Why should I invest in Greek banks?

By Demosthenes Triga

Banks, after more than 10 years of being in the dark, seem to be making up for lost time. The Eurozone Interbank Index table shows why Greek banks are so investable and can generate high returns for their shareholders. On the other hand, aren’t there risks? clearly! Some of the risks to bear in mind for banks are a weaker than expected macroeconomic environment, possibly a tougher regulatory framework after the recent events with SVB and Credit Suisse, tougher competition from competing foreign banks, as well as lower than expected growth. in the “healthy” loan portfolio.

However, as shown in the table (referring to data from 9 months 2022), the cost-to-expense ratio shows how competitive it is compared to the rest of European banks, while the loan-to-deposit ratio shows us how much. There is room to grow their portfolio, as long as it is done with correct and judicious criteria! Finally, the return on equity, which is among the highest in the Eurozone, can provide returns to the shareholder not only from capital gains, but also through dividends and private equity purchases!

On the other hand, the capital adequacy ratio is at satisfactory levels, without being the lowest in the Eurozone, as many would expect! Of course, we do not forget that a large percentage of their capital consists of deferred taxes, with the largest percentage in Piraeus Bank and the smallest in Eurobank. Finally, the NPE has the second worst position in the entire Eurozone after Cyprus, at 6% on 12/31/2022, an average of less than 3%! However, we must not forget that without risk there is no return (no risk, no return)!

The National Bank: The highest coverage ratio among all regular banks

The financial results of the National Bank were above market estimates in most of its lines. The non-performing loan ratio was 5.2% as of 12/31/2022, up from 7% a year earlier, while the estimate for 2025 is 3%. One of the group’s strong points is the coverage ratio of the Middle East and Africa region, which exceeds 87% and is the best performer among the systemic banks.

Regarding dividends, management has estimated that they can be granted for the fiscal year 2022, that is, their distribution will take place in 2023 if the necessary approvals are received, which is not expected before July 2023. At the same time, management has stated its intention, once it gets the green light from SSM , to initiate the purchase of its shares, even to buy back shares from the HFSF.

The group’s management said that the return on equity for the three years 2023-2025 is estimated to be close to 11%-12%, with the corresponding earnings per share from 0.75 euros to 0.9 euros per share in 2025.

Finally, the tangible net position on 31/12/2022 amounted to 6.02 billion euros or 6.58 euros per share. Regarding the National Bank Group’s valuation, based on 2023 estimates, the price-to-net tangible position ratio per share (P/TBV) is 0.67 times, compared to 0.73 times in 2022.

Alfa Bank: better than expected estimates for 2023

Alpha Bank’s net profit was just below market estimates, mainly due to shrinking financial profits but also slightly higher expenses. Non-performing loan ratio was 7.8%, compared to 13.1% on 12/31/2021, while year-end estimates are just under 7%!
With regard to dividends, management has estimated, consistent with the opinion it expressed last year, that dividends can be distributed for the year 2023, that is, they should be distributed in 2024, if the necessary approvals are received.

Return on equity reached 7% for 2022, while management estimates for 2023 speak of a figure greater than 9%! The tangible net position as at 31/12/2022 was €5.8 billion or €2.46/share.

Finally, with regard to the Alpha Bank Group’s valuation, the ratio of price to net tangible position per share (P / TBV) is set at 0.55 times for 2022, while according to management estimates for 2023, the ratio is estimated at 0.52.

Eurobank: The highest profitability in the Greek banking industry

Eurobank’s financial results not only exceeded market estimates, but also exceeded the targets set by management in its business plan. In particular, net earnings per share amounted to 0.18 euros, against the initial target of 0.14 euros. At the same time, return on equity exceeded 11%, or 11.4%, against the 10% target set by management in the business plan.

Management estimates for 2023 have been revised upward and speak of €0.22 EPS, while ROE is estimated at an impressive 13%! For 2025, the estimates are €0.25 per share net profit and 12% return on equity, provided euribor starts to decline!

NPE at the end of 2022 was 5.2%, while in 2025 it is estimated that it will not exceed 4.5%. The administration announced that it was ready to submit a proposal to the General Assembly. Dividends for 2022 provided of course that they get regulatory approval (nothing newer than SSM). At the same time, the management indicated that once it obtains the approval of the supervisory authorities, it will buy back the shares of the HFSF Fund (1.4% of the capital) with the aim of canceling them.

In terms of Eurobank Group’s valuation based on 2023 estimates, the price-to-net tangible position ratio per share (P/TBV) is 0.67x.

Piraeus Bank: The lowest rating among the four regular banks

Piraeus Bank Group’s net results for the fourth quarter of 2022 were better than market estimates, with net interest income making up the difference. The index of distressed exposures on 12/31/2022 amounted to 6.8%, coverage amounted to 54%, while net profit per share amounted to 0.42 euros.

Management has indicated that the return on equity for 2023 will be close to 10%, the non-performing loan ratio is 6%, and the coverages will exceed 60%!

Finally, the tangible net worth on 12/31/2022 amounted to 5.6 billion euros. In terms of the Piraeus Bank Group’s valuation based on 2023 estimates, the price-to-net tangible position ratio per share (P/TBV) is 0.38x (after the recent drop in share prices).

Agenda (28/3/2023 – 02/04/2023)

HEXA and AMK Attica’s financial results under the microscope

Today, Tuesday, he called an extraordinary general meeting. Frigoglass with the sole release of approval to dispose of the company’s assets, while Sarantis announces financial results for the fourth quarter of 2022. On Wednesday, Motodynamics and BriQ Properties AEEAP report financial results for the twelfth month of 2022 (after the end of 2022). a. The new shares are expected to be offered on the Abu Dhabi market on Thursday. And on the Vienna Stock Exchange (VSE) of Austriacard Holdings (the parent company of Inform Lykos), while the beginning of the negotiation period and the exercise of preemptive rights to participate in the AMK of Attica Bank. On the same day, ELSTAT announces the producer price index for February. Trastor AEEAP and Premia Properties on Friday announced financial results for 12 months 2022, while PPC called an extraordinary general meeting. The main issues are amending its articles of association and electing members of the Audit Committee. On the same day, the Bank of Greece announces bank interest rates on deposits and loans for February, while ELSTAT publishes the retail trade index for January and unemployment for the same month.

Attention will focus on the personal consumption expenditures index on Friday

Overseas, on Tuesday, the Consumer Confidence for March in the United States was released. On Wednesday, it was the turn of February’s pending home sales to see the light of day. German inflation for March will be released on Thursday, while fourth quarter GDP data in the US will be published in the early afternoon. On Friday morning, China’s manufacturing PMI for March, inflation in the eurozone for the same month, and the PCE index, which shows us the change in prices in the US consumer basket for February, and finally the short and long term, were released. Range inflation and consumer expectations from the University of Michigan based on March data.

* Demosthenes Tryngas is a BETA Stock Exchange Certified Stock & Market Analyst – [email protected]

** Republished from Kefalio Newspaper