ML
We remain selectively optimistic on EEMEA banks, biased towards strong macro and growth
Welcome to the latest edition of our Emerging EMEA Banks Adviser. Owning the region’s banks has been a pretty rewarding
strategy in recent years, and valuations have long since been described as cheap – with perhaps one or two exceptions. We
are biased to countries where we see strong, or at least improving macro, and we believe it is still most rewarding to focus on
growth – with few signs of intense margin pressure or issues like asset quality to worry about.
Stocks we like: Sberbank, Garanti, Raiffeisen, Standard, BZWBK, Halyk
We’re bullish on credit growth, and we see growth as much more broadly balanced between corporates and individuals. All of our
favoured stocks benefit from this feature. We like Russia a lot, hence the enthusiasm for Sberbank and it’s a big reason we like
Raiffeisen. Turkey’s more mixed, but we think it’s through the darkest days and Garanti is taking market share while also growing
margins and fees strongly. We see Standard Bank as simply the best play on a combination of retail / corporate / investment
banking and Africa. BZWBK’s done well, but we like the macro, mutual funds and commercial focus. Halyk’s the more risky call,
but we think Kazakh growth will remain extremely strong, and this is the best positioned bank for both fees and funding.