Banca Intesa - gz
By: GZ on Domenica 01 Dicembre 2002 15:46
Commerzbank venerdì abbassa ^Intesa#^ a Sell, target a 1.5 (siamo a 2.17).
Deutsche Bank l'ha appena messa nella focus list target a 2.6.
Breakingviews venerdì loda Passera per la manovra sul capitale (in pratica Intesa è una delle pochissime banche europee di cui parla bene).
Ci sono 8 SELL oggi contro 5 sell 3 mesi fa, 10 Buy contro 14 buy 3 mesi fa
e 10 Hold
Quando i pareri divegono in questo modo su un titolo sta per succedere qualche cosa. Leggere con attenzione quello che dice Breakingviews.
------------------------- Commerzbank -------------------------------
Commerzbank cuts ratings on five banks, saying that a 30% rally has exhausted upside. Also says it's cutting 02-03 forecasts 8%. Downgrades IntesaBCI to sell from reduce, lowers target price 20% to EUR1.5 from EUR1.9.
---------------------- Breakingviews ----------------------
Intesa: Only a month ago, Intesa was viewed as a basket case. Italy's largest bank by assets was seen as a candidate for a rescue rights issue. A nasty put warrant, connected with its disastrous takeover of BCI in 1999, was coming back to haunt it. The bank was up to its eyeballs in loans to poor credits like Swissair, Enron, WorldCom, Vivendi and Fiat. What's more, it was heavily exposed to Latin America. The stock traded at only 60% of book value.
No longer. Following Intesa's third-quarter results, investor sentiment has turned on a sixpence. A big part of that is due to the fact that Corrado Passera, the new broom sweeping up the mess left by the previous management, is delivering ahead of plan. Exposure to large corporates - the source of many of the bad loans - shrank by 13% in a single quarter. Open positions on credit derivatives declined by 38%. Risk is being managed down aggressively.
What about Intesa's capital? Core tier 1 capital of E12.5bn at the end of the quarter - providing a ratio of 5.8% - isn't strong. What's more, it will be knocked further in the current quarter. The put option is being exercised, swiping E840m off capital. Clean-up charges - relating to restructuring the business and pulling out of Argentina and Peru - will amount to another E1bn.
This is what had investors scared. But what few appreciated was how much extra potential capital Passera had stashed away in his back pocket. He has already secured a capital gain of E200m from selling real estate and is expected to make a further E200m-E300m from selling a stake in Banco di Chiavari, a local Italian bank.
What's more, the put option isn't quite as bad as it looks. Now that it has been exercised, it doesn't have to hold so much capital to insure against the risk. So, although the capital has gone down, the capital ratio will be barely affected.
There are, of course, concerns about asset quality. Despite the clean-up, Intesa has only provisioned for 61% of its non-performing loans. That's not bad for Italy, but it is 10 percentage points lower than many banks in other European countries.
Intesa's big exposure to Fiat - via perhaps E3bn in loans and E650m of quasi-equity - is a particular worry. It is also sitting on unrealised losses on its stake in Commerzbank.On the other hand, the group is in the happy position of enjoying an unrealised gain on its stake in Credit Lyonnais. And if it chooses to sell its own treasury shares - perhaps via some mandatory convertible bond - it could boost its capital by nearly E1bn.
Such thinking suggests that Intesa's capital position, while not strong, is certainly OK. Hence the rebound in the stock.
But to justify a further advance, Passera needs to deliver on his other main target: cutting the bank's cost/income ratio from the current 68% to 50%-55% over three years. That will be challenging in a weak economic environment and in a country where it is hard to cut jobs. Nevertheless, the Intesa may even earn a return on equity next year that covers its cost of equity. That, on its own, would underwrite its current valuation in line with book value. Any increase beyond then would merit a further boost. Passera has confounded his sceptics once - on capital. It would be rash to bet against him a second time.
---------------------------Deutsche Bank -------------------
Deutsche Bank adds IntesaBCI (I.ITB) to its
European focus list, saying it considers the Italian bank as "one of the most
attractive" turnaround stories in the European banking industry. Praises new
management's move to downsize risky wholesale banking business in favor of
domestic retail banking. Remains confident on '02/'03 forecasts since it expects
Intesa to break even in '02. Keeps stock at buy with target price of EUR2.60.
Edited by - gz on 12/1/2002 14:49:4