TLV - Very Strong Q3 Results

TLV – Instant Earnings Comment

Recommendation:  Buy (unch.)

Target price (12M): RON 2.5 (unch.)

 

• Banca Transilvania reported net income in the first 9M of 2019 came to RON 1.6 bln, implying a net profit of RON 626 mln vs our forecast of RON 400 mln in Q3.
• Better than expected results stemmed from risk provisioning as there was a release as well as better fees and other non-interest income (Net F&C, trading and profit from AfS).
• On a quarterly basis, NII was rather flattish on higher interest expenses and margins as a result also came down by 20bps.
• Cost-to-income remained under control at 43.03%. In the first three quarters, expenses declined 6.4% y-o-y, attributed to lower other operating expenses at subsidiaries outside the Bank, as taking out these impacts, OPEX rose 22.2% on PEREX.
• Net loans expanded by 6% q-o-q and 5% y-o-y, respectively while deposits also experienced solid growth. Loan-to-deposit ratio as a result remained at a comfortable level at 56.4%.
• NPE ratio was 4.49% as of September 2019 with coverage at 96%. Risk cost was positive in the quarter, a significant contributor vs. RON 156.7 mln provisioning in Q2.
• Capital ratio including the interim profit stood at 21.1%.
• The Bank said its preliminary bank tax calculation is RON 90.5 mln for this year and was already paid (though not shown in accounted figures). On a pro rata basis, net profit would have been less by RON 57 mln.
• Opinion: BT reported very strong results in the third quarter on better non-interest income and risk costs and should definitely be beyond our FY estimate (given that in the first 9M it already exceeded the figure).
• Conf call is set at 18 November, 16:00, local time.

 

 

Hai Thanh Le Phuong, CFA
Head of Research

CONCORDE SECURITIES LTD.

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