/q (cost of risk 143bp). Management guidance for 2014 of lower operating costs vs 2013 and of LLP in a EUR1.3bn-1.4bn range was unchanged. We slash our 2014e earnings estimate as we factor-in a EUR240m charge in relation to Hungarian FX mortgages (EUR160m for bid-ask spread and unilateral changes in interest rates in line with guidance and a further EUR80m for a likely conversion of such loans into HUF), but increase our forecasts for both 2015e and 2016e by 2% (higher NII and lower operating costs).
Risks are under control
Net exposure to Ukraine fell by EUR190m q/q to c.EUR0.7bn (EUR513m equity, EUR660m intragroup funding and a risk transfer guarantee from the Republic of Austria of c.EUR500m) and a recent central bank audit found no need for additional capital; Russia posted another satisfactory result with no material asset quality deterioration (EUR101m net income and an 18% annualised ROTE) and management does not foresee any significant impact from the recent sanctions. The group's gross NPL ratio increased by 10bp q/q to 10.7% with coverage stable at c.65%. Solvency is in our view high enough to withstand severe shocks and management expects the bank to pass the AQR/stress test without difficulties. The residual EUR750m participation capital should be repaid before the year-end.
