INTESA-UNICREDIT, DUEL TO THE PLAY OF RECORD VOTES
BUT THE UNKNOWLEDGE OF SPREADS AND RECESSION IS SCARY
It should logically be the duel between two potential first class. But the effect of Italy's relapse into recession has played its part a bad joke to Intesa and Unicredit, the two flagships of the Italian banking system, subjected to a heavy barrage.
Both Unicredit and Intesa left more than 3% on the ground yesterday in one of the most tormented days of the recent history of Piazza Affari. And yet, in parallel, the appreciations and consent of brokers and analysts rained down on the telematic networks.
Everyone likes the core tier 1 at 10,4%, beyond the promised barrier of 10%, in conditions of absolute security in view of the asset quality review. Also appreciated was the profit beyond market estimates (403 million in the last quarter, over a billion in the first six months of the year) and the provisions for non-performing loans equal to one billion (against a forecast of 1,10 billion ).
Hence a flurry of promotions. Equita ha raised the target price to 7,8 euros (buy report card) betting on 2,3 billion profits at the end of the year; Kepler Chevreux (hold, target price at 6,5 euros) already takes into account the effects of the sale of the German Dab.
Analysts Morgan Stanley underline the value of common equity tier 1, higher than expected. “The bank will face the asset quality review and the stress tests with a good level of capital – reads the note from the investment bank – The action remains one of our favorites in Europe and as regards the sale of Unicredit Credit Management Bank, the CEO confirmed that he expects a sale before the end of the year, but the deal is complicated”, concluded Morgan Stanley.
And so on: Banca Akros confirmed accumulated recommendation and target price of 7 euro, Banca Imi add and target price of 7,15 euro, Nomura buy and target price of 7,6 euro, JP Morgan overweight with a target price of 8,2 euro, Mediobanca Securities outperforms with a target price of 8,9 euros and Barclays overweight and a target price of 7,5 euros, specifying that in the best-case scenario Unicredit's valuation could rise to 8,26 euros while in the worst-case scenario it will fall to 3,72 EUR. Only Credit Suisse and Natixis have a neutral rating with a target price of 6,6 euros for the former, revised from 7 to 6,40 euros for the latter.
Why, despite this shower of good grades, are the markets bombing Unicredit? Because, as always happens in moments of general weakness of the system, banking and financial stocks are the most penalized, thanks to the widening of the spread between Btp and Bund to 171 basis points.
The consideration is even more valid for Banca Intesa, punished today under the storm, rewarded a few days ago after the presentation of the accounts. The institution was fortunate enough to present its mid-year accounts on Friday, August 1, before the storm hit. In that context, despite the pressures on the sector linked to the collapse of Banco Espirito Santo. The market was able to appreciate the excellent results achieved under the guidance of CEO Carlo Messina: profit almost double compared to the same period of 2013 (720 million against 422 million), a common tier 1 without equal in Europe at 12,9 %, interest margin growing to 4,2 billion despite the drop (-3,4%) in loans to customers. Finally, the flows of new non-performing loans mark the lowest level since the end of 2011.
Beyond the numbers, both banks seem well equipped to immediately exploit the arrival of the TLTROs to great profit. loans from the ECB arriving from mid-September with the aim of increasing loans to the productive sector. All in all, the car seems to run well. Provided that the fall in government bonds at an extremely delicate moment, when the crux of the evaluation of public securities in portfolios and bank balance sheets is still on the table, does not cause new requests and provisions and, worse still, a new violent flight of international investors .
