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雷达卡
Italian Banks
Reducing EPS again but still the best of "bad bunch"
Banks
Francesca TondiAC
(44-20) 7325-1579
francesca.tondi@jpmorgan.com
Erica Noda
(44 20) 7325-8098
erica.m.noda@jpmorgan.com
J.P. Morgan Securities Ltd.
For Specialist Sales advice, please
contact:
Justine Shih
(44-20) 7779 2149
justine.shih@jpmorgan.com
Nick Gough
(44-20) 7325-9459
nick.c.gough@jpmorgan.com
Oliver Doeltl
(44-20) 7779-2187
oliver.doeltl@jpmorgan.com
See page 57 for analyst certification and important disclosures, including non-US analyst disclosures.
J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Table 1: Italian Banks — J.P. Morgan
EPS estimates vs. consensus%
2009E EPS 2010E EPS
UCI -38% -35%
ISP -28% -27%
BP -37% -37%
Medio -16% -21%
MPS na na
UBI -35% -39%
BPM -42% -39%
Average -33% -33%
Source: J.P. Morgan estimates, Bloomberg
• We continue to find it extremely difficult, from a bottom up point of view,
to buy European banks in the current context. However, our analysis
indicates that despite further weakening earnings, Italian banks still remain
safer in a relative context thanks to relatively less geared balance sheet and
OK funding, even on reduced earnings.
• We take into account in our earnings estimates our economists’ recent
downward revision of economic estimates and the impact of the sharp
IR cuts by the ECB in the last 3 months. This leads us to cut earnings
again by a further 39% for 2009-10 for the Italians and TPs by an avg 13%
(see Table 2 for details). Our earnings cut is large, but still acceptable in the
context of the 40-50% cuts done for other banks around their Q4 results. We
settle 33% below Bloomberg consensus again for both years. We also note
that despite a reduced RoNAV, Italian banks still manage to make a profit
09E-10E, although only ISP still covers its cost of equity.
• Italian banks still at low risk of significant NAV erosion even on a highloss
scenario. Applying our analysis of probability of default (PD) and Loss
given default (LGD) (as already used to identify the “bad banks” or “at risk
assets” and the potential losses at risk in Germany and UK) to the Italian
banks, we conclude that their NAV is not at substantial risk; note that we
have used the same PD and LGD assumptions as for the other European
banks. On our analysis, the
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