Komercni Banka confirmed at BUY, TP CZK 650 - Investment case unchanged post 2Q results
Komercni Banka delivered 2Q earnings below our and consensus estimates on the back of higher risk costs and lower NII. Still, we slightly raise our 2020e estimates based on a less conservative COR scenario, which remains above the management guidance. Our investment case, however, centres around the record capitalisation of KB. At a CET1 ratio of 21.3% the bank ranks on top of our coverage universe. The excess capital on tier 1 level including the upper range of the 50 200 bps management buffer stands at > CZK 140 per share (i.e. >25% of the current share price). This should provide a solid downside protection and enable the bank to resume dividend payments at a high payout ratio going forward. We adjust our price target to CZK 650 (was CZK 670) on the back of slightly lower NIM assumptions in the mid-/long term and confirm our BUY recommendation.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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