Komercni Banka: Dividend evergreen (stays BUY)

We keep Komercni Bank as a BUY-rated stock and set our updated 12M price target (PT) at CZK 1,126/share (up from CZK 928), offering 21% upside. Our perception of the key angle of Komercni’s equity story remains broadly unchanged: we expect a superior dividend yield this year (a 10%+ yield). However, bearing in mind that we may be in the swing momentum of the macro cycle currently, we add that Komercni has a proven track record of achieving one of the top banking sector bottom-cycle ROEs, as well as cross-cycle ROEs, of all the CEE banks. Last but not least, it still offers a play on rising NIMs, albeit with lower leverage than some of the other CEE banks. We have increased our 12M PT for Komercni due to our higher medium-term forecasts (2023E EPS up by 17%) and, thus, our higher 2024E ROE outlook of 13%+. There could be more improvement in the ROE (company’s 2025E strategic target at 15%), as the new IT system deployment should yield more cost savings in 2025E and/or if an acquisition is plotted into the financial outlook (which is not included our explicit forecasts at the moment).