North Macedonian Banks: Growth story to continue after COVID-19 (Komercijalna Banka downgraded to HOLD, NLB Banka stays HOLD)
Since we initiated on the two North Macedonian banks last year, both have converged towards our price targets (PTs). Komercijalna Banka, following our Buy recommendation, has posted a solid return of >28% and we have decided to downgrade it to HOLD in this report, believing the stock’s current multiples put a cap on any further re-rating to the upside. At the same time, we remain HOLDers of NLB Banka, for which we see minor upside of c.4%. However, in view of the ongoing pandemic, the slow vaccination rollout in the Balkans in general, and the related crisis, we still prefer Komercijalna, due mostly to its conservative balance sheet. On our numbers, Komercijalna trades currently at 1.3x P/BVs for both 2021E and 2022E, while NLB Banka trades at 1.1x for 2021E and 1.0x for 2022E. In view of the banks’ ROE outlooks, dividend yields of >7% in the next two-to-three years and bottom-line growth prospects, we believe our HOLD recommendations are justified.
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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