What’s new? Alpha Bank was the last GR bank to report Q3 results yesterday. General picture: Banks are doing a good job with NPEs, which are going down (securitized) fast, while new NPEs are negligible. Normalizing CoR drove annualized pre-tax RoTE at 8%. However, a good part of pre-tax income reflects NPE and TLTRO income, to go missing in 2022. Loan balances are not moving despite gross disbursements (banks blame repayments) and DTA weight on TBV and CET1 continues to look bad. The recent Covid-Omicron-variant correction means banks are now trading 0.44x TBV 2022 with Eurobank (0.60x) and Piraeus (0.31x) standing out. Eurobank thanks to foreign earnings contribution and Piraeus due to weak CET1 (in our view). Banks insist on reinstating dividends. We consider this quite tricky, given the large amounts of DTA and state guarantees. New loans remains the real catalyst, in our view.

Our positive call on ADMIE Holdings has not worked. The irony is that our positive conviction keeps going up. The case looks like a value trap but the risk/reward profile remains compelling. We have failed to spot a catch in the investment case. We maintain our OI rating with a higher PT of E3.4 (from E3.3). We analyze our approach…

The Greek telco market has witnessed some interesting changes / developments in the last weeks. Some of which have been long speculated/flagged/communicated by market participants. We summarize these below, together with our thoughts and comments on what these might mean for the business performance of the different operators. It will take a while for the dust to settle. Until it does we can only speculate on the impact. As usual we will start with our conclusions: OTE’s investment case is not affected by recent developments. The incumbent is not a sitting duck. This means that our OI rating does not change. Combined with the special dividend this year from the sale of TR, OTE remains a compelling cash flow – dividend case, with a risk-reward profile making it a no-brainer for investor portfolios, in our view.

Our investment thesis on OPAP remains unchanged. It is hard to compare business performance yoy given the different lockdown days caused by the pandemic and the full consolidation of Stoiximan. Retail shops were open for most of this quarter, unlike Q2 last year. On a H1 basis, EBITDA stood at E205m and cash flow at E109m. Management felt confident enough to announce E0.10 interim DPS. We are not revising our estimates. Assuming no further lockdowns we expect FY 2021 EBITDA at E500m and E320m cash flow while FY DPS should reach E1.0 (including the interim). Stoiximan acquisition proved to be a wise move, more so during the lockdown, contributing 20% of EBITDA, 30% of net income and cash flow in H1. The run rate of Stoiximan is stronger than our FY numbers, but if retail shops do not close again, the trend could shift a bit towards shops. Either way, a nice headache to have.

With Eurobank we round up the Q2 results season, which as we wrote in our most recent RG Banking Blog, held zero surprises compared to Q1 when it comes to the fundamental story of the sector. Most notable points include stronger fees driven by credit cards (pandemic) and asset management (churn from deposits). We will repeat our view that new lending is the single most important number to follow. Q2 was not the beginning of a surge in new loans. We count E1.5bn for the sector in Q2 with Eurobank close to zero. We are talking about net new loans, excluding refinancing. Business plan targets remained pretty much the same. There is a challenging task to replace NPE and TLTRO related income, with Eurobank being the least exposed with 18%/27% of clean NII/PPP against 33%/56% on average for the 4 banks. A good reason for this has to do with contribution from foreign operations.