BRD-GSG confirmed at HOLD, TP RON 13.3 - Model update - Almost priced to perfection

Since our last update, BRDs management provided an updated outlook which sees ROE between 8%-10% this year. Another key takeaway was that CoR is seen around 120 bps, as BRD already started to book general provisions of EUR 25 mn in 1Q 20. Otherwise, CoR would have been positive even last quarter. The management stated that around 15% of total loans portfolio was under a form of debt moratorium, but the positive twist was that half were actually voluntary moratoriums of up to 3 months. In our view, less than 20% of the portfolio might be exposed to the moratorium until the deadline set on June 15. Under the current form of the Government imposed debt moratorium, with interest payments not annulled, we believe BRDs ROE could be closer to 10%. The current share price implies a 2020e-21e P/B of 1.0x, which seems to be well correlated with our updated ROE expectations, which are close to the cost of equity on the medium-term. Societe Generale decided to vote against regular dividend payments, and given the latest recommendations from ECB, we would not expect other dividend payments this year, although the domestic regulator (National Bank of Romania) does not prohibit it. Thus, we do not see company specific triggers for the coming months, and we confirm our HOLD recommendation with a higher 12m TP of RON 13.3 (RON 12.0) on the back of an improved CoR outlook.