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DB forecasts for banks

04/01/2008 12:01
According to Deutsche Bank, “one scenario is that funding conditions will improve in early 2008, global growth will hold up, and that corporate credit quality (thanks to strong balance sheets) will be resilient”. In a report under the title “European Banks Strategy” dated January 2, DB refers to the estimated course of the European Banks. Bank of Cyprus continues to be among the top picks of DB with a TP of €17 and a Buy recommendation. Deutsche Bank expects that BOCY will achieve profits of €491 million in 2007, €600 million in 2008 and €761 million in 2009.

According to DB, “there is currently a conflict between valuations in the financial sector (especially banks) and the rest of the market. This follows banks underperforming the wider market by 19%, and trading at the bottom of their twenty year PE relative range. The banks are now half-way priced for a global recession and liquidity crunch, while expectations for the corporate sector remain high”.

Deutsche Bank recommends a relative overweigh in the banks. “Our top picks are well capitalised with steady, organic growth stories, avoiding earnings downgrade risk”, the report said.

“We like UBS (TPCHF 70), Santander (TP Euro 18.3), BNP Paribas (TP Euro 97, DnB NOR (TP NOK 99), Unicredit (TP Euro 7.8) and Bank of Cyprus (TP Euro 17), all rated Buy”, DB concluded.