Moneta Gains Most in Six Weeks as Profit Beats Analyst Estimates

  • Czech lender cuts NPL ratio to 6.9% from 11.7% in first half
  • Capital surplus to fund growth or return to owners, CEO says

Moneta Money Bank AS shares gained the most in six weeks after the Czech lender’s earnings beat estimates and management confirmed it would stick to its dividend policy.

Second-quarter net income rose 1 percent from a year earlier to 1.2 billion koruna ($49 million) as spending cuts offset shrinking income from interest and fees, said Moneta, in which General Electric Co. floated a majority stake in May. The result exceeded all three analyst projections in a Bloomberg survey, of which the highest was for 940 million koruna.

“We consider the results positive,” J&T Banka AS analyst Milan Lavicka, who has a buy recommendation for the stock, said by e-mail on Thursday. “The income trend is more or less in line with our full-year projections and operating and risk costs are developing in a more positive way than expected.”

The shares rose 3.5 percent to 75 koruna at the end of trading in Prague, the biggest gain in the PX index. The stock price is up 10 percent since the initial public offering three months ago, valuing the company at 38.3 billion koruna.

Moneta, before the IPO known as GE Money Bank AS, is benefiting from rising demand for loans as the Czech Republic boasts one of the lowest jobless rates and fastest-expanding economies in Europe. The lender has written off or sold a substantial part of its non-performing loans, reducing the ratio of bad debt to 6.9 percent at the end of June from 11.7 percent six months earlier.

Capital Surplus

With a CET-1 capital ratio, a measure of financial strength, at 17.7 percent, above the management’s 15.5 percent target, Moneta is in a “very comfortable” position to further expand its business, according to Chief Executive Officer Tomas Spurny. The company’s priority is to boost lending to retail clients and small businesses, he said in a phone interview on Thursday.

“We want to use that capital surplus for further growth,” Spurny said. “If the market doesn’t offer opportunities for sufficiently sustainable growth, we will try to return the capital to our shareholders on a two-year horizon.”

Moneta expects its dividend for 2016 in line with management policy, which is to pay out at least 70 percent of recurring profits. Jerzy Kosinski, an analyst at Czech brokerage Wood & Co. who also has a buy recommendation, said he expects the lender to pay 6.1 koruna per share, implying a dividend yield around 8.5 percent.

“The strong second-quarter numbers confirm our positive view on the stock, and we believe that there is upside risk for the full year,” he wrote. Moneta enjoys a “unique combination of being a top dividend play among the central and eastern European banks, top profitability, and operating in the stable macroeconomic and political environment of the Czech Republic.”

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