Her Eleftherias Kourtali
The story of Greek banks remains strong and attractive, according to Euroxx Securities, after the results of the first quarter and sees margins of growth of their shares up to 86% while maintaining the overweight recommendation, while it estimates that all four systemic banks will achieve the goals have set for the year in terms of increasing loans and repaying equity.
More analytically, in terms of valuations, despite the outbreak of the crisis in Ukraine and Energy and concerns about a slowdown in GDP growth, Euroxx still believes that the attractive investment story of the Greek banking sector, which is based on the large fall in risk costs and the return on loan growth remain intact.
As a result, current price levels (now trading at a price index with a book value of P / TBV of 0.50x) overlook the industry’s earnings per share (EPS) recovery and dividend distribution prospects.
As the stock exchange points out, Greek banks do not have direct or minimal exposure to Ukraine and Russia. However, the energy crisis will affect household disposable income and corporate profits, which could change the expected credit expansion and increase the inflows of new NPEs.
In any case, the Recovery Fund, the action of the Commission for the energy crisis, the reduction of unemployment recorded in 2021, the change of the monetary policy of the ECB (with a benefit of over 1 billion euros in net interest income – NII) , the reluctance to issue corporate bonds and most of the deposits accumulated during the pandemic, will alleviate the negative impact of inflation and will support the growth of lending to Greek banks.
Thus, Euroxx maintains the overweight recommendation for all four systemic banks and the target price of 1.60 euros for Alpha Bank and a growth margin of 67%, of 1.30 euros for Eurobank and a growth margin of 28%, of 4 , 20 euros for the National Bank with an increase margin of 16% and, finally, of 2.20 euros for Piraeus with an increase margin of 86% from the current levels on the board of Athens Avenue.
Given the above, Euroxx expects that the goals of Greek banks will be achieved in general terms in terms of expanding loans and the return on ROE equity.
Regarding the results of the first quarter, during the stock market, they showed that the Greek banks started the year on a very strong basis and are moving towards achieving their goals for the whole year.
More specifically, as he notes, Greek banks recorded mostly improving trends in pre-forecast revenues, mainly reflecting the remarkable creation of commissions, the expansion of serviced loans with total disbursements of 7.5 billion euros and the cost savings from the implemented programs. voluntary output and digitization, offsetting the pressure (which was milder than expected), net interest income NII with a decrease in net interest margins, due to de-risking risk and increased costs from T2 issues.
In addition, despite concerns about deteriorating payment behavior due to the energy crisis and rising inflation, asset quality continued to improve due to non-organic actions as well as the negative NPE formation, resulting in a reduction in underlying risk costs.
Finally, as Euroxx notes, Greek banks have maintained their strong capital and ample liquidity that can now be invested in higher-yielding assets.
Source: Capital
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