Nomura Sees Polish Banks Underperforming In Q1
"Competition is so rife that banks are starting to urge each other to behave and protect their margins," Nomura said in the research note, "Such appeals are likely to fall on deaf ears - practice shows that only consolidation is the proper long-term response to competitive pressures".
Nomura said it expected the Warsaw bourse as a whole to rise early next year thanks to U.S. investment in central and eastern Europe of which Poland is one of the core markets with a reduced currency risk.
It also said it assumed President Aleksander Kwasniewski would sign a key corporate income tax cutting bill.
Nomura said that wholesale banks would be more exposed to competitive pressures than retail banks, because of the higher costs of funding after a steep central bank interest rate rise on November 17 and weak capital markets.
Nomura cut Bank Rozwoju Exportu SA's (BRE) rating to hold from buy "as the likely failure of the merger with Bank Handlowy approaches, investor sentiment towards BRE has hit a temporary lull."
Bank Handlowy Warszawie SA shareholders will vote on the BRE tie-up at a meeting on December 9 with some investors, such as the state PZU insurer and the state treasury, trying to block the merger.
Nomura kept Handlowy's recommendation unchanged at sell.
But the research report said that BRE "would deliver outstanding shareholder value in the future regardless of the merger outcome".
It added that if the merger succeeds on proposed terms, with Commerzbank AG buying PZU's stake for cash, the stock should be re-priced to around 125-130 zlotys.
PEKAO UPGRADE
Nomura upgraded large retail bank Pekao SA to buy on the back of aggressive performance targets by its owner UniCredito Italiano , including a 20 percent nominal return on equity and a 50 percent or below cost/income ratio in 2002.
"Targets insisted upon by UniCredito are overly aggressive, but achieving just a fraction of the targetted improvements can make a big difference," Nomura said.
Nomura warned, however, that investors should be wary of a planned one billion zloty share issue, 50 percent of which should be sold on the market, and the end of a lock-up period for 14.15 percent of employee shares on June 24 of next year.
The London-based Nomura initiated Powszechny Bank Kredytowy SA with a buy, saying the stock has "so far managed to escape investor attention for some reason and is now quite cheap on most valuation measures".
It said the overhang of the end of the lock-up period for employee shares, about a 12.7 percent stake, in October was putting pressure on the stock, but that the underlying performance should remain solid in 2000.
Nomura upgraded Bank Slaski to buy from hold after the bank invested heavily in mini-branches and IT systems, which should start delivering stronger earnings. It also noted its strong position in the nascent pension fund sector.
"The bank's 20 percent ownership in PTE Nationale Nederlanden, one of the most successful (private) pension fund businesses, supports its valuation," the equity reaserch report said.
WBK DOWNGRADE, BIG, BPH, KREDYT BANK UNCHANGED
Nomura downgraded WBK, controlled by AIB , to hold from buy as increasing competition may cause the bank to slightly revise upward investment at the cost of ROE.
"The unfortunate lack of liquidity..., no GDR programme, (also) makes it an unlikely market outperformer over the next few months," Nomura said.
Nomura kept BIG Bank Gdanski's recommendation unchanged at sell with speculations over a potential takeover bid from Deutsche Bank "not providing a solid foundation for being heavily exposed to the stock at the current price."
Nomura kept BPH's and Kredyt Bank's ratings unchanged at hold after trading in both stocks virtually disappeared.
Nomura said it expected the Warsaw bourse as a whole to rise early next year thanks to U.S. investment in central and eastern Europe of which Poland is one of the core markets with a reduced currency risk.
It also said it assumed President Aleksander Kwasniewski would sign a key corporate income tax cutting bill.
Nomura said that wholesale banks would be more exposed to competitive pressures than retail banks, because of the higher costs of funding after a steep central bank interest rate rise on November 17 and weak capital markets.
Nomura cut Bank Rozwoju Exportu SA's (BRE) rating to hold from buy "as the likely failure of the merger with Bank Handlowy approaches, investor sentiment towards BRE has hit a temporary lull."
Bank Handlowy Warszawie SA shareholders will vote on the BRE tie-up at a meeting on December 9 with some investors, such as the state PZU insurer and the state treasury, trying to block the merger.
Nomura kept Handlowy's recommendation unchanged at sell.
But the research report said that BRE "would deliver outstanding shareholder value in the future regardless of the merger outcome".
It added that if the merger succeeds on proposed terms, with Commerzbank AG buying PZU's stake for cash, the stock should be re-priced to around 125-130 zlotys.
PEKAO UPGRADE
Nomura upgraded large retail bank Pekao SA to buy on the back of aggressive performance targets by its owner UniCredito Italiano , including a 20 percent nominal return on equity and a 50 percent or below cost/income ratio in 2002.
"Targets insisted upon by UniCredito are overly aggressive, but achieving just a fraction of the targetted improvements can make a big difference," Nomura said.
Nomura warned, however, that investors should be wary of a planned one billion zloty share issue, 50 percent of which should be sold on the market, and the end of a lock-up period for 14.15 percent of employee shares on June 24 of next year.
The London-based Nomura initiated Powszechny Bank Kredytowy SA with a buy, saying the stock has "so far managed to escape investor attention for some reason and is now quite cheap on most valuation measures".
It said the overhang of the end of the lock-up period for employee shares, about a 12.7 percent stake, in October was putting pressure on the stock, but that the underlying performance should remain solid in 2000.
Nomura upgraded Bank Slaski to buy from hold after the bank invested heavily in mini-branches and IT systems, which should start delivering stronger earnings. It also noted its strong position in the nascent pension fund sector.
"The bank's 20 percent ownership in PTE Nationale Nederlanden, one of the most successful (private) pension fund businesses, supports its valuation," the equity reaserch report said.
WBK DOWNGRADE, BIG, BPH, KREDYT BANK UNCHANGED
Nomura downgraded WBK, controlled by AIB , to hold from buy as increasing competition may cause the bank to slightly revise upward investment at the cost of ROE.
"The unfortunate lack of liquidity..., no GDR programme, (also) makes it an unlikely market outperformer over the next few months," Nomura said.
Nomura kept BIG Bank Gdanski's recommendation unchanged at sell with speculations over a potential takeover bid from Deutsche Bank "not providing a solid foundation for being heavily exposed to the stock at the current price."
Nomura kept BPH's and Kredyt Bank's ratings unchanged at hold after trading in both stocks virtually disappeared.
