WOOD Flash – BRD-GSG: 2Q18 results and conference call summary
BRD-GSG reported its 2Q18 results on 2 August. The stock price reacted negatively to the results, and we believe the poor readings that triggered this reaction might have been: 1) a decline in profits, as the cost of risk moved from negative to zero (due to a lack of indemnities and a lack of sales of NPLs); 2) sluggish lending growth, at just 2% ytd; and 3) a negative RON 237m impact charged directly to capital due to AFS yields expansion.We still believe the results are in line with BRD’s strategy to focus more on dividends and having a prudent approach to lending, and less on high growth. We believe there are positives in the results: 1) the results are robust, even if they were not above expectations (which have increased lately - see chart below); and 2) there are still possible indemnities recoveries, according to management, and the cost of risk excluding one-offs is still very low, so a beat vs. expectations for FY18E is still possible. We believe the overall results confirm the expectations for this year, and the potential for another high dividend payment.
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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