What’s new? BoC announced strong Q4 2022 results, beating our NII/PPP/pre-tax estimates by +17%/+17%/+11%. Management updated 2023 guidance to RoTE >13% (from >10% previously and 11% in 2022), on the back of +15% stronger NII; NPE ratio and CoR reiterated at <5% and 50-80bps, along with the intention to resume dividend payments in 2023. Conclusion. The latter is what’s missing for BoC to make it in the top league of EUR banks with RoTE 12.5%-14.1% rewarded with a median 0.93x TBV 2023. We expect BoC will pay a dividend yield of 3.5% (or higher) in 2023 out of 2022 earnings.

What’s new? We upgrade our rating to OI and raise our PT to E5.9 (from E4.2). 2023 has started off strongly in ADV terms. It reached E92m in Jan while Feb-to-date is at E120m. These are the strongest first two months since 2015. ADV throughout 2022 stood at E74m.
We have updated our estimates. In guestimating ADV we model a) the market cap of Greek equities and b) the velocity rate. And insert them in the following equation:

ADV = (market cap x velocity rate) / No. of trading days

What’s new? Jumbo announced a) January sales grew by an outstanding +45% yoy (GR +48%; CY +32%; BUL +53%; ROM +40%) and b) the board will propose a DPS of E1.155 (flat yoy; 6.5% yield), in the EGM taking place on March 8. In a totally consistent manner, the company urged readers not to extrapolate January’s growth rate for the remainder of the year.
January’s outstanding performance and dividend policy were hinted/communicated in December’s trading update a month ago. The additional information is that December’s cash position stood at E794m. If our earnings, debt, and capex estimates for H2 are correct, this implies net cash of E500m and FCFE of E125m, o/w E135m in H2. This would be E13m/-9% lower than our estimate. Which implies working capital came down from H1 levels, but not as much as we estimated.

Focal points in 2023
1) Elections. Most likely in April with a second round in May, as we described back in Sep (note attached). Mitsotakis has cemented a 7-8ppt lead in polls. Market is betting on him renewing its mandate, even with a coalition govt. Which means anything else will be a negative shock.
2) Greek debt: What was once the reason to avoid Greece has now become its main selling point. Public debt/GDP -30ppt down to 160% (partly growth, partly inflation); avg cost of debt at 1.5% (80% is held by official creditors); avg maturity at 18YRS. Private debt at 2x GDP remains an issue; more of a non-RRF lending capacity constraint than a balance sheet concern.
3) Investment grade. It will help cost of funding and investments. Piraeus Bank says we need E370bn of these by 2030 to tap sustainable +3% GDP growth p.a. Not a make or break for public debt given ECB’s anti-fragmentation policy; Greece is currently rated one-notch below inv grade. Reviews by rating agencies in June-October.
4) Banks RoTE moving >12%. We expect this to be the new story gradually. Driven by higher loan rates, decent volume growth and controlled cost of risk. The result will be P/TBV moving towards 1.0x but always in line with EUR banks performance (no de-coupling).
5) Our Greek universe trades on 8.8x EPS and 5.5x EBITDA 2023 but 11.4x EPS 2024 and 6.4x EBITDA 2024. Almost half of 2022 and a good part of 2023 earnings (excluding banks) are driven by the UKR war/energy crisis. Namely in refining, gas, electricity, and commodity related businesses.. Year 2024 is more representative of underlying earnings.

What’s new? Piraeus Bank held an update conference call yesterday. If we should put a title, it would be: ‘Loan re-pricing with no asset quality impact’. Management guided for c.10% RoTE in 2023, driven by high double-digit growth in NII (higher rates, mainly) and slightly lower costs and despite CoR moving higher yoy. Fully loaded CET1 will rise above 12%.
Conclusion. We believe such RoTE levels of 9%-10% justify P/TBV closer to 0.60x (from 0.40x currently). Which is why we upgrade our rating to OI and reinstate our PT at E2.9 per share (from N/A). We are using 15% CoE to value the shares.