Greek Banks: It's All About "HAPS" And that Requires Risk Appetite

Global Bank Equity Specialist, Creative Portfolios

Paul Hollingworth

Global Bank Equity Specialist

Creative Portfolios

Equity Bottom-Up

Financial Conditions in Greece have gotten better over the last 12 months.<a href="https://www.smartkarma.com/entities/alpha-bank-ae" target="_blank" data-smartkarma-citation="entities:22601:1">Alpha Bank AE (ALPHA GA)</a> stands to benefit further from macro stabilisation as it continues to "put its house in order" amidst asset quality improvement, a pick-up in business lending, and moderate deposit inflows.Our fundamental momentum gauge, the PH Score, stands at 6. This is not a bad score, incorporating better headline profitability, improving asset quality, positive liquidity trends, and stable Capital Adequacy. However, CIR and net interest margin show slippage. Despite cost-control restraint, CIR is held back by a decreasing top-line and muted consumer loan growth (demand) though the focus still remains on de-risking and deleveraging. Banks promised to hit “bold” asset quality targets and they cannot be faulted, aided by the emergence of outside players, technology, and legislative change.Alpha trades on a FV of 6% and a P/Book of 0.3x. These are hardly demanding multiples given the tailwinds of a probable market-centred administration that seeks to raise “animal spirits”. Banks stand to gain from a greater emphasis 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>

Financial Conditions in Greece have gotten better over the last 12 months.Alpha Bank AE (ALPHA GA) stands to benefit further from macro stabilisation as it continues to "put its house in order" amidst asset quality improvement, a pick-up in business lending, and moderate deposit inflows.Our fundamental momentum gauge, the PH Score, stands at 6. This is not a bad score, incorporating better headline profitability, improving asset quality, positive liquidity trends, and stable Capital Adequacy. However, CIR and net interest margin show slippage. Despite cost-control restraint, CIR is held back by a decreasing top-line and muted consumer loan growth (demand) though the focus still remains on de-risking and deleveraging. Banks promised to hit “bold” asset quality targets and they cannot be faulted, aided by the emergence of outside players, technology, and legislative change.Alpha trades on a FV of 6% and a P/Book of 0.3x. These are hardly demanding multiples given the tailwinds of a probable market-centred administration that seeks to raise “animal spirits”. Banks stand to gain from a greater emphasis on enterprise culture. 2019 Elections - Part 5. Greece: New Democracy Promises Magic Makeover

Alpha Bank AE

Alpha Bank: Time to Accumulate