TLV - Q3 Still Distorted By Integration But Trends Remain In Place

TLV – Instant Earnings Comment

Recommendation:  Buy

Target price (12M): RON 2.8

 

• BT posted net income of RON 1.2 bln in the first 9M of the year, and a net profit figure of RON 376.5 mln in the 3^rd quarter, up 18.8% y-o-y and down 20.8% q-o-q, nevertheless the drop on a quarterly level was due to the bargaining gain related to acquisitions, otherwise there was a slight growth. 
• NIM slightly came down to 428 bps from 435 bps a quarter ago and NII grew by 10.9% q-o-q while Net F&C also expanded by 4.4% q-o-q.
• Cost-to-income was at a very comfortable level of 45.3%, down from the previous quarters but still reporting a slight rise by 160 bps.
• NPE ratio somewhat increased from 5.58% to 5.74% q-o-q and risk cost was also higher, reaching almost 2% vs. write-backs in the previous quarter. We have to look into the details whether this was due to the integration of the new banks or any one-offs.
• Net loans still show a good trend, growing by 4.1% q-o-q.
• Capital adequacy stood at 23% on a total standalone level, though we have to admit that consolidated figures show a lower figure but still above the required level.

• Opinion: We hold the view that BT is close to the end of its acquisition spree, though smaller acquisitions can happen but nothing very large, given where capital adequacy stands. Trends remain encouraging and our FY estimate of RON 1.4 bln is reachable. We maintain our recommendation and TP.