WOOD Flash – Greek banks rally: where do we stand?
Greek banks are up 47% from the lows in mid-January, and c.+35% ytd. The highest beta name, Piraeus Bank, is up 116% from its lows in January, followed by NBG (+66%), Alpha (+43%) and Eurobank (+41%).Will the rally last? In view of such a strong share price performance ytd, we believe that a correction would not be a surprise. Our fundamental view remains unchanged, however, i.e. that the Greek banks will avoid distressed capital issues or a wipe out of old shareholders. There are big challenges ahead (NPEs are huge, NPE cash coverage is relatively tight, the quality of is capital low) but we do see gradual progress that should enable the banks to survive without a forced recap, in our view. In this context, the valuations remain low, with NBG trading close to 0.3x P/TBV, Alpha on 0.24x and Piraeus at 0.1x (on 2019E estimates). Eurobank currently trades close to 0.5x P/TBV post the Grivalia deal and creation of the SPV, but is ahead of the pack in NPE reduction (15% NPE ratio expected at end-2019E) and ROE potential (close to 10% in 2020E). Our PTs imply another c.40% upside for the sector.
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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