Альфа-Банк: рекомендации по банковскому сектору

Sberbank Supervisory Board to recommend re-election of Herman Gref to CEO, Vedomosti reports. The Board meeting is scheduled for today. Gref's current contract expires at the end of 2019.

We see the news as POSITIVE for the stock, as one of the biggest investor concerns could be removed (the final step, though, is approval by AGM, likely in June). Overall, we see the current backdrop as supportive for Sberbank, given positive news flow, a strong ruble and approaching dividends (8-9% yield on 3M horizon, the decision likely to follow in mid-April). At the same time, Sberbank still trades at 1x P/BV and 4.8x P/E 2019E, with c.14% discount to 2017-18 average.

Bank St Petersburg is scheduled to report 4Q18 IFRS results on Wednesday, followed by a conference call with management. While we expect Q4 margins to come under pressure from hiked funding costs, the solid bottom line dynamics (+42% y/y with 13.3% ROAE) will likely be supported by strong trading revenues and lower provisioning. Being 2% above consensus on 4Q18 earnings, we do not expect the numbers to surprise the market materially. At the same time, any management comments on 2018 dividends and potential buybacks will likely be taken positively by the market. With N1.2 ratio of 9.25% as of February 1 (10.3% including 2018 audited earnings, above the 9.75% management target), we believe BSPB has capacity to pay out 20% of IFRS net income and to consider another share buyback. With that we see BSPB generating 7% dividend yield on 3 months horizon (vs. 2-3% historically). At the same time, valuations remain undemanding: 0.3x 2019E P/BV and 2.6x 2019F P/E imply 20-30% discount to 2017-18 average multiples.

4Q18 estimates: We expect 4Q18 NII to grow 3% y/y to RUB5.9bn, driven by 6% y/y loans growth. That was, however, offset by hiked funding costs in Q4, putting pressure on NIM (-0.2pp y/y). We forecast net F&C growth decelerating to 6% y/y vs. 13% y/y in Q3 (given high base of 4Q17). At the same time, Q4 was strong for trading business, according to RAS data (we expect +49% y/y). We expect 4Q18 provisions at RUB1.8bn, 24% lower y/y, implying 1.9% Q4 CoR. With that we see 2018 total CoR at 2.1% (the mid-point of BSPB’s 2018 guidance) and stage-3 coverage staying at 91%. We project 4Q18 opex at RUB3.6bn (6% higher y/y), implying 1pp y/y CIR reduction. That results in 6% y/y opex growth for 2018 (slightly above the company’s guidance). With that, we estimate the 4Q18 bottom line at RUB2.5bn (+42% y/y, with 13.3% ROAE) – which is 2% above the consensus. That translates into total 2018 net income of RUB9bn (+20% y/y, with 12.2% ROAE).

Conference call details: BSPB hosts a conference call on 20 March at 16:00 Moscow time / 9:00 New York / 13:00 London. Dial-in: +44 330 336 9126. Conference ID: 2626533

The contents of this e-mail have been prepared by Joint Stock Company Alfa Bank («Alfa Bank») as Investment Research within the meaning of Article 36 of Commission Delegated Regulation (EU) 2017/565 supplementing the Markets in Financial Instruments Directive (2014/65/EU). Please refer to the further important information in relation to this located on the last page of the attachment. Alfa Bank, ACC, and their associated companies, directors or employees from time to time, may deal in, hold or act as market makers or advisors, brokers or commercial and/or investment bankers in relation to the securities, financial instruments and companies mentioned in this email, or may have been, or may be represented on the board of such companies. Further information on relevant noted holdings can be found at  https://alfacapital.com.cy/en/mifid/disclosures/