Greek Banks: managing the second-order effects (Alpha Bank, Eurobank, NBG and Piraeus Bank stay BUY)
In this report, we have adjusted our forecasts for the Greek banks, to account for the indirect impact of the geopolitical risks. Although it is still too early to make a full assessment, we do expect higher inflation to lead to lower disposable income and softer GDP growth in 2022/23E, implying slower loan growth and a higher cost of risk. The mitigating factors for the Greek banks include the timely reduction of the legacy portfolios, a resilient and tested performing book, the potential for higher rates, the implementation of the RRF plans, a good tourism season (with very low base effects), and high liquidity buffers among households and corporates. All-in-all, although the 10% target ROTE for the Greek banks seems to be at risk in the short term, we expect decent profitability in 2022/23E and we reiterate our positive call on the sector. Our preferred picks are NBG and Alpha Bank.
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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