Erste Bank: double-digit sustainable ROE for 0.7x P/BV (stays BUY)
We remain BUYers of Erste Bank and adjust our 12M price target (PT) to EUR 49.5/share (from EUR 50.2). We consider the combination of Erste’s current valuation (2023E P/BV of 0.7x), its double-digit medium-term through-the-cycle ROE outlook of >11% and low consensus earnings expectations, as an attractive entry point. All this comes after Erste’s management issued quite ambitious 2023E guidance, lending comfort to our expectations of a positive earnings revision cycle ahead. If we blend this with the somewhat defensive characteristics of Erste’s balance sheet, and a special mention of the very high NPL coverage ratios, we see this as an appealing banking story for 2023E.Erste Group is a financial services provider based in Austria. As of Dec 31 2015, Co.'s total assets amounted to Euro199,743 million and the number of customers was approximately 16.5 million. Co.'s key business is the retail business, covering the entire spectrum from lending, deposit and investment products to current accounts and credit cards. In addition to providing financial services to private individuals, Co.'s core activities also include advisory services and support for corporate clients in financing, investment and access to international capital markets, public sector funding and interbank market operations.
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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