Komercni Banka confirmed at BUY, TP CZK 650 - Investment case unchanged post 1Q results
Komercni Banka delivered 1Q earnings 6%/16% ahead of our and consensus forecasts on lower risk costs. Gross operating income fared slightly weaker than expected on a muted F&C development (mainly on transaction fees) and a weaker income from financial operations, while NII fared in line. Opex was impacted by higher than expected regulatory expenses (seasonal), but slower than assumed growth of personnel and other admin. costs. Incorporating 1Q numbers and the new outlook provided by the management we cut our revenue estimates, but leave EPS practically unchanged on lower COR (still significantly more conservative than the management guidance). Thus we confirm our BUY recommendation (we upgraded the stock two weeks ago) at a target price of CZK 650 (was CZK 630).Komercni banka is a universal banking group based in the Czech Republic. Co. is engaged in the provision of a range of financial services in retail, corporate and investment banking. Co.'s operating segments include: Retail Banking, the provision of products and services to individuals, such as among others building savings, pension insurance, overdrafts, credit card and personal loans and mortgages; Corporate Banking, the provision of products and services to corporate entities such as foreign currency and derivative products, syndicated and export financing, and guarantee transactions; and Investment Banking, which involves trading in financial instruments.
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