Šiaulių Bankas: wait and breathe (HOLD - transfer of coverage)

In this report, we transfer coverage of Šiaulių Bankas (SB), downgrading our rating to HOLD, but increasing our price target (PT) to EUR 0.96 (from EUR 0.86), offering potential upside of c.6%. While the theme for 2024 was profitability normalisation, we view 2025E as a transition year for the group, as: 1) the NII will remain challenged by a NIM contraction and, in our view, flat yoy; and 2) the group is about to embark on a transformational journey, through the rebranding and upgrading of its core-banking platform, which will put significant stress on costs. As such, we expect negative jaws in 2025E and further ROE compression. Nonetheless, we remain rather positive on Šiaulių Bankas’ future, and expect the group to emerge stronger and with a solid foundation to deliver value to shareholders in the long term. A significant portion of the upside seen by the group, however, has not been factored into our forecasts, due to the lack of visibility, and remains a source of upside potential; conversely, in our experience, such profound transitions, like those SB has planned for the next two years, are prone to both delays and overshooting the budgeted costs. Trading at c.1.0x P/BV and 8.5x P/E, on our 2025E figures, we view the bank, currently, as fairly valued, by and large, offering rather limited upside potential at this juncture.