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? Piraeus announced strong Q1 numbers, driven by NII, on higher loan rate pass through compared to deposits (widening loan-spread). Volume remains weak. But the margin trend is proving to be stronger than before. Combined with higher base rates (3.25% from 2.50%) and negative NPE formation, management revised 2023 RoTE to 12% (from 10%, adjusted for AT1 costs). And assumes RoTE will remain at these levels until 2025.

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? Piraeus published Q4/FY 2022 results (no IFRS notes) showing super strong NII (+E100m/+30% qoq), hitting annualized adjusted RoTE of c. 12.5% (on our clean calculations). All thanks to a) the loan-deposit spread going up +E50m/+17% qoq (almost zero pass-through to deposits); and b) ECB income +E50m qoq (net of TLTRO), following ECB rate hikes.
It was the latter, combined with lower costs, that drove the +9% pre-tax beat vs our estimates. Whereas higher taxes brought the bottom-line figure in line with our clean E190m estimate (or c.E175m AT1 adjusted).
Conclusion. Neither NII, nor net ECB income will be as strong going forward. Piraeus called Q4 peak NII. Which is why they maintained c.10% RoTE guidance for 2023. And it’s also why we stick to our own c. 9% RoTE in 2023E (both in AT1 adjusted terms).