Wood and Company - Banca Transilvania S.A. (TLV) ... Romanian Banks: As if it never happened (Banca Transilvania upgraded to BUY; BRD stays HOLD)

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Wood and Company

Alex Boulougouris, CFA ...

Stefan Lungu, CFA

Romanian Banks: As if it never happened (Banca Transilvania upgraded to BUY; BRD stays HOLD)

We turn more constructive on the Romanian banks, following the governmentâ€™s decision to water down the bank tax substantially. We believe the banks can now go back to â€œbusiness as usualâ€, but will also need to navigate the elevated political and macro risks over the next year. The return to normality is appealing, in our view, as the Romanian banks offer high sustainable ROEs (14-16%), solid capital ratios (a CAR of c.20%) and high dividend yields (over 7%). We see both banks as well-prepared, even for a potential downturn in the Romanian economy, able to deliver double-digit ROEs, despite the rise in the cost of risk. Our preferred pick is Banca Transilvania (TLV; upgraded to BUY from Hold, new price target (PT) at RON 2.60), while we keep our HOLD on BRD-GSG (new PT at RON 13.50).

13/05/2019 20 EN

Underlyings

Banca Transilvania S.A.

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ROTLVAACNOR1 Bucharest Stock Exchange Romania

BRD-Groupe Societe Generale

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ROBRDBACNOR2 Bucharest Stock Exchange Romania

Provider

Wood and Company

WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.

A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.

Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.

We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.

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Analysts

Alex Boulougouris, CFA

Stefan Lungu, CFA

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Romanian Banks: As if it never happened (Banca Transilvania upgraded to BUY; BRD stays HOLD)

Surprising Q1 on revenues, lower provisioning

EM Credit Spark/EM credit weekly

WOOD Flash – Banca Transilvania: NIM resilience and strong loan book expansion the key positives of 1Q24 bottom-line beat

WOOD Daily: CZ Banks; ALARABIA AB; GEV CP; EME Macro/Strategy Weekly; CAR PW

EME Macro/Strategy: macro all-in-one (13-19 May)

WOOD Flash – GEVORKYAN: 1Q24 – strong set of results, with EBITDA up 24% yoy, 17% above our estimate

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