Czech Banks: Scratched, not wounded (Komercni Banka and MONETA Money Bank stay BUY)
There are no winners, just survivors, but we believe that both Komercni Banka and MONETA Money Bank should emerge from the crisis a little scratched, but not severely wounded. At the start of the pandemic, they had some of the most defensive balance sheet characteristics of the CEE banks under our coverage (solid asset quality mixes, high coverages, very strong capital ratios, liquid balance sheets), which should help to see them through the crisis in relatively good shape. Their ROEs will be hit, dropping to single-digit levels for the first time in many years (our 2020E ROE forecasts are at 7-9% for both), but they should still deliver well above what many banks would treat as a solid delivery under normal circumstances. Our medium-term outlook still shoots their ROEs into double-digit territory, which is something we believe that most of the Polish banks may find impossible, due to the low level of market interest rates and the structural hit from the bank tax, the still fragmented market (despite a decade of consolidation) and the pending FX mortgage litigation risk. There are some exceptions in the Polish system, but the Czech banking sector, in general, seems healthier on the whole, in our view. This is not the only reason to remain positive on the Czech banks, however: we also see them as the first in CEE to return to hefty dividends, which could prove to be a catalyst and a welcome feature.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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.