In today’s new note to investors, Mediobanca states Alfa Bank in its best investment options.
The House believes that the fact that the Bank is better positioned in the new low interest rate environment compared to the rest of the banking sector, combined with the progress made by the Bank in strengthening its capital, could be catalysts to reverse the recent situation. underperformance of its reserves; Mediobanca set a €1.90 target price on Alpha Bank in a previous report.
Factors that make Alpha Bank better positioned 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 environment of lower interest rates is based, as indicated in the new guidance of the Administration (March 2024);
– the time positions in derivatives received early by Alfa Bank to offset the cost of interest reduction
– in portfolio valuation securities, mainly due to the redemption of 4.5 billion euros of bonds in 2024-2026.
– the time reduction of financing costs which will result from the reduction of interest rates expected from the second half of 2024
– and: increasing the credit portfolio.
The aforementioned factors are expected to increase net interest income in the coming years, despite the expected decline in interest rates, as shown in the chart below, which is 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.
Wood’s analysis
Among the top picks were Alpha Bank and Wood, in a note to analysts yesterday, expected 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 its guidance administration :
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.