Net earnings came in at PLN 222.7m for 1Q07, up 93.3% q/q and 182.3% y/y, above both our forecast of PLN 194.7m and the consensus estimate of PLN 202m (range of PLN 176m – PLN 222m, according to PAP). As had been widely expected, the key driver of the results in the quarter was the sale of SAMH, with a pre-tax gain of PLN 89.5m, booked on the line of discontinued operations. Apart from this, the bank delivered a better-thanexpected result from continued operations, on the back of stronger-thanexpected revenues, particularly net interest income, and lower-thanexpected net provisioning costs. Though operating costs were up substantially year-on-year, the development was in line with expectations.
Overall, though the results were boosted by non-recurrent income, we expect the results to have a positive impact on earnings estimates. We expect this to have a favourable impact on trading today, though we maintain our Sell rating on BRE Bank
, trading on a 2008F P/E of 36.8x and at a 102% premium to the CEE sector of 18.2x.