Blackrock's selling is interesting, even entertaining. The must have seen some value when the crossed the 3% threshold at 26c in 2013. I don't believe things have changed so dramatically that they should now be selling at 17c. More likely they are decreasing their overall sector exposure, rather than selling with a singular focus on BOI. For that, you would need to check for other other signs of TR1s/selling by Blackrock in the sector. I'd also watch the left field. It sends an obvious signal into the market when a firm like Blackrock is selling down some of its large percentage stakes. It sends the price down, and is amplified by market participants who can't judge value simply following what they believe to be an informed investor. Under the covers however, you could have Blackrock selling down its directly held stake while somewhere else, increasing its stake in some other indirect fund which is continuing to accumulate BOI shares at these knock down prices. Sell with the left, buy with the right. ME (Saudi, Oman, etc) funds appear to be keen to pick up bargains at the moment.
BOI's profitability has been a little lumpy. Using a modest PE of 10, 500m earnings gets you to 15c. Push that PE to 12, you get 19c. Move earnings up to 600m, those numbers become 19c and 22c respectively. Given we could be doing that per-half-year, double those to 30c, 38c respectively. Let's add some growth, say through ongoing development of the UK business. Bring earnings out to €1.4b, PE 15, 65c.
All this says that around this region, we can expect the BOI share price to be somewhat volatile. However, as a longer term story the bank looks to offer significant value at this time. That would be especially true if being used as a tax-benefitting investment, such as a purchase through a pension fund contribution where you can forget about it for a while and also recoup the income tax which for many, could pay for most of the investment and provide a more or less free run.
BOIs NPL is closer to the realm of $10b which is down about $5bn YoY. It's a large figure but I suppose it needs to be put in the context of the banks overall assets and liabilities, €126b, and the fairly agressive manner in which it is being managed down. Also keep in mind the Cerebus/RBS brushstroke which took out £1b from Ulster Bank last week; interesting and unpredictable things can happen in the markets.
MSM likes to agitate punters by bandying about large numbers without context. Case in point, DB, whose 42t derivates book has been repeatedly sensationalised with very little reference to the net exposure in the book. The net exposure is still large (~ €18b), but would need everything that can go wrong, to go wrong, in order to be realised. Likewise, the prospective MBS related fines. Likely to be negotiated down. Less seen in print, often these fines are not levied in cash lump sums, but in changes to (restrictions on) business practices and/or over time. You don't see that much in print when the size of the prospective fine is being compared to DB's market capitalisation. DB has some other, and complex issues, in how it reports but because of the forensic nature of those issues they don't make for good scare-mongering headlines. Relevance; all weighs on the sector.
Brexit is doubtless going to have an impact on economies, ROI's, UK's and others, but the precise impact is probably not readily predictable. For every ying, somewhere there will be some yang. Hard to see if there is going to be an absolute net loser, more a case of musical chairs. BOI's UK business looks at first pass to be quite strong; mortage book equivalent in size to ROI, with non-performing element far lower. I expect this business will continue to grow. Brexit or otherwise it has the potential to outgrow the ROI business while providing better client diversification, lower risk, lower cost, and higher margin. It is also a model which could in theory be tested beyond the UK.
.. good summary.. people forget the effort to eliminate the losses of boi and aib... both definitely overdid loss writeoffs to have to reverse these later.. boi and aib should remain local and forget trying to grow international.. too risky, some exposure to the UK and post office, and insurance is conservative... the way to go.. go back to the basics.. both banks have a long history, traditional banks .. i have my stock here.. i dont want jpm, citi, ubs etc.. this bank is fine.. growth will be slow for all banks.. stability with an eventual dividend is fine.. growth worldwide is slow.. like ranger said.. hold a while.. year 2020-1 before the next downturn or before..
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