On Tuesday, Deutsche Bank updated its outlook on BAWAG Group AG (BG:AV) (OTC: BWAGF) shares, increasing the price target to EUR80.00 from the previous EUR78.00 while reiterating a Buy rating on the stock. The bank forecasts a modest year-over-year (YoY) decline of around 4% in the bottom line for BAWAG's third-quarter 2024 results. This prediction is based on an expected marginal decrease in net interest income and potentially higher risk costs.
The bank's analysis suggests that BAWAG's net interest income is likely to see a 1% YoY dip, attributed mainly to subdued loan demand. However, it is anticipated that the first rate cuts will have a minimal impact within the quarter. Fee income is expected to remain consistent quarter-over-quarter but projected to rise by 7% YoY. Costs are predicted to increase by 1% YoY, which would result in a relatively stable pre-provision profit compared to the previous year.
BAWAG's performance remains attractive to Deutsche Bank due to its strong returns within the sector. The bank also notes the potential for significant earnings per share (EPS) growth stemming from BAWAG's recent acquisitions, which are expected to close between the fourth quarter of 2024 and the first quarter of 2025.
The financial institution is set to announce its third-quarter results on the morning of October 28. Deutsche Bank's outlook includes stable quarter-over-quarter fee income and a slight YoY increase in costs, maintaining a consistent pre-provision profit year-over-year.
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