Erste Bank: Some upside still left (stays BUY)

We keep Erste Bank as a BUY and increase our 12M price target (PT) to EUR 50.2/share (from EUR 29.5/share), still offering some 17% upside. We have reflected a higher NIM in our medium-term forecasts for 2022-24E, driven by actions taken by the CEE central banks. Our forecasts still provide upside risk, due to the potential hawkish pivot of the ECB, which may happen much sooner than the markets were expecting a few months ago (our macro team sees this as likely even in 2H22E, a non-consensus call). On top of this, we alter our 2021E EPS, on the very low risk charges that were present in the 1-3Q21 results, but we accept a more cautious stance for 2023-24E. Our 2022E EPS forecast is 14% higher than the street’s, which leads to a rather undemanding valuation for the bank, in our view. At our 2022E P/E of 9.1x, it trades at a 14% discount to its long-term 12M FWD consensus P/E of 10.5x. Positive consensus earnings revisions may add more fuel to the share price performance. We consider Erste Bank a relatively high-quality proxy, on our still positive stance on the Czech banks, but we prefer Komercni Banka on this front, due mostly to its higher dividend yields, especially in the near term.