HDFC, ICBC, Sberbank, Banco Bradesco are household names for BRIC emerging market equity investors, but what are the next generation of banks in the less mainstream developing markets of Bangladesh, Vietnam, Egypt and Nigeria?
BRAC Bank, Bangladesh (BRAC BD):
Best-in-class management, margins, asset quality, funding and capital strength, together with a meaningful stake in the country’s largest mobile money platform, bKash. The stock is fully pricing in an aggressively implemented loan rate cap, which we think is unlikely.
Credit Agricole Egypt (CIEB EY):
Most profitable listed Egyptian bank with superior margins, good cost control, disciplined risk management; complemented by a high dividend. Less exposed to withholding tax changes. Given COMI EY’s strong run, we see scope for investment inflows to this name.
Vietnam Prosperity Bank (VPB VN):
Market-leading consumer credit arm (FE Credit) helps VPB generate class-leading ROE, which in turn keeps capital ratios healthy. We think volume growth will recover from H1 18’s slowdown, while a potential listing of FE Credit will help to improve transparency.
Zenith Bank, Nigeria (ZENITHBA NL):
Second-largest Nigerian bank, with strong capital ratios, good provisions coverage and high profitability, supporting an attractive double-digit dividend yield. We think these positive attributes can be sustained, despite regulatory uncertainty and a weak macro environment.
|Coverage median||Mkt cap (US$mn)||ADV (USk)||Rating||LCY||Share price||Target price||ETR||2020 PE||2020 PB||2020 ROE||2020 DY|
Overall coverage median
Source: Tellimer Research. Note: Share price as of 3 February 2020.
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