Banca Transilvania confirmed at HOLD, TP RON 2.35 - Higher earnings, though higher economic risks
We maintain the HOLD recommendation for Banca Transilvania with a new 12 months target price, RON 2.35 (previous RON 2.6, adjusted for the capital increase).In the short and medium term, we see an improvement in the NIM as a result of tightening monetary policy (Raiffeisen Research expects a key interest rate of 7% at the end of this year) and the high exposure on variable interest rates loans (almost 80% of the retail portfolio and almost all the corporate portfolio).
However higher interest rates will come with higher risks. Thus, we have increased our expectations regarding CoR, NPLs ratio and CoE. At the same time, we also changed the rate of growth in perpetuity by 50 bps, to 3.5%.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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