Axia: Maintains buy recommendation for Greek banks after the results of the year – High growth margins

Her Eleftherias Kourtali

Axia Research identifies two key issues in terms of the results of the four systemic banks, for which it maintains the buy recommendation seeing growth margins of 44% up to 97%.

First, as he points out, the Greek banks recorded a strong balance sheet clear against the initial targets, in combination with very low new NPE formations. And second, they have avoided setting long-term goals that incorporate the impact of higher inflation and the possible slowdown in GDP due to the war in Ukraine.

Axia welcomes the faster clearing of balance sheets, which also led Eurobank and the National Bank with the highest CET1 capital ratios to announce the dividend payment for 2022, and estimates that the Greek economy can withstand the short-term growth as opposed to is based on solid fundamentals and well-defined and secured investment plans.

Thus, for Alpha Bank it maintains the buy recommendation with a target price of 1.80 euros. According to Axia, Alpha Bank completed its transformation year but reduced its guidance for the coming years due to changes in dynamics. The systemic bank closed in 2021 with a loss of 733 million euros due to the one-time cost associated with NPE transactions. The group’s results were in line with the guidance for 2021. However, Axia notes that net interest income (NII) in 2022 was revised down to € 1.15 billion (from € 1.3 billion) due to faster than expected de-risking of NPEs, higher deposit rates and issuance costs. In addition, this new guidance does not take into account the impact of higher inflation and / or potential GDP slowdown.

For the National Bank it also maintains the buy recommendation with a target price of 6.00 euros, noting that it had a strong fourth quarter. It made a profit of 0.9 billion euros due to revenue sustainability, cost control and significantly lower risk costs. In addition, the Frontier II portfolio, the sale of the insurance business and the completion of the joint venture with EVO Payments will push the group’s CET1 capital ratio to 16.5%. This allows management to distribute a dividend, aiming for a 20% payout ratio based on 2022 earnings. RoTE 10.2%.

For Piraeus Bank the recommendation is also a buy while the target price is set at 2.15 euros. In the results of the fourth quarter of 2021, it recorded profits of 74 million euros, lower than market estimates due to higher tax burdens. However, on a pre-tax basis, Piraeus recorded profits of 250 million euros in the fourth quarter, which easily exceeded market estimates at all levels (ie NII, commissions, transactions, operating expenses and impairments). In addition, Axia points to the faster than expected decline in NPEs, with the index standing at 12.5%, from 45.3% a year ago. Piraeus will present its business plan for 2022-2025 on April 6, revealing its renewed medium-term goals.

End, for Eurobank the recommendation is buy with a target price of 1.50 euros. The quarterly results were characterized by the strongest commissions and the highest of the expected interest-free income. In short, Eurobank managed to close 2021 ahead of all the targets set for the year. Management has unveiled the group’s business plan for 2022-24 with updated targets, with Axia seeing room for analysts to make pre-forecast earnings and risk costs. Most importantly, management remains committed to distributing 20% ​​of 2022 profits, subject to the approval of regulators.