In a new note to investors today, Mediobanca ranks Alpha Bank among its top investment picks.
The house believes that the fact that the bank is better positioned in the new environment of lower interest rates compared to the rest of the banking sector, combined with the progress made by the Bank in strengthening its capital, could be catalysts of late. underperformance of its reserves;
Mediobanca set a €1.90 target price on Alpha Bank in a previous report.
Factors that position Alpha Bank better in the new low interest rate environment
In fact, it is worth noting that Mediobanca’s assessment of the Bank’s better positioning in the new low interest rate environment is based, as indicated in the new guidance of the Administration (March 2024); set out to offset the cost of the rate cut early by appreciating the bond portfolio, mainly through the redemption of €4.5 billion of bonds between 2024 and 2026; Interest rate reduction and loan portfolio growth expected from the second half of 2024.
The above factors are expected to increase net interest income in the coming years, despite the expected decline in interest rates, as shown in the following chart included in the 2023 results presentation.
Let’s remind that in the new guidance issued in March, the Bank included particularly conservative forecasts regarding the course of interest rates for the next three years.
Alpha Bank and Wood were among the top picks in yesterday’s note to analysts, expecting the Bank to achieve a capital adequacy ratio of over 17.5% and an NED ratio of under 4% by 2026, fully in line with management’s guidance. In addition, the house expects the Bank’s profitability in terms of RoTE to rise above 10% by 2026, with a dividend distribution of €750 million over the three years 2024-2026.
The house also specifically referred to the low selling price of the stock, where the P/E index is 5.4 and the P/TBV index is 0.55. According to the house, the possible interest of UniCredit to strengthen its position in the Bank can be a medium-term positive catalyst for the growth of the stock.