If there is one bank that should have already raised 2024 guidance when releasing Q1 results, it is BoC. RoTE in Q1 stood at 29% (on 15% CET1), on avg Euribor at 3.9%, time deposit beta at 22% and time depo mix at 33%. These compare with FY 2024 assumptions of 3.15%/40%/45% and RoTE guidance of >17% (RGe at 18%). BoC said will review its guidance with Q2 results.
Conclusion. We reiterate our OWN IT (OI) rating and PT of E5.7 (from E5.5). We raise our FY 2024 NII/PPP/pre-tax income/net income estimates by +3%/+5%/+9%/+5%; with our 15% CET1 based RoTE at 20% from 18%. Net income revision is held back by the 15% vs 12.5% tax rate (EU min).

What’s new? BoC reported a super strong set of Q2 results, driven by the wide(r) loan-deposit rate asymmetry boosting NII +21% qoq/+164% yoy, with clean RoTE at 25% (from 21% in Q1). Despite the stronger run rate, management maintained June Investor Day guidance for >17% RoTE 2023 (and >14% 2024, >13% 2025).
Conclusion. We raise our 2023 RoTE estimate to 19.6% (18.3% adjusted for AT1 costs) and reiterate our OWN IT (OI) rating with our PT at E5.9 (from E5.7). Unless earnings are hit by a windfall tax, we expect the 30% minimum payout guidance to equal a 9% dividend yield next year. And rise closer to 10% by 2025 assuming mid-payout guidance of 40%. In which case, we agree with management that shareholders will be pocketing c.30% of BoC’s market cap in the form of total dividends during 2023-2025.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? BoC raised its RoTE target to >17% in 2023 (from >13%) and to >13% in 2025, driven by higher ECB interest rates; their favorable pass through on loans compared to deposits; mid-single digit lending growth; more income from bonds and a clean balance sheet keeping mid-term CoR at 40-50bps. The 30%-50% targeted payout translates to 8%-9% dividend yield while the 15% targeted CET1 implies excess capital equal to 40% of market cap by 2025.

What’s new? BoC reported annualized RoTE at 21% in Q1 2023, way higher than its FY 2023 target for RoTE >13%, driven by a widening loan-deposit spread. Management did not change its full year guidance but will most likely do so on its Investor Update Event on June 8. We are raising our 2023 RoTE to 17% (from 14%), or 15.5% adjusted for AT1, on lower deposit costs.