Raiffeisen Bank International: material upside locked up in Russia (stays BUY)
We maintain our BUY on RBI, and set a new 12M price target (PT) of EUR 35.8/share, offering 21% upside. We see RBI as one of the cheapest among the regional and European banks, on an adjusted earnings basis (2025-26E adjusted P/E excluding Polish losses of 6.8-6.6x). On the headline earnings, excluding the Russian operations, it is trading at our 2025-26E P/Es of 10.6-8.5x, which do not offer as wide discounts to its peers, but neither do they indicate a significant valuation premium. RBI trades at our 2026E P/BV of 0.7x, with a headline 2026E ROE of only 8.3%, on our current expectations. The weak ROE is temporary, however, due to the losses in Poland, and we expect an improvement to above 10% by 2028E. On an adjusted basis, we see an underlying ROE of 11%+. While RBI’s profitability and risk reward profile deserve some discount to the book value, we consider the current discount to be too wide.Raiffeisen 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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