What’s new? OTE reported Q2 sales up +2.7% and adjusted EBITDA(L) +7% yoy (margin at 39%), with Greece +5% yoy (margin at 42%) and Romania doubling EBITDA yoy (or +50% adjusted for one-offs). Strong mobile, higher TV and visitor roaming revenues (+80%, exceeding pre-pandemic levels). In its outlook OTE said it expects to continue to grow in H2 but at a more moderate pace. Management reiterated FY 2022 reported cash flow guidance at E600m (o/w E500m paid out).
BB fiber service sub additions stood out at 207k in the quarter (from 40k-60k in previous quarters) reflecting OTE’s initiative to double BB speeds for 750k eligible customers. Penetration of BB fiber jumped to 62% from 53% in Q1. FTTH became available to 40k more homes, with 17k more taking up the service, and penetration at 14% from 12% in Q1. FY 2022 target for 1.0m FTTH footprint remains.

What’s new? Piraeus Q2 clean PPP went up by +8% qoq driven by NII and fees +6-7% qoq, while clean pre-tax and net income grew by an even higher rate at +18% and +44% qoq respectively, the latter thanks to zero taxes booked this quarter. CoR at 83bps (incl. service fees) and annualized RoTE at 10% (from 7% in Q1), partially reflecting lower CET1/TBV than its Greek peers. The NPE ratio went down to 9% with coverage at 46%. FL CET1 remains the weakest link at 9.5% or 10.2% pro forma for H2 actions (RWA reliefs /corporate deals).
Management raised FY 2022 guidance on lending, normalized total income and normalized RoTE, although under ‘normalized’ the bank includes M2M securities gains. Even so, core/clean 2022 RoTE should end up higher than previously expected. There was no guidance on 2023 numbers (as was the case with all other GR banks).
Conclusion. We reiterate DOI and withdraw our price target on low visibility in 2023. It is quite tempting to OI Piraeus given the 100% upside implied by conventional valuation tools (RoTE/CoE).
However, the uncertainty on 2023 macro conditions combined with the regulatory capital requirements framework forces us to draw a line on any back with a FL CET1 below 12%. The risk/reward profile is attractive only if the NPE ratio stays below 17% (from 9% currently), otherwise the bank will be breaching 9% CET1, triggering recap speculation/discussions.

What’s new? Alpha Q2 2022 results were mixed, as NII and core PPP went up by 2%-7% qoq on our calculations, whereas normalized earnings dropped by -25% qoq or by -45% qoq according to the bank, on higher CoR. We find Alpha’s ‘normalized’ calculations confusing and believe ‘adjusted’ would be a more appropriate term. We do not like NPE coverage dropping to 40% (from 48%).
Management said FY 2022 NII will be at c.E1.2bn from >E1.15bn previously, while net new loans will increase by +E2.7bn (from +E2.2bn). Target for resuming dividend payments out of 2023 earnings, on a 20%-30% ratio, was reiterated along with Project Tomorrow 10% RoTE target. Management did not provide guidance for 2023.
Guidance: 2022 net new loans at +E2.7bn (from +E2.2bn); NII at cE1.2bn (from >E1.15bn); CoR at 70bps (unchanged); RoTE at 6%; Tomorrow targets (2024): 10% RoTE; TBV of E6.7bn (i.e., net income of E670m); CET1 >15%.

What’s new? Eurobank Q2 2022 results came in stronger sequentially driven by NII and fees; more importantly, management raised RoTE 2022 guidance to 11% from 10% while downplaying asset quality concerns, at least for 2022. Resuming dividend payments out of this year’s earnings remains high on the agenda.
Guidance: Core PPP > E1.0bn (from E865m) and RoTE at 11% (from 10%). Performing loans will increase by E2.9bn (from E2.3bn previously). Asset quality guidance remains the same (CoE, NPE ratio and coverage).
Conclusion. We reiterate our DOI rating. We believe shares are worth E1.22 (from E1.05), or +36% above current trading. But the risk/reward profile is not favorable. Amid stagflation concerns we prefer NBG which has a higher NPE coverage and higher FL CET1. Our exercise shows it would take an NPE ratio of c.23% (from 6% currently) for CET1 to drop below 9% (from 14% currently) and recap needs to arise.

What’s new? NBG Q2 2022 results came out with a strong message on a) the sovereign economic outlook; b) higher NII and fee income guidance for the full year; c) NII sensitivity on higher interest rates; d) asset quality trends YTD.
Management reiterated core earnings and RoTE guidance for 2022 at E500m and 9% respectively. They are cautiously optimistic on Greek GDP growth and banking conditions, albeit reluctant to provide CoR guidance for 2023 (70 bps in 2022).
Conclusion. We reiterate our OI rating and raise our price target to E4.8 (from E4.3), pointing to an upside of 57% from current levels. In the context of risk aversion surrounding macro-dependent/related investment cases like banks, we recommend investors go with high coverage, high CET1 cases like NBG.