Raiffeisen Bank International: Risk costs reversal already appreciated (downgraded to HOLD)
We downgrade our rating for RBI to HOLD (from Buy), but hike our price target (PT) considerably, to EUR 34.4 (from EUR 25.3). The key reason for this is the increases in our financial forecasts for 2017-19E, as well as a rollover of our model by one year, with our explicit forecasts now extended to 2020E. We expect a solid earnings delivery on RBI’s side, although we believe that our 2018-20E ROE expectations of up to 9.5% at this stage are largely priced in at our current 2018E P/BV of c.1.0x (with a COE of 9.5%, on our assumptions). Our 2018-20E EPS CAGR is only 3%. We appreciate RBI’s strong focus on cost optimisation, and we forecast a costs CAGR ofRaiffeisen Bank International is a universal bank focusing on corporate and retail customers in Central and Eastern Europe (CEE) and on corporate customers in Austria. In CEE, Co. consists of a network of banks, leasing companies and financial service providers. In Austria, Co. is involved in corporate finance and export and trade finance banks. Co. provides services to customers in 2,800 branch offices. In the retail banking business, Co.'s product and service portfolio comprises inter alia credit services (mortgages, credit cards and personal loans), as well as payment transaction and current account package services. As of Dec 31 2014, Co.'s total assets amounted to Euro121.6 million
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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