IC Market Espresso 21 Mar 2023

Upcoming Events – March 2023

Here you can find the dates for the upcoming events of the regional companies.

wdt_ID Date Ticker Announcement Country
22 30.3.2023 ATGR Atlantic Grupa 2022 Annual Report Croatia
23 30.3.2023 SFG Sphera Franchise Group Ex-dividend date Romania
24 31.3.2023 TLSG Telekom Slovenije 2022 Annual Report Slovenia

Due to the nature of these events, they are subject to change (might be postponed or canceled).

Loans of Croatian Financial Institutions Increased by 10.9% YoY in January 2023

At the end of January 2023, the loans of Croatian financial institutions amounted to EUR 41.3bn, representing an increase of 10.9% YoY, and 1.57% MoM.

Despite the ongoing inflationary pressures and macroeconomic developments, the loan development in Croatia is still quite strong and resilient. In fact, by the end of January 2023, the total loans of the Croatian financial institutions amounted to EUR 41.34bn. This represents an increase of 1.57% (EUR 640.7m) MoM, and 10.86% (EUR 4.05bn) YoY. As Croatia officially entered the Eurozone in January, the month to the latest report from the Croatian National Bank, HNB, there were some changes in the classification and the breakdown by categories. As such, some of our numbers might differ from the ones before as some of the data is no longer available in the same format.

With that out of the way, we can break down the two main drivers of loan growth, i.e. household and corporate loans. In January 2023, household loans amounted to a total of EUR 19.86bn, representing a decrease of 0.14% (or EUR 28.6m) MoM, but an increase of 5.21% (or EUR 983.1m) YoY. On the other hand, corporate loans amounted to EUR 13.9bn, an increase of 0.73% (or EUR 101.2m) MoM, and 21.54% (or EUR 2.46bn) YoY. As such, and as we have already seen in the previous couple of months, corporate loans remain the main drivers of loan growth.

Corporate and household loans growth rate (January 2015 – January 2023, %)

Source: HNB, InterCapital Research

Looking at corporate loans more closely, and breaking them down by purpose, we can see several interesting things. Investment loans still remain the largest category, holding 39.7% (or EUR 5.5bn) of the corporate loans, followed by working capital loans at 31.2% (or EUR 4.3bn), and other loans at 29.1% (or EUR 4.05bn). In terms of growth, on an MoM basis, other loans recorded the largest increase, growing by 2.99%, followed by working capital loans by 0.90%, while investment loans decreased by 0.99%. The decrease in investment loans could be the beginning of a cooldown in investment activity, however, it will require several months of decreases in this loan form to establish a trend and conclusively affirm this. Meanwhile, on a YoY basis, all of the corporate loan categories recorded significant growth, which was to be expected as 2022 was the first year after the start of the COVID-19 pandemic that companies could operate relatively normally. In terms of growth, other loans grew the most, increasing by 30.6%, followed by working capital loans at 20.6%, and investment loans, at 16.3%. In absolute terms, these represent increases of EUR 947.7m, EUR 774.1m, and EUR 739.9m, respectively.

Moving on to the other category of loans, household loans, housing loans still have the largest percentage in the total, at 49.95% to be exact. Following them, we have consumer loans at 36.26%, and other loans, at 6.24%. In terms of growth, on an MoM basis, all household loan categories remained roughly the same, changing only slightly. On a YoY basis, a larger difference can be seen, with housing loans increasing by 9.93% (or EUR 896m) YoY, followed by consumer loans, which increased by 1.77%, or EUR 125.6m.

Composition of Croatian loans to households (October 2011 – January 2023, EURm)

Source: HNB, InterCapital Research

The continued growth of housing loans and their resilience to the current macroeconomic shocks is closely tied to several factors. First, of course, the fact that housing is one of the fundamental requirements for living, and as it is also seen as a form of saving/investment in Croatia, there is an even larger incentive to take housing loans. Also, the subsidies on loans issued by the government also play a factor here. Finally, the imbalances of the supply/demand in the real estate market in Croatia, in general, are driving up the requirement for higher loan amounts, which would mean that even if the same amount of loan volume is issued, they’re issued in the higher amounts. Lastly, this does not take into account the interest rate on these loans. According to the latest data for January 2023, the average interest rate on new housing loans amounted to 2.89%, representing an increase of 0.21 p.p. MoM, and 0.32 p.p. YoY, meaning that the vast majority of the increase in the interest rate came in the last month. This, however, is to be expected, as the increase in interest rates by the ECB, which started in the middle of 2022, is finally having its effect on the new loan issuances.

The increase in consumer and other loans, as well as corporate loans, is even higher. In fact, at the end of January 2023, the average interest rate on consumer and other loans amounted to 5.36%, an increase of 1.33 p.p. YoY, and 0.34 p.p. MoM, while the average interest rate for corporate loans amounted to 3.37%, an increase of 1.51 p.p. YoY, but a decrease of 0.10 p.p. MoM.

Average new housing and new corporate loan interest rates (December 2011 – January 2023, %)

Source: HNB, InterCapital Research

BVB Trading Activity in February 2023

By the end of February 2023, BET increased by 1.5% MoM. Looking at the latest data available, BET increased by 3.5% on a YTD basis.

The Bucharest Stock Exchange, published its monthly trading report for February 2023, while also commenting on the general sentiment so far this year. According to the report, the first two months have brought a 5.5% surge for companies listed on the BVB with the listing of the second ETF and one equity listing. In the report, BVB emphasized the achieved yields of the companies in the BET-TR composition. The companies yielded nearly 100% over the past 5 years cumulatively, with superior performance over the US S&P500 index.

CEO of the Stock Exchange notes that investors follow with interest the dividend proposals, while on the other hand waiting for an already known new listing of Hidroelectrica this year. From the liquidity perspective, one can observe investors are in the expectations stage. Beyond this current volatility, it can be seen that the capital market is an effective solution for savings (at least in Romania 😊). After dividends are included, the investor would double their investment if he was to invest 5 years ago. BVB looks at 2023 with confidence with Hidroelectrica acting like a catalyst for investors.

We note that during previous year, new all-time highs were recorded last year in terms of total transaction value, number of transactions and average daily liquidity. The number of investors in the capital market in Romania continued to grow and reached 133k investors.

Performance of BET constituents in February 2023 (MoM, %)

Source: Bloomberg, InterCapital Research

Looking at the BET index and its constituents, on an MoM basis, more than half of companies (13 out of 20) recorded growth. However, 5 companies are within +/-1%, and as such, the changes are minuscule. Of the largest gainers, Transelectrica and Aquila increased by 15.5% and 8.7%, respectively. They are followed by Transgaz at 8.6%, Alro at 5.7%, and Transport Trade Services at 5.6%. On the other hand, Teraplast declined the most, at a 5.7% decline, followed by BRD Group at 3.2%, and Purcari, at a 3.2% share price decline.

Performance of BET constituents in 2022 (YTD, %)

Source: Bloomberg, InterCapital Research

On a YTD basis, taking into the account latest share prices, the largest increase was recorded by the BVB, at 20.7%, followed by Aquila at 15.9%. Transelectrica and OMV closely follow with 14.7% and 14.6% YTD growth, respectively. There are also companies that noted a double-digit growth in 2023, so far, like Transgaz and Alro. Only three companies reported a YTD decline in 2023. Of these, the largest decline was recorded by BRD Group, at 7.7% decline, followed by Purcari and One United Properties with a 4.1% and 0.5% decline, respectively.

Overall, 2022 was a year of all-time highs in terms of transactions, turnover and the number of investors participating in the capital markets. 2023 so far started carefully, but with a solid performance of BET constituents. Further, BVB thinks that the new listing will further drive the market liquidity and visibility.

Nuclearelectrica proposes RON 4.254 DPS

At the share price before the announcement, this would amount to a DY of 9.4%. The ex-date is set for 6 June 2023.

On Friday, Nuclearelectrica published a notice for the OGSM and EGSM meetings, which will be held on 26/27 April 2023. In the notice, they also discussed the distribution of profit. In total, from the financial year 2022, they approved the amount of RON 1.28bn to be paid as dividends, which would imply a payout ratio of 47%. On a per-share basis, this would imply a gross dividend of RON 4.25407469. Furthermore, at the share price before the announcement, this would be indicative of a DY of 9.4%.

Of course, the dividend proposal is subject to approval at the OGSM meeting mentioned above. The ex-date is set for 6 June 2023, while the payment date is set for 23 June 2023. Below we provide you with the historical dividend per share and dividend yields of Nuclearelectrica.

Nuclearelectrica dividends per share (RON) and dividend yields (%) (2016-2023)

Source: Nuclearelectrica, InterCapital Research