Sberbank: No thrill, but inexpensive (stays BUY)
We have revised our model for Sberbank post the downbeat 1Q19. The bank’s 1Q19 NIM was materially below its YE19E target and fee growth was not up to expectations. Promising a significant improvement on both fronts for the rest of 2019E, management has not changed its 2019E guidance. At this point, we have not made any major changes to our numbers due to the bank’s track record on delivery and potentially better than expected 2019E COR. We are realistic about Sberbank and our fair value is 12% below the consensus target. However, the bank still looks intrinsically inexpensive, and it is the biggest bank in the region, offering a high single-digit dividend yield. We keep our BUY rating on the bank. The commons trade at 5.5x P/E and 1.2x P/TBV for 2019E (and at 6.7x P/E and 1.4x P/TBV at our fair value). Our PTs are now RUB 277/share (from RUB 260) on the commons and RUB 235 on the prefs (from RUB 221).Sberbank Russia is an open joint stock commercial bank. Co.'s principal business activity is corporate and retail banking. This includes, but is not limited to, deposit taking and commercial lending in freely convertible currencies, local currencies of countries where the subsidiary banks operate and in Russian Roubles, support of clients' export/import transactions, foreign exchange, securities trading, and trading in derivative financial instruments. Co.'s operations are conducted in both Russian and international markets. As of Dec 31 2014, Co. had total assets of RUB25.20 trillion.
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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