TLV - Annual Figures Distorted By Acquisitions, Higher DPS Proposed

TLV - Instant Earnings Comment

Recommendation:  Buy (unch.)

Target price (12M): RON 2.8 (unch.)

• BT posted net profit of RON 1.2 bln for the full year of 2018 with Q4 amounting to only RON 16 mln.
• The weaker Q4 results stem from lower NII q-o-q and higher risk cost both q-o-q and y-o-y. Nevertheless we believe the figures were also distorted by acquisitions and thus we wait for the conf call to gain more insight on the matter.
• Cost-to-income came down to 48.44% from 50.97% last year.
• NPE ratio went down to below 5% with a coverage of 93% (cash coverage). Net loans slightly went down by 1.1% q-o-q which we believe is related to the higher risk cost and coverage, i.e. we believe there were write-offs possibly related to acquisitions.
• Loan-to-deposit ratio stayed at comfortable level, at 58.3%.
• Capital adequacy was somewhat own from 23% in the previous quarter to 21.5% but remained at comfortable level. Tier 1 ratio should have been around 17%.
• The Bank proposes a DPS of RON 0.17, up from 0.14 a year ago.
• Opinion: BT’s results seemed to be distorted by one-offs which needs more inspection, still, the proposed dividend and BT’s intention to raise dividend payout is positive in our view. Conf call is set on Monday, 4 March, 16:00, Romanian time.
• Bank tax: The Company also made a statement about the negative impact of the bank tax. We did not incorporate any bank tax impact in our TP yet, and please find the table for the impact below:

 

Bank tax impact

 

Bank tax	Annual contribution (local currency mln, after tax)	% of total profit 2018	TP (ex-dividend), local currency
0.00%	0	0.0%	2.8
0.20%	109	8.6%	2.5
0.40%	217	17.2%	2.3
0.60%	326	25.9%	2.0
0.90%	489	38.8%	1.7
1.20%	652	51.7%	1.5

Source: Concorde

 

 

 

Hai Thanh Le Phuong, CFA
Head of Research

CONCORDE SECURITIES LTD.

Hillside
55-61 Alkotás street, H-1123 Budapest.
Phone: | Fax: | Mobil:
|
MEMBER OF THE CONCORDE GROUP

 

 

This message and its attachments contain confidential information, and their disclosure is restricted by law and the relevant regulations. If you are not the intended recipient, it may be forbidden and illegal to disclose, copy, distribute or use the information in this message. If you are not the intended recipient, please notify the sender immediately and delete this message and its attachments. If you are a client of Concorde Securities Ltd., the standpoints and suggestions described in the message should be interpreted in accordance with the relevant parts of the agreement in effect between us.