Romanian Banks: How I learned to stop worrying (Banca Transilvania and BRD-GSG stay BUY - transfer of coverage)
In this report, we transfer coverage of Banca Transilvania (BUY, new price target (PT) RON 2.9) and BRD-GSG (BUY, new PT RON 16.3). As investors are preparing for a slowdown in GDP growth rates across the region, we believe the Romanian banks offer a safe place to hide due to their strong capital ratios (a CAR of c.20%), high ROEs (14-16%) and solid dividend yields (>5%). We see both banks as well-prepared, even for a sharp downturn in the Romanian economy, able to deliver double-digit ROEs despite the rise in the cost of risk. Although we like both banks, we prefer Banca Transilvania’s risk/return profile as we believe it can achieve superior ROEs with higher growth rates in the long run.
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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