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Optima Bank | Optimal Growth: Gaining Market Share with Superior RoTE

A clean balance sheet with best-in-class returns – Optima bank is one of the non-systemic Greek banks established in 2019 following the acquisition of Investment Bank of Greece (IBG) by a subsidiary of Motor Oil. It is a unique case among Greek banks given that it has a clean balance sheet (NPE ratio 100%) and a lean and flexible business model (with cost/income c22% in 9M’24, set to remain flattish throughout 2025-27e). Key to the investment thesis is the bank’s very high return on equity, with RoTE >23% in 2024e-25e and a sustainable level >20% on our estimates in the medium term, at the high end among European banks.

Focus on high-end banking; 20% loan CAGR through to 2027e, 14% NII CAGR – Optima positions itself as a premium banking institution, defined by exceptional service, transparent processes, and innovative corporate banking solutions. With a branch-light model, paperless operations, and a modern setup, it prioritizes efficiency and a seamless customer experience. On the funding side, deposits—accounting for 84% of assets—are primarily sourced from affluent customers and corporates, with corporate deposits comprising c67% of the total. We expect Optima’s deposits to reach €8.2bn by 2027e (c22% CAGR), lifting its market share to 3.8%, with term deposits steady at c50%, ensuring funding amid loan growth. On the asset side, targeting healthy second-tier large corporates—often overlooked by systemic banks—and SMEs, Optima has grown its loan book to €3.3bn (c2.7% market share) from €1.7bn in 2022, with a strong NIM (4.4% in 2023, set to exceed 4% in 2024e). We expect c20% loan CAGR through 2027e, slowing from >50% p.a. previously considering RWAs and rising competition. With these dynamics, we forecast an NII CAGR of 14% over 2024–27e—quite a compelling – and rather rare – growth proposition.

Solid capital to support growth – Optima Bank completed its €150mn IPO in September 2023, and as of 9M’24, its CAD ratio reached 15.6%, fully composed of common equity—up 400bps yoy. Despite strong lending growth and a 30% payout ratio, CET1 and CAD should remain well above regulatory thresholds through 2025-27e. Optima may issue a Tier II bond if market conditions allow, further strengthening its capital structure and enabling either accelerated credit expansion or a higher payout ratio (vs the 30% guided by mgt).

Valuation – Our GGM valuation yields a €16.6 TP, based on a 2026e exit P/TBV of 1.42x, factoring in a 14.8% cost of equity (including a 2.8% size premium) and a conservative 20% sustainable RoTE cap (despite our projections for higher returns to be delivered through to 2027e). While we see RoTE >21% as achievable in 2026-27e, we prefer to take a prudent approach, leaving room for upside if Optima continues to outperform. Our valuation would place Optima at a premium vs EU periphery peers, justified in our view by the superior returns.