Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/piraeus-bank-sa" target="_blank" data-smartkarma-citation="entities:22603:1">Piraeus Bank SA (TPEIR GA)</a> bank continues to take steps to remedy its Balance Sheet. Asset Quality is improving (in terms of NPL and NPE reductions) with Liquidity as Deposit inflows in Greece are benign. For the first time since the crisis, the performing credit book actually grew quarter-on-quarter at Q119. Regarding the P&amp;L, modest underlying Income growth (a plus given deleveraging) combines with drastic OPEX reduction to make room for still hefty asset write downs. The bank reported a Profit at Q119 versus a loss at Q118.The latest strategic loan service deal with <a href="https://www.smartkarma.com/entities/intrum-justitia-ab" target="_blank" data-smartkarma-citation="entities:22392:1">Intrum Justitia Ab (IJ SS)</a> is mutually beneficial. Greek banks have morphed into debt collection outfits in recent years and this arrangement will concentrate Piraeus management minds on evaluating and disbursing credit amid improving macro and financial conditions. This will free up time and resources and enable the bank to hit its "Agenda 2023" targets based on growth and efficiency. There is some way to go.The election of New Democracy will act as a tailwind for Greece and its banks, generating a pick-up in "animal spirits" and an enhanced focus on enterprise culture. <a href="https://www.smartkarma.com/insights/2019-elections-part-5-greece-new-democracy-promises-magic-makeover" target="_blank" data-smartkarma-citation="insights:27788">2019 Elections - Part 5. Greece: New Democracy Promises Magic Makeover</a>Despite being the riskiest of Greece's main traded banks, as proven in the last stress tests, shares look too cheap on a Franchise Valuation of 3% and a P/Book of 0.24x.

Piraeus Bank SA (TPEIR GA) bank continues to take steps to remedy its Balance Sheet. Asset Quality is improving (in terms of NPL and NPE reductions) with Liquidity as Deposit inflows in Greece are benign. For the first time since the crisis, the performing credit book actually grew quarter-on-quarter at Q119. Regarding the P&amp;L, modest underlying Income growth (a plus given deleveraging) combines with drastic OPEX reduction to make room for still hefty asset write downs. The bank reported a Profit at Q119 versus a loss at Q118.The latest strategic loan service deal with Intrum Justitia Ab (IJ SS) is mutually beneficial. Greek banks have morphed into debt collection outfits in recent years and this arrangement will concentrate Piraeus management minds on evaluating and disbursing credit amid improving macro and financial conditions. This will free up time and resources and enable the bank to hit its "Agenda 2023" targets based on growth and efficiency. There is some way to go.The election of New Democracy will act as a tailwind for Greece and its banks, generating a pick-up in "animal spirits" and an enhanced focus on enterprise culture. 2019 Elections - Part 5. Greece: New Democracy Promises Magic MakeoverDespite being the riskiest of Greece's main traded banks, as proven in the last stress tests, shares look too cheap on a Franchise Valuation of 3% and a P/Book of 0.24x.

Piraeus Bank SA

Piraeus Bank: Risky but Too Cheap