Czech Banks: Predictably strong and solid (Komercni Banka and MONETA Money Bank stay BUY)
The Czech banks are widely known for issuing frequent, and rather cautious, market guidance. Most of the time, they are holding the hand of the markets, offering stability combined with hefty dividend yields. This solid performance is not reflected fully in the current valuations, in our view, and thus, we maintain our BUY ratings on both stocks. We prefer MONETA Money Bank, as it offers higher growth, dividends and ROEs than Komercni Banka (KB) on our 2020-22E outlook, and is also superior to KB, with at least some EPS growth, due to the acquisition angle. That said, we note that KB is, in any case, at the top of the range in CEE with regard to these factors, and also that it should have much higher capital ratios going forward, which may translate into some upside as, should it not use this for higher growth than in our current forecasts, we would see a rising likelihood of larger payouts. Our view on KB and MONETA is not to grasp some short-term market momentum, but instead is a reflection of the quality of the assets and the relatively more stable returns than at some of the higher-Beta equity stories among the CEE banks.Komercni banka is a universal banking group based in the Czech Republic. Co. is engaged in the provision of a range of financial services in retail, corporate and investment banking. Co.'s operating segments include: Retail Banking, the provision of products and services to individuals, such as among others building savings, pension insurance, overdrafts, credit card and personal loans and mortgages; Corporate Banking, the provision of products and services to corporate entities such as foreign currency and derivative products, syndicated and export financing, and guarantee transactions; and Investment Banking, which involves trading in financial instruments.
Moneta Money Bank as is a Czech Republic-based retail and expanding small and medium enterprises (SME) bank. The Company holds an universal banking licence and provides a range of retail and SME-focused financial products and services. The Company operates through a national distribution network of 229 branches and through alternative distribution channels, such as the internet, its call centre, auto dealers, brokers and approximately 4,700 leasing partners. The Company together with its controlled subsidiaries offers current accounts, savings accounts, term deposits and transactional banking products including payment services and debit cards, consumer loans, credit cards, overdrafts, mortgages and auto loans, auto leases and other complementary products such as bancassurance and sales of investment funds.
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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