WOOD Flash – Bank of Cyprus: 3Q23 results highlights
Bank of Cyprus (BOCH) has reported EUR 129m in net income for 3Q23, exactly in line with what we forecast as a quarterly run-rate for 2H23E (EUR 126m). There is no consensus available, and the bank does not guide for its quarterly results. We believe that our thesis still holds up: the bank’s profitability will normalise, to an extent – but only gradually. In 3Q23, BOCH made a 26% ROTE, on our calculations, where the market assumes an almost imminent normalisation, back to the 11-12% levels, as we said in our recent report. In the meantime, the bank can return significant amounts of capital, on the back of its high capitalisation. Although management has no official guidance for capital returns, it has increased the payout accrual in the capital calculations to 50%, from 30%. Based on the 50% payout ratio, we may be talking about a c.17% dividend yield for BOCH from its 2023E net income. We rate BOCH a BUY, with a price target (PT) of GBP 3.20/share. The bank is trading at 0.6x P/TBV and 2.9x P/E, on our 2023E estimates.
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.
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