BUCHAREST (Romania), November 20 (SeeNews) – Raiffeisen Capital & Investment (RCI) said on Friday it has upgraded its recommendation on Banca Transilvania stock to 'hold' from 'reduce' and raised the 12-month target price after the bank reported its third-quarter financial results.
“We lowered the cost of equity […], lifted the long term growth rate to 4.5% from 4.0% and more importantly we increased the sustainable return on equity from 12.5% to 15%. Moreover, we could not overlook that the bank’s 2010 estimated trading multiples are more than 10% below those of its peers,” RCI, the brokerage arm of Austrian banking group Raiffeisen in Romania, said in a statement.
“In addition, since we consider Banca Transilvania a macroplay, the latest more upbeat GDP data could provide a further boost to investors’ confidence. The upcoming presidential elections might have the same effect by reducing the political uncertainty,” it said.
RCI raised the bank’s target price to 2.3 lei from 1.47 lei previously. Banca Transilvania’s stock, part ofthe BET blue-chip index of the Bucharest Stock Exchange, last traded up/down at … lei by … GMT on Friday.
“Banca Transilvania’s third-quarter unconsolidated Romanian Accounting Standards results beat our and consensus expectations on the back of surging NIM, robust trading gains and higher one-off gain,” RCI said.
Given the stellar performance of net interest margin (NIM) in the third quarter, RCI raised its full year NIM estimate from 3.18% to 3.57%. Despite increasing the banks’ risk costs projection for 2009, RCI expects higher net income through 2011.
Banca Transilvania's third-quarter net profit dropped by 87% on the year to 37 million lei. The bank sees its gross profit falling by 82% to 85 million lei in 2009.
(1 euro = Romanian lei)
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