NLB Group confirmed at BUY, TP EUR 91 - Lower risk costs estimates create additional upside
We confirm our BUY call on NLB after upgrading TP to EUR 91 (was EUR 65) on the wings of ca. 40% cumulative earnings uplift and unchanged COE of 12%Following another round of risk costs cut and better F&CI outlook we underscore the excess capital buildup (adj. for EUR >300 mn dividend distribution, irrespective of eventual capital optimization measures) which may allow for further mid-sized M&A deals
NLB trades at 0.7x 2023e BV which is notably below its ROE potential of 10.4%
The upcoming Q3 21 should bring core revenues growth (NII, F&CI), low risk costs and stable cost discipline.
NLB dd is a Slovenia-based company, which is primarily involved in the financial services industry. The Company operates as a parent company of NLB Group and has a number of subsidiaries, such as NLB Banka Banja Luka, NLB Banka Sarajevo, NLB Banka Prishtina, NLB Nov penziski fond Skopje, NLB Tutunska Banka Skopje, NLB Bank Podgorica, Bankart, Nova ljubljanska banka, NLB Skladi, NLB Vita, NLB Banka Belgrade, NLB Srbija Beograd, NLB Leasing Sarajevo, Prvi Paktor Sarajevo, NLB Leasing Sofia, Optima Leasing Zagred, among others. The Company operates in such countries, as Slovenia, Bosnia and herzegovina, Kosovo, Macedonia, Montenegro, Serbia, Bulgaria, Croatia, Czech Republic, Germany, Italy, Switzerland, among others.
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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