Bank of Cyprus: A visible turnaround (stays BUY)
We have upgraded our model on Bank of Cyprus, following the announcement on Helix 3 and the reduction of the NPE ratio to below 10%. The faster execution of the NPE reduction plan and the strong capital ratios (TCR of >19% as of June 2021) imply that the bank is well on track to exceed its mid-term ROTE target of c.7%, in our view. We believe that the solid growth in fees, an improving cost structure (aided by a voluntary retirement scheme (VRS) in 2022E) and lower provisions (COR of c.60bps) should enable the bank to deliver a ROTE of >8% in 2023E, on our estimates. The bank still trades at discounts of c.40% vs. its Greek peers (0.3x P/TBV on our 2021E), which we see as excessive. Our new price target (PT) is EUR 1.70/share (from EUR 1.50), and we maintain our BUY rating on the stock.
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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