NLB Group offered EUR 450m for 83.2% of the total shares of Komercijalna Banka. To put things into a perspective, this puts the offer at a P/B of 0.9 and a P/E of 7.8.

According to the Serbian media, NLB gave the best bid among 3 other banks for the sale of Komercijalna Banka. Allegedly, NLB offered EUR 450m for 83.2% of the total shares, which are owned by the Republic of Serbia. To put things into a perspective, EUR 450m puts the offer at a P/B of 0.9x and a P/E of 7.8x. Note that such an offer is priced at a higher P/B than NLB Group’s public offering, which was priced at P/B of 0.67x. As a comparison, at the current share price, Komercijalna Banka is traded at a P/B of 0.75x and P/E of 6.57x.

It is worth noting that if NLB eventually ends up being chosen as the buyer of Komercijalna Banka, the sale would probably not occur in 2019, as NLB Group has an acquisition ban, which expires at the end of 2019.

As a reminder, the Republic of Serbia has earlier this month reached an agreement with EBRD and IFC Capitalization Fund concerning the sale of 34.58% of the ordinary shares in Komercijalna Banka. Following completion of the mentioned transaction, the Republic of Serbia will own 83.2% of the ordinary shares of the Bank.

To read about Komercijalna Banka’s H1 2019 results click here.

Currently for NLB Group, Serbia represents their smallest market, where the company has only 1.6% of the total market share by total assets. In H1 2019, the company observed total assets of EUR 527m and net income of EUR 1m, which are both the lowest on the Group level. Currently the company has 28 branches operating in this market. 

As of June 2019, the company recorded a net interest margin (NIM) of 4.21%, which is significantly higher than the NIM on the Group level of 2.54%. However, note that the NIM has observed pressure in the past years, as it has been gradually decreasing in the past years (from 5.88% in H1 2016). Note that such a trend could be observed on the whole Serbian market. As a comparison, Komercijalna Banka’s NIM has been decreasing gradually since 2015 (NIM of 3.5%) and currently stands at 3.1%.