What price targets does Goldring have for the shares of the main banks on the BVB?

The Goldring brokerage house's Market Analysis and Strategies team has price targets above the recent market ones for BRD-Groupe Societe Generale (BRD) and Banca Transilvania (TLV) shares, while Erste Group Bank shares are within the estimated price range, according to a report published on the company's website in the second half of last week, signed by Roxana Stejerean.

For Banca Transilvania, the analyst set a target price of 32.73 lei per share using the market multiples method and 31.18 lei using the Gordon Growth model, 15.4% and 10% respectively above the TLV share price in the first half of Friday's trading session, of 28.35 lei.

In the case of BRD, the target price forecasted by the multiple comparison method is 21.48 lei, 13.5% higher than the price on Friday at 12:00, of 18.92 lei. For Erste, the analyst obtained, by the multiple comparison method, a target price of 253.81 lei, and by the Gordon Growth model the target price is 275.51 lei, the range in which the bank's share price was at the end of last week, of 256.9 lei.

"The macroeconomic context of the first nine months of 2024 highlighted a complex evolution at both national and European levels, characterized by a subtle interaction between moderate economic growth, the ongoing disinflationary process and the remarkable consolidation of the banking sector, where institutions such as Banca Transilvania, BRD and Erste Bank demonstrated an impressive capacity for adaptation and performance, reflected in particular by the expansion of lending activity and the improvement of profitability indicators," the report states.

According to the analyst, the outlook for the coming period suggests a potential moderate acceleration of economic growth, accompanied by the continuation of the disinflationary process, with the possibility of reaching the inflation target within the 12-18 month horizon. "The stability of the financial and banking sector is also expected to be maintained and significant development opportunities are expected in export-oriented sectors and in areas with high added value, although the challenges related to the budget and current account deficits continue to require special attention from decision-makers," the report also states.

• Lending growth for all three banks

BRD reported a significant increase in its net customer loan portfolio, reaching 47.6 billion lei at the end of September 2024, an increase of 15.1% compared to the same period of the previous year.

"This growth was supported by both customer segments - retail and corporate - with a higher contribution from the corporate segment, which recorded an expansion of 23% year-on-year," according to the report. Erste Bank's net customer loans increased by 2.7%, reaching a total of 213.5 billion euros, compared to 207.8 billion euros at the end of 2023.

"This growth was mainly supported by lending activity in Central and Eastern European markets, especially in the Czech Republic and Romania, where retail loan demand remained robust. The increase in the volume of loans demonstrates Erste's stability and ability to support economic expansion in key markets, adapting to the specific requirements of each region", according to Goldring.

Regarding Banca Transilvania's lending activity, the report mentions that the institution continued to demonstrate robust growth in net loans granted to customers, mainly due to the sustained expansion of the loan portfolio for individuals and legal entities, reflecting an efficient strategy to consolidate its presence on the market. "The total value of net loans and leasing receivables reached 94.2 billion lei, representing a significant increase of 24.6% compared to the end of the previous year. This evolution is supported by an intensification of lending activity, with a 9.2% increase in loans granted to individuals and companies", according to the report.

Regarding deposits, the document shows that in the case of BRD they increased by 7.9% compared to the same period in 2023, reaching a total of 65.4 billion lei at the end of September 2024. "This growth was supported by both retail deposits, which recorded an advance of 9.9%, and the non-retail segment, with an increase of 4.5%. Within the retail segment, deposits from individuals increased by 10.1% compared to the previous year, reflecting a continued preference for saving in the current economic conditions", according to the document.

At the end of September 2024, Erste Group's customer deposits had reached a total of 239.6 billion euros, marking a 3% increase compared to the end of the previous year, including significant contributions from both retail and corporate customers, which represents an essential source of stable funding for the group.

For Banca Transilvania, the report states that customer deposits had reached 142.8 billion lei at the end of September, marking a 6.2% increase compared to the end of the previous year. "These deposits are fundamental for supporting the expansion of the bank's loan portfolio, contributing to its long-term stability and liquidity," according to the document.

In summary, the Goldring report shows that, at the end of September, Banca Transilvania had a loan/deposit ratio of 58.02%, BRD had a 72.7%, while for Erste the ratio was 89%. The return on equity was 29.34% for Banca Transilvania, 20.9% for BRD and 16.7% for Erste. The non-performing loan rate was 2.01% for Banca Transilvania, 2.37% for BRD and 2.4% for Erste.

The report of Goldring's Analysis and Strategies Department can be consulted in the attached report.