Greek Banks: The last mile (Alpha upgraded to BUY, Eurobank and NBG stay BUY, Piraeus stays HOLD)
We reiterate our constructive view on the Greek banks and believe that 2021-22E should lead to the final clean up of the legacy NPE stock and a return to decent profitability, with a normalised ROTE of >7%. Although the share prices have recovered (>60% from the lows in October 2020), they are still down 42% in the last 12 months, with the P/TBV at c.0.3x on average 2021E. We see these valuation levels as very attractive for banks that can earn sustainable returns of over 7% in an oligopolistic environment. Our favourite plays remain Eurobank and NBG (lower NPE ratios, higher cash coverage, better capital), but we have also upgraded Alpha Bank to BUY (from Hold), on the back of better visibility on lowering NPEs and returning to normality. We maintain our HOLD on Piraeus.
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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