Equity Research November 2014 Austrian Banks The

Transcript:Equity Research November 2014 Austrian Banks The:
Equity Research November 2014 Austrian Banks The market reaction to the comprehensive test Emerging Markets Banks Cristina Marzea, CFA Head of CEEMEA & LatAm Banks +4420 3555 0572 cristina.marzea@barclays.com Barclays, London The comprehensive test – what the research team thought.. Barclays European Banks Equity Research ‘So what’s next?’ ‘The forthcoming capital raises are likely to be very small. [..] this may provide some relief for share prices where equity issuance was feared… Does the comprehensive assessment change anything for the banks? A wholesale revaluation of the sector seems unlikely, in our view. However, it is possible that loan growth could edge upwards in the periphery‘ Source: European Banks : So, what's next? Barclays European Banks Credit Research ‘Less than €6bn capital left to raise post Comprehensive Assessment’ ‘The low number of banks failing and the low aggregate capital shortfall is not a result of the test lacking in credibility, but rather as a result of the significant capital raising and balance sheet de-risking that the banks have undertaken since the 2008 crisis, in our view’ Source: Macro Daily Focus: Less than EUR6bn capital left to raise post Comprehensive Assessment Credible test – compared to US stress test (# banks failures, % CET1 average capital impact) Small number of failures/ additional capital raises is not a disappointment, reflects capital measures taken over the last 9 months Credibility will be strengthened if no bank is found with capital shortfalls in the next 6-12m Unlikely to act as a ‘clearing event’ for a pick up in credit/economic growth – supply issues likely to remain, but focus to shift to weak demand 2 The comprehensive test – the market reaction The market reaction was confusing – a case of travelling vs arriving? The sector rallied ~30mins then sold off .. What did we miss? The market went from periods of not caring (1H14), to overly concerned (3Q), to taking a bet it will not be too bad and positioning for a benign outcome As the outcome did not surprise, no marginal buyer Superseded by concerns about Eurozone growth Finding faults with the stress-test – no deflation, no litigation risk factored in Will it be repeated? Then banks will continue to have to focus on capital management as we move towards fully loaded B3. Are assumed dividends at risk? Sustained rally in equity/ credit in borderline cases (press speculated will fail, they passed well) Did