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Stock Exchange: Domestic and foreign managers ‘bet’ on banks for 2022

Greek banks are negotiating with a discount of at least 20% compared to the European average and domestic and foreign investment houses see large margins for the rise of bank shares for next year.

The banking sector has acquired new capital and new investors, non-performing loans have fallen to levels that can see the industry as better investors while the promises of business plans remain tempting for their current valuations.

Greek banks are now returning to normal, with the NPE index expected to fall to 5% next year for the industry as a whole. Non-performing exhibitions fell to a new low in the nine months (13.6%) bringing the industry closer to the normality of its activities.

The rapid implementation of strategic plans is transforming the balance sheets and operations of banks, on the one hand, and on the other hand, it sends a strong message to the market about their determination to return to normalcy as soon as possible.

Better-than-expected trends in organic asset quality trends alleviate concerns about a new wave of pandemic-related NPEs. In addition, the expected increase in loans will be much stronger than next year, which will support the trends of their first line.

Axia expects a rally for the shares of Greek banking shares based on the new target prices, while maintaining the buy recommendation in all.

It raises the bar for bank shares to much higher than current levels. For Ethniki it sets the target price of 6.00 euros, for Alpha Bank 1.80 euros, for Eurobank 1.50 euros and for Piraeus 2.15 euros.

In this context, Axia confirms the buy ratings for all four systemic banks and estimates that there will be dividend payments from three (Eurobank, National and Alpha Bank based on the fiscal year 2022 onwards).

According to Axia, the growth of lending to the industry as a whole is expected to be much higher than currently estimated, thanks, among other things, to the high growth of Greek GDP and the possible repayment of cured loans by servicers to banks.

As Axia notes, according to official forecasts, Greece is going to benefit from years of sustainable economic growth and therefore the market expects an increase in borrowing of 6-7 billion euros per year (about 5%). However, as Axia points out, based on the banks’ business plans and market estimates, a 20 billion euro lending extension is expected for 2022-2024.

Eurobank Equities sees large margins for growth in the banks, emphasizing that the Greek banks are negotiating with a 25% discount in relation to the bonds of the EU region.

The stock exchange sets targets for Alpha Bank at 1.37 euros, for Ethniki 3.48 euros and for Piraeus at 1.84 euros.

Eurobank Equities analysts stress that banks will also be able to meet their targets for lowering their NPEs and coming closer to the European average, with the most significant “clearing wave” in the d quarter of the current year.

The American bank Of Of America finds a drastic change for the better in the prospects of domestic banks.

As he explains, he proposes banks with improved asset quality and sufficient capital and expects that the ROaE indices of Greek banks will expand in 2022 thanks to the normalization of credits and losses after the risk reduction program and the reform of the growth of services. .

BofA also prefers banks where the improvement in asset quality is combined with a satisfactory net worth, as there is less risk of future cash receivables and a faster path to potential dividends.

For Alpha Bank it gives a target price of 1.45 euros, for Ethniki 3.30 euros, for Eurobank 1.15 euros and for Piraeus 1.40 euros.

JP Morgan sees further significant growth margins for the shares of the banks of the region of Central Europe, the Middle East and Africa in 2022, and especially in the Greek banks which, as it characteristically notes, present the most impressive story of growth of the return on equity ratio. .

It also maintains overweight positions in the Greek banking sector and for Alpha Bank gives a target price of 1.56 euros, for Eurobank 1.3 euros, for Ethniki gives 4 euros and for Piraeus maintains a neutral position with a target price of 2 euro.

HSBC expects core operating profit to reach 28% between 2020 and 2024.

Forecasts for higher profitability and capital, due to capital enhancement actions and better NPE pricing, lead to higher target prices for banking stocks.

In this context, it raises the target price for Alpha Bank to 1.40 euros from 1.20 euros before, it also raises the target price for Piraeus to 1.95 euros from 1.64 before, raises the price- target for Eurobank at 1.30 euros from 1 euro before as well as for NBG at 3.55 euros from 3.40 euros before.

Wood is now focusing on increasing loans, margins, commissions and forecasts, ie the key elements that will determine the profitability of the now “clean” Greek banks.

The valuations of Greek banks, as Wood points out, remain attractive, with Greek banks trading with the P / E index moving at 6 in 2022 and 5 in 2023. The house thus reiterates their bullish view of the outlook. banking stocks and sees a margin of 50%.

Recommends buy for all four most systemic banks. In terms of target prices, it upgrades to 1.30 euros from 1.10 euros before the target price for Eurobank, to 4.10 euros from 3.50 euros before the target price for NBG at 1.70 euros from 1.50 euros for Alpha Bank, while for Piraeus it now places the target price at 2 euros from 1.90 euros before.

SOURCE: AMPE

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