The market value of BRD (Romanian Development Bank) - Groupe Société Générale, Romania's second-largest bank in terms of banking assets, yesterday exceeded the one billion-dollar landmark on the Bucharest Stock Exchange (BSE).
Paradoxically, Romania's largest bank - BCR (Romanian Commercial Bank) has been valued at less than one billion dollars when the privatisation process was launched last fall. Furthermore, BRD practically holds only half of BCR's market share.
The price of BRD shares yesterday climbed 3% as compared to the end of last week, up to 23,700 ROL/share, at a time when most stock prices are rallying. According to yesterday's closing prices, BRD has a market capitalisation worth 1.01 billion dollars.
On the other hand, a 25% stake in the biggest bank on the Romanian market - BCR was sold by the Privatisation Authority (APAPS) last November for 222 million dollars, which puts the bank's value at $888 million.
BCR's total banking assets amounted to 4.4 billion euros in mid-2003, accounting for 31.6% of the total assets of the Romanian banking system. At the same time, BRD assets were close to 1.8 billion euros, that is 13.2% of the banking system's total assets.
Nonetheless, it is worth noting that BRD's value has soared after the bank went through an ample restructuring and reorganisation process, which is still ongoing in several departments. Investments worth several tens of millions of dollars (made by the main shareholder) also helped.
According to brokers, BRD's rising market value is not grounded only on the past years' financial results, but also on the fact that the bank is listed on the Bucharest Stock Exchange. "The price/earnings ratio is among the highest on the Stock Exchange. The bank is held by the French group, which makes the investors feel safe. Also, BRD shares are among the few options that foreign investors have on the Romanian market," says Valerian Ionescu, head of operations with CAIB Securities. Brokers expect BRD to report $70-75 million in profit for 2003 (similar to the previous year's levels), which would put annual earnings at 7% of the bank's market value, whereas interest rates currently revolve around 14-20%.
Société Générale took over 45% in the Romanian Development Bank in 1998 and then operated a capital increase, which pushed its stake up to 51%. The investment was only worth 220 million dollars, with the French having earned 120% in five years from the stock price increase alone. The rising market value is joined by the dividends the bank pays every year.
"I always have and always will believe in the bank's potential. I will not forget that last year, when I sold some of my shares, there were plenty of speculations about me knowing something or running away from something. I said it then and I'm saying it now: BRD shares are worth holding onto, as they will continue to grow. The bank has practically tripled its value since it was privatised," said Bogdan Baltazar, chairman of the BRD Board.
oana.nuta@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
