Laszlo Urban, the CFO of Bank gave a press interview yesterday. The main points include:
Profit target reiterated: The CFO reiterated 2009 net profit target of above HUF 150bn.
No need for additional capital by 2010 year end: He maintained that the bank does not need additional capital at least until 2010 year end. If Bank would come to the market that would be only considered as ‘confidence-boosting step’ and would be a small amount. He added that could soon conclude talks with the EBRD over a subordinated loan and other forms of cooperation.
Asset quality deteriorated in Hungary, but stable in Ukraine: Asset quality is expected to deteriorated further, however recently the bank sees quicker formation of NPLs in Hungary (amounting to 5%-6%), but relatively stable development over 1Q09 in Ukraine (NPLs amount to 11%).
No sale of foreign subsidiaries considered: Foreign subsidiaries may need some US$ 100m- US$ 200m capital by the year end. No sale of foreign subsidiaries is considered now.
Our view:
Management guidance for a net profit of at least HUF 150bn (-30.6% y/y on an adjusted basis) is optimistic and we expect this to be missed by just over 5%. However, our net earnings forecast is also 38% higher than the pessimistic consensus of HUF 102.8bn (source: Bloomberg). We expect a better-than-expected net profit in 1Q09, to drive further upgrades as the year develops. We expect a neutral trading impact of the news, as we consider the interview to be reiteration of previous statements.