Wood and Company - Banca Transilvania S.A. (TLV) ... Romanian Banks: It happened one night (Banca Transilvania and BRD downgraded to HOLD)

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Wood and Company

Alex Boulougouris, CFA ...

Stefan Lungu, CFA

Romanian Banks: It happened one night (Banca Transilvania and BRD downgraded to HOLD)

We downgrade the Romanian banks to HOLDs (from Buys), following the governmentâ€™s decision to introduce a bank tax in December 2018. We believe the governmentâ€™s actions have created significant uncertainty in an otherwise very strong banking sector. Both BRD and Banca Transilvania trade slightly above book value currently, which we see as fair, as sustainable ROEs in this new environment are likely to be close to or below the cost of equity. We believe that the mix of government intervention, elevated country risk and a slowdown in GDP growth offsets the strengths of the Romanian banks (high capital and liquidity, solid NIMs, low C/I ratios, well-provisioned). We therefore prefer to remain on the sidelines until we get more visibility on the bank tax.

30/01/2019 16 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: It happened one night (Banca Transilvania and BRD downgraded to HOLD)

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

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