Money normally can't buy the positive stock market impact of a favourable shout-out on the pages of influential US financial magazine Barron's.
So Cantillon kept a close eye on the share price of AIB on Monday after a Barron's interviewee, Carles de Vaulx, a French-born asset manager at International Value Investors, said the stock was worth €6 – some 28 per cent above where it is currently changing hands.
"Since the crisis the [Irish banking] system is basically oligopolistic," De Vaulx told Barron's in its latest issue on Monday, adding that he was focused on AIB, as a "pure Irish" play, as rival Bank of Ireland iwas heavily exposed to the UK. "It's well capitalised. The company could be worth 1.5 times adjusted tangible book, which would put it at €6, which should grow over time."
Shares in AIB, however, fell 0.2 per cent, extending their decline for the past five sessions to 5.4 per cent.
AIB is the worst-performing Irish banking stock so far this year – down almost 15 per cent – as the sector deals with everything from political resistance to non-performing loans sales to the likelihood of income-boosting European Central Bank interest rate rises being delayed until the back end of next year.
Although analysts have long held that AIB is sitting on more than €3 billion of excess capital (following a €20.8 billion taxpayer bailout during the crisis), the Central Bank’s recent move to slap a 1 per cent countercyclical capital buffer on banks from next July will dampen hopes of special dividends.
And if Davy’s forecasts are right the bank will show on Friday, when it unveils results for the first half of the year, that it has not yet managed to reach its much-hoped-for return to loan book growth after a decade of contraction.
Analysts at the broker see AIB’s loan book shrinking by 0.5 per cent in the period.
