Raiffeisen Ups Banca Transilvania’s Target Price To RON1.68

04.13.2011 By Florentina Dragu

Raiffeisen Capital&Investment Wednesday raised by 6% to 1.68 lei (EUR1=RON4.114) a share its 12-month target price on Romanian lender Banca Transilvania (TLV.RO), citing positive performance on the capital market.

However, Raiffeisen kept its recommendation on Banca Transilvania's shares unchanged at "hold."

At around GMT1120, Banca Transilvania's shares were up 0.07% at RON1.496 in Bucharest.

The Austrian financial group estimates Banca Transilvania will increase its share market in 2011, but it reduced its prognosis on loan growth to 9.7% from 10.5% previously, saying it expects a stronger leu appreciation.

Raiffeisen said bank system profitability is expected to deteriorate this year, due to increasing pressures on revenues.

"Previously, we expected the decrease in risk costs to more than compensate for this deterioration of operational profitability. Following the release of the financial 2010 results, we increased our risk costs estimate. We still believe that non-performing loans (in relative terms) will peak in the summer of 2011," Raiffeisen analysts said.

The Austrian bank increased its estimate on Banca Transilvania's operating profit to RON1.48 billion in 2011, from RON1.4 billion initially. However, Raiffeisen revised downward its forecast on adjusted net profit to RON135 million, from RON183 million.

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