Patria issued a pre-9M-results report of Komercni banka yesterday. Despite certain short-term risks-associated mainly with the bank’s large debt derivatives investment and possible additional provisioning, our key recommendation to buy the stock and target price of CZK 1,170 per share are unchanged. The stock could benefit if KB’s 9M results (due on October 31) eliminate some of the uncertainty noted above. Given the current 19% discount of the stock’s market price (CZK 983) to our target price, we recommend buying the stock, and the strength of this opinion will increase if next week’s results suggest that our full-year provisioning forecasts (CZK 4.28 bil.) are sufficiently conservative.
(Jan Hájek)