ANALYST REPORT November 16, 2016

BRD-GSG. Strong nine months warrant an upgrade

BRD-GSG reported a strong set of 9M16 results last week, confirming both our positive view on the bank, and also that our expectations of a decline in the cost of risk (COR) might materialise sooner than we anticipated. As a result, we have adjusted our COR estimates downwards, to 1.5% in 2016E (vs. 1.8% previously) and 1.3% in 2017E (from 1.6% previously), while the changes for 2018E have only been minor. Incorporating the gain on the VISA transaction for 2016E, our net profit estimates have increased by 33.4% to RON 780m for 2016E and by 17.6% to RON 719m for 2017E. As a consequence of the above changes, and adjusting for the time value, our price target (PT) increases by 17.4% to RON 13.62/share, implying 23.8% upside. We maintain our BUY rating.