Eurobank: All about profits (stays BUY)
We still see significant value in Eurobank, despite the recent share price re-rating (+38% ytd). In the next three years, we forecast the bank to grow its performing lending book by c.7% p.a., with its ROTE slightly above 10%. This attractive growth profile is not reflected in the current valuation levels, in our view, with the stock trading at a P/TBV of c.0.5x and a P/E of c.5x on our 2022E figures, a discount of >40% vs. its European peers. We believe the fair value for Eurobank (on a ROTE of around 10% and a cost of equity of 12%) is close to 0.7x, with a P/E of c.7x, on 2022E. We remain BUYers of the stock, and increase our price target (PT) to EUR 1.10/share, from EUR 0.90/share previously.Eurobank Ergasias and its subsidiaries are organized in the following reportable segments: Retail. which incorporates customer current accounts, savings, deposits and investment savings products, credit and debit cards, consumer loans, small business banking and mortgages; Corporate, which incorporates direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products; Wealth Management, which incorporates private banking services; Global and Capital Markets, which incorporates investment banking services; and International, which incorporates operations in Romania, Bulgaria, Serbia, Cyprus, Ukraine and Luxembourg.
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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