Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

National Bank Of Greece Sa / Equity Bottom-Up

We take a look at Greek Banks, having recently reported FY17 data.We pass the slide rule across <a href="https://www.smartkarma.com/entities/22604" target="_blank" data-smartkarma-citation="entities:22604:1">Eurobank Ergasias SA (EUROB GA)</a>, <a href="https://www.smartkarma.com/entities/22601" target="_blank" data-smartkarma-citation="entities:22601:1">Alpha Bank AE (ALPHA GA)</a>  <a href="https://www.smartkarma.com/entities/22602" target="_blank" data-smartkarma-citation="entities:22602:1">National Bank of Greece SA (ETE GA) and </a><a href="https://www.smartkarma.com/entities/22603" target="_blank" data-smartkarma-citation="entities:22603:1">Piraeus Bank SA (TPEIR GA)</a><a href="https://www.smartkarma.com/entities/22602" target="_blank" data-smartkarma-citation="entities:22602:1"></a>.Data show that the fundamental progression from previous quarters seems to have waned and stalled somewhat. This is a disappointment. Having said that, we believe respective management teams took the opportunity at Q417 to better prepare their banks for May's Stress Test outcome as well as grappling with other regulatory targets. This need not be a reversal in their fortunes but a temporary setback.Valuations remain low with Eurobank and Alpha trading at 0.27x Book Value while National Bank of Greece fetches 0.36x. Piraeus can be purchased at just 0.11x. Valuations reflect risk and growth as well as risk of growth and growth of risk.We actually see rather a lot improving with the economic backdrop and with the legal framework in which banks operate.Barely needing ELA-ECB funding anymore, now tapping wholesale markets, shedding non-core assets, and receiving Deposit inflows, banks can now stand on their own feet and NPE targets over 2018-19 can be met.So often cited as a classic value trap, Greek banks may be on the cusp of delivering some value for patient shareholders. It all could get a lot worse of course but the probability is that we touched bottom some quarters ago. We are thus cautiously hopeful and will wait for the PH Scores™ to improve with the overall economy. We have to admit though that the signals from the PH Score™ at FY17 gave us conflicting messages.

We take a look at Greek Banks, having recently reported FY17 data.We pass the slide rule across Eurobank Ergasias SA (EUROB GA), Alpha Bank AE (ALPHA GA)  National Bank of Greece SA (ETE GA) and Piraeus Bank SA (TPEIR GA).Data show that the fundamental progression from previous quarters seems to have waned and stalled somewhat. This is a disappointment. Having said that, we believe respective management teams took the opportunity at Q417 to better prepare their banks for May's Stress Test outcome as well as grappling with other regulatory targets. This need not be a reversal in their fortunes but a temporary setback.Valuations remain low with Eurobank and Alpha trading at 0.27x Book Value while National Bank of Greece fetches 0.36x. Piraeus can be purchased at just 0.11x. Valuations reflect risk and growth as well as risk of growth and growth of risk.We actually see rather a lot improving with the economic backdrop and with the legal framework in which banks operate.Barely needing ELA-ECB funding anymore, now tapping wholesale markets, shedding non-core assets, and receiving Deposit inflows, banks can now stand on their own feet and NPE targets over 2018-19 can be met.So often cited as a classic value trap, Greek banks may be on the cusp of delivering some value for patient shareholders. It all could get a lot worse of course but the probability is that we touched bottom some quarters ago. We are thus cautiously hopeful and will wait for the PH Scores™ to improve with the overall economy. We have to admit though that the signals from the PH Score™ at FY17 gave us conflicting messages.

Greek Banks: A Gift Horse or a Value Trap?

Greece

Eurobank Ergasias SA attracts deposits and offers commercial and retail banking services.  The Bank offers mortgage and automobile loans, capital markets and treasury services, manages mutual funds, and offers credit cards and insurance services.

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Eurobank Ergasias Sa (EUROB GA)

Greek Banks: A Gift Horse or a Value Trap?

We take a look at Greek Banks, having recently reported FY17 data.We pass the slide rule across Eurobank Ergasias SA (EUROB GA), Alpha Bank AE...

Paul Hollingworth

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