April 26, 2017 / 10:32 AM / in 6 months

CEE MARKETS-Budapest leads stocks retreat in CEE on bank margin worries

    * Prospect of low interest rates, margins weigh on OTP Bank
shares
    * Rise of stocks, currencies after French election loses
steam
    * Polish BZW BK stocks fall, refiner Lotos shares surge on
results
    * Leu underperforms, Romanian budget figures do not end
concerns

    By Sandor Peto
    BUDAPEST, April 26 (Reuters) - Budapest stocks led a retreat
of Central European equities on Wednesday, driven lower by OTP
 shares, after the Hungarian central bank signalled
that it intends to keep interest rates low, eroding banks'
interest income.
    Regional equities and currencies had firmed after centrist
Emmanuel Macron won the first round of France's presidential
elections on Sunday, curbing the risk of a shift to the far
right. However, currencies steadied or eased from multi-week
highs on Wednesday.
    Hungary's main equities index fell 0.7 percent by
0855 GMT, driven by a 1.4 percent decline by OTP, the region's
biggest independent bank.
    "Some investors are worried that the central bank may take
measures to reduce bank margins," said Monika Kiss, analyst of
the Budapest-based brokerage Equilor.
    The National Bank of Hungary has said repeatedly that it
wants stronger competition among banks in lending and that
banks' mortgage spreads were too high.
    "Yesterday's central bank (rate) statement was as expected,
but it underpinned that loose monetary policy will remain and
that is not favourable to banks," Kiss said.
    While fresh central bank signals that it may take measures
to tighten banks' margins and the rate statement affected OTP,
Kiss added that the stock "remains a good paper". 
    Central European bank profits are set to rise faster than at
Western rivals, analysts have said.
    Banking stocks were key drivers in a rise in Warsaw equities
on Tuesday, with Bank Millennium stock jumping due to
a rise in first-quarter profits.
    Warsaw stocks were mixed on Wednesday.
    The blue-chip index eased due to a more than 4
percent fall in BZW BK after Poland's third biggest
bank reported a 19 percent annual fall in first-quarter profit.
    Refiner Lotos surged 10 percent, after reporting a
288 percent annual rise in first-quarter earnings.
    The leu underperformed regional currencies,
shedding 0.2 percent to 4.537 against the euro, after late
Tuesday's government figures showing a slight budget surplus in
the first quarter did not expel fears of a full-year deficit
overshoot in 2017.
    The government plans further public sector wage hikes even
though it would need to curb spending to keep the deficit below
the EU's ceiling, which is 3 percent of economic output.
    "However, the current space for manoeuvre will surely be
more limited by the recent (politically irreversible) wage and
pension hikes, plus new ones to come into force in July 2017,"
Erste analysts said in a note.
    Government bonds eased slightly or moved sideways in the
region ahead of an auction of Czech bonds.
    After recent disappointing auction results, demand could be
helped by the prospect of low Czech debt issuance in May,
Komercni banka said in a note.
    "(The) combined amount of 11 bln CZ (Czech crowns) might
still prove to be on the upper side for the market," it said.   
              CEE        SNAPS   AT  1055          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             26.88  26.88   +0.0  0.45%
                            50     40     0%  
 Hungary                 311.6  311.8   +0.0  -0.91
 forint                    500    750     7%      %
 Polish                  4.225  4.222  -0.06  4.22%
 zloty                       5      8      %  
 Romanian                4.537  4.527  -0.22  -0.04
 leu                         0      0      %      %
 Croatian                7.464  7.466   +0.0  1.21%
 kuna                        5      5     3%  
 Serbian                 123.2  123.3   +0.1  0.11%
 dinar                     200    750     3%  
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  992.5  992.9  -0.04   +7.7
                             9      8      %     0%
 Budapest                33297  33519  -0.66   +4.0
                           .17    .07      %     4%
 Warsaw                  2350.  2353.  -0.12   +20.
                            46     17      %    67%
 Bucharest               8218.  8260.  -0.50   +16.
                            99     33      %    00%
 Ljubljana               783.8  777.2   +0.8   +9.2
                             1      9     4%     3%
 Zagreb                  1936.  1937.  -0.04  -2.91
                            70     55      %      %
 Belgrade     <.BELEX15  731.6  732.4  -0.10   +2.0
              >              9      1      %     0%
 Sofia                   651.5  653.7  -0.35   +11.
                             0      6      %    10%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  0.023  0.023   +071   +3bp
              >                          bps      s
   5-year     <CZ5YT=RR  0.269  0.047   +060   +6bp
              >                          bps      s
   10-year    <CZ10YT=R  1.039  0.017   +067   +2bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  1.985  0.003   +267   +1bp
              >                          bps      s
   5-year     <PL5YT=RR  2.888  -0.02   +322  -2bps
              >                     7    bps  
   10-year    <PL10YT=R  3.457  0.006   +309   +1bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.31   0.36   0.44      0
              PRIBOR=>                        
 Hungary              <   0.24   0.33   0.43   0.16
              BUBOR=>                         
 Poland               <  1.751  1.782  1.833   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague, Marcin Goclowski in Warsaw; Editing by Ken Ferris)
  
 
 

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below