PKO BP – Quality and dividend
We keep our Accumulate recommendation for PKO BP unchanged and raise the target price to PLN 47.17. In our opinion, PKO BP’s recent results represent above-average quality. The Company’s reported results have been in line with or above market expectations for nine consecutive quarters. In view of high growth in net interest income supported by retail loan sales and high quality of the portfolio, we have upgraded our forecasts by 7% for 2019 and 5%-6% for the next two years. The 2019 results should include additional PLN 235m one-off gains on the reversal of withholding taxes (1Q’19), the recognition of badwill on the acquisition of PCM (2Q’19) and the revaluation of interests in PSP – BLIK (3Q’19). Our projection includes a dividend payout from undivided earnings and a rerun of that scenario in 2021. In our opinion, PKO BP’s capital adequacy ratios allow for such payments, additionally encouraged by the emerging Prime Minister’s “Capital Investment Fund” to be formed with dividends paid by government-owned companies. In our view, the high dividend and the growing profitability merit PKO BP’s rerating to 13.0x fair P/E.
PKO Bank Polski is a universal commercial bank offering services to both domestic and foreign retail, corporate and other clients. Co. is licensed to hold foreign exchange and currencies and sell/buy them, as well as perform a full range of foreign exchange services; open and hold bank accounts abroad and to deposit foreign exchange in these accounts. In addition, Co. conducts activities relating to leasing, factoring, electronic settlements via payment cards, as well as renders other financial services. As of Dec 31 2009, Co. had total assets of Zl156,478,685,000 and total deposit of Zl124,628,562,000. Co. operates in the Republic of Poland, Ukraine and Sweden.
Set up in 1986, mBank (originally BRE – Export Development Bank) is Poland’s 4th largest universal banking group in terms of total assets and 5th by net loans and deposits at the end of June 2019. mBank has one of the oldest brokerages in Poland – we have been providing brokerage services since 1991 - and the biggest, serving about 300 ths clients.
We provide all brokerage services available in the Polish capital market (i.e. Warsaw Stock Exchange, non-public markets and forex) in a way that meets the expectations of all groups of investors, both individual and institutional. Participating in the dynamic growth of the Polish capital market since its inception, we have acquired competences and experience needed to provide the highest quality of service and we have won the trust and satisfaction of our Clients.
Over the past decade, mBank's Equity Research Team has been consistently ranked among the top research teams in Parkiet's annual institutional investor surveys (Parkiet is Poland's leading daily business newspaper). mBank analysts provide coverage on an extensive list of companies, mainly in Poland but also elsewhere in the CEE region: Austria, Czechia, Portugal, Ukraine and Hungary.
Clients get access to a comprehensive selection of research products including daily market insights, monthly roundups, macroeconomic views, industry- and company- specific analyses, investing strategies, earnings comments, etc.
We give our institutional clients numerous opportunities to connect with industry professionals, top executives, and leading analysts:
- Get direct access to senior management teams at listed companies (over 30 meetings in 2018),
- Engage in our many industry events, featuring listed Polish and global firms (in 2018, we hosted sector-themed conferences around industrials, chemical companies, telecoms, retail, and financials, and co-hosted a Best of Poland investors' with Commerzbank and the Warsaw Stock Exchange),
- Stay informed through an array of enlightening discussion panels, workshops, and briefing sessions with regulatory officials.
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