Greek Banks: Going full monty! (Alpha, NBG and Eurobank stay BUY; Piraeus upgraded to BUY)
We remain BUYers of the Greek banks after the publication of their 1Q18 results, but we switch our best pick to Eurobank due to its superior ROTE potential, decent NPE coverage and low valuation. We have also upgraded Piraeus Bank to BUY from Hold as we believe that it is likely to be able to avoid a dilutive equity issue. Our bullish view on the Greek banks is mostly a valuation call based on our opinion that they can avoid distressed capital issues and re-rate to a P/TBV range of 0.5-0.6x (implying a low sustainable ROTE of 5-6% on a cost of equity of c.11%). We believe that any further upside could be capped by the weak pre-provision income generation, the (still) fragile cost of risk and the low ROTE.
Eurobank Ergasias and its subsidiaries are organized in the following reportable segments: Retail. which incorporates customer current accounts, savings, deposits and investment savings products, credit and debit cards, consumer loans, small business banking and mortgages; Corporate, which incorporates direct debit facilities, current accounts, deposits, overdrafts, loan and other credit facilities, foreign currency and derivative products; Wealth Management, which incorporates private banking services; Global and Capital Markets, which incorporates investment banking services; and International, which incorporates operations in Romania, Bulgaria, Serbia, Cyprus, Ukraine and Luxembourg.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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