European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Turkiye Garanti Bankasi As / Event-Driven

<ul>
<li>The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.</li>
<li>BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.</li>
<li>The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.</li>
</ul>


The deal for 50.15% of Garanti has received the relevant authorizations and approval from the market regulator. The  offer memorandum has been published. The offer period started on 4 April.
BBVA should pay €1,605 million (as of 11 April), €644 million less than upon announcement due to Turkish lira depreciation. Some fund managers have voiced their intention of not tendering.
The shares trade roughly in line with peers and are likely to continue their bull run in the short term. It is increasingly difficult the offer succeeds without a sweetening.


BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>BBVA Mexico expanded its premium return on equity of the big nine Mexican banks to 23% to December, and through opex control, it “works” its healthy core capital ratio hard</li>
<li>The bank system trends remain healthy, with additional improvements to NPL ratios and healthy coverage; Banorte and BanBajio screen better than peers on combined credit quality metrics to December</li>
<li>We believe that mid-cap bank BanBajio is good value, and are positive on BBVA for its Mexican exposure; on balance, we remain cautious on Banorte, due largely to valuation</li>
</ul>


BBVA Mexico expanded its premium return on equity of the big nine Mexican banks to 23% to December, and through opex control, it “works” its healthy core capital ratio hard
The bank system trends remain healthy, with additional improvements to NPL ratios and healthy coverage; Banorte and BanBajio screen better than peers on combined credit quality metrics to December
We believe that mid-cap bank BanBajio is good value, and are positive on BBVA for its Mexican exposure; on balance, we remain cautious on Banorte, due largely to valuation


Mexican Banks’ December Data Adds to Positive Trend on Credit Quality, but Lending Spread Eroding

<ul>
<li>BBVA Mexico delivered premium return on equity (ROE) of the big nine Mexican banks to November, at 20%+ and, through opex control, “works” its healthy core capital ratio hard</li>
<li>The bank system trends remain healthy, with improving NPL ratios and healthy coverage; Banorte and BanBajio continue to screen better than peers on combined credit quality metrics to November</li>
<li>We like mid-cap bank BanBajio for its good value, and are positive on BBVA for its Mexican exposure; we remain cautious on Banorte to a degree, due largely to valuation</li>
</ul>


BBVA Mexico delivered premium return on equity (ROE) of the big nine Mexican banks to November, at 20%+ and, through opex control, “works” its healthy core capital ratio hard
The bank system trends remain healthy, with improving NPL ratios and healthy coverage; Banorte and BanBajio continue to screen better than peers on combined credit quality metrics to November
We like mid-cap bank BanBajio for its good value, and are positive on BBVA for its Mexican exposure; we remain cautious on Banorte to a degree, due largely to valuation


Mexican Banks’ November Data Looking Positive on Credit Quality, Lending Spread Stable

<ul>
<li>Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations</li>
<li>Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX</li>
<li>In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers</li>
</ul>


Among EM banks, our top picks are Sberbank in Russia, Banco do Brasil and HDFC Bank in India; we are negative on recent IPO Nubank due to inflated market expectations
Our top picks for 2022 are BBVA and Banco BPM for Southern Europe banks. In Exchanges, we are positive on B3 of Brazil and SGX
In payments, we like Mastercard and Pagseguro, but we are negative on Paytm; we see BTG Pactual as an attractive pick and winner in the digital wealth managers and brokers


2022 High Conviction Ideas in FinTech & Financials

Banco Bilbao Vizcaya Argentari / Event-Driven

<ul>
<li>BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive</li>
<li>The negative reaction to BBVA’s move reflects investor concerns surrounding macro-economics and politics in Turkey, and the weak Turkish Lira; we believe that Turkish monetary policy easing is largely done</li>
<li>BBVA shares provide exposure to its best-in-class return group emerging market banks at an attractive PBV ratio; in addition, BBVA shares are supported by its big share buy-back plan</li>
</ul>


BBVA’s offer to buy out the Garanti minorities values the Turkish bank at a PTBV ratio of 0.7x and prospective PE of 3.6x and is expected to be earnings accretive
The negative reaction to BBVA’s move reflects investor concerns surrounding macro-economics and politics in Turkey, and the weak Turkish Lira; we believe that Turkish monetary policy easing is largely done
BBVA shares provide exposure to its best-in-class return group emerging market banks at an attractive PBV ratio; in addition, BBVA shares are supported by its big share buy-back plan


BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

Spain

Banco Bilbao Vizcaya Argentaria, S.A. attracts deposits and offers retail, wholesale, and investment banking services.  The Bank offers consumer and mortgage loans, private banking, asset management, insurance, mutual funds, and securities brokerage services.  It operates in Europe, Latin America, United States, China and Turkey.

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Banco Bilbao Vizcaya Argentari (BBVA SM)

BBVA/Garanti: Offer Period, Shares at a 9% Premium to Offer Price

Due to the Turkish lira depreciation BBVA could get a sweet deal, but minority shareholders have said they won't tender without an increase in the...

Jesus Rodriguez Aguilar

Mexican Banks’ December Data Adds to Positive Trend on Credit Quality, but Lending Spread Eroding

Credit quality ends the year strong, with evidence of marginal spread erosion in December; we like mid-cap bank BanBajio and BBVA for BBVA Mexico;...

Victor Galliano

Mexican Banks’ November Data Looking Positive on Credit Quality, Lending Spread Stable

November Mexican bank sector credit quality data are positive, with little spread erosion. BBVA Mexico remains the local benchmark based on...

Victor Galliano

2022 High Conviction Ideas in FinTech & Financials

Our 2022 high conviction ideas include buys on Sberbank, Banco do Brasil and HDFC Bank, as well as BBVA, Banco BPM, B3, SGX, Mastercard and...

Victor Galliano

BBVA (BBVA SM)-Garanti: Better the Devil You Know, Especially in Emerging Markets

BBVA shares provide exposure to its high return group emerging market banks in Mexico, Turkey and other LatAm at an attractive PBV ratio; plus BBVA...

Victor Galliano

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52-week Range

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