What’s new? With Alpha Bank (Jun 7) and Bank of Cyprus (Jun 8) holding their Investor Update events this week, we thought it would be useful to wrap up Q1 2023 results and touch upon the major banking trends in Greece. And what better way to do this than through a RoTE waterfall chart that shows each bank’s RoTE components in margin terms (% assets). Additionally, we summarize the most notable points out of Q1 2023 results.

What’s new? Alpha Bank announced strong Q1 numbers, driven by a widening loan-deposit spread, in turn driven by the asymmetrical loan vs deposit rate pass through (continuing). Volume remains weak. But the margin trend is proving to be stronger than expected. Unless term deposits go up (now at 20% or +4ppt qoq, vs 45% year-end target), we do not expect the NII dynamics to change, even though management said Q1 NII will probably be the year’s strongest. Very positive that costs went down and that NPE formation remains negative; and that Alpha is getting rid of NPAs.

Now that all Greek banks have -finally- published their full IFRS notes (Eurobank being the last), we analyze the most interesting points out of 2022 performance: Balance sheet structure, NII breakdown, RoTE differences, Securities HtM & unrealized losses, Stage 1-3 movements & coverage, and P&L reporting peculiarities. Some things we find annoying. You can see these highlighted in blue.
In the spreadsheet attached, you can see our Sector Map (with Q4/FY 2022 P&L, Asset Quality, Capital, and Balance sheet items, side-by-side for all 4 systemic banks); Balance sheet structure 2012-2022; Forecast earnings 2023-2025; Multiples; MREL; NII B/D; Stage 1-3; IRBB.

What’s new? With this note, we are making a case in favor of Greek banks, considering recent banking developments in the US and Europe, namely the collapse of SVB and Signature Bank, the rescue of First Republic Bank, and the acquisition of Credit Suisse by UBS, including the wipe out of AT1 holders. We reiterate our OWN IT ratings on NBG, Eurobank and Piraeus Bank.
We should also flag Bank of Cyprus, which can now boast about its huge cash balance of 30% to total assets (earning 3% yield @ ECB’s DFR) and low unrealized losses in its HtM securities portfolio.

What’s new? As more and more Investors are asking about the work done so far by loan servicers on Greek NPEs, managed either on behalf of the banks or on behalf of third parties, we are compiling all available performance data in this note. The numbers available are not always straightforward or sequentially comparable. The primary source is Bank of Greece.
Although the bulk of NPEs do not belong to banks anymore, the issue remains important because a) banks have kept senior notes from NPEs securitized on their balance sheets; b) the sovereign and its debt are on the hook for those senior notes because they are guaranteed by the state under the ‘Hercules’ scheme; c) cured NPEs could find their way back to banks’ balance sheets (if regulators/authorities approve) and from there to cash NII.
Market Snapshot & Conclusions. Our main findings are outlined below…