Goldman Sachs: Raises target prices for Greek banks

Her Eleftherias Kourtalis

Goldman Sachs raises target prices for Greek banks after Q2 results to incorporate management’s new guidance, market trends, as well as higher earnings per share estimates and increased regulatory capital reserves .

As he notes, market reaction to the results has been positive for all four Greek banks: shares are up 15% on average over the past month, reflecting three main points:

(1) the stronger-than-expected expansion of NII net interest expense and servicing loans;

(2) favorable trends in asset quality, and

(3) the improved CET1 ratios

In particular, he maintains a buy recommendation for National Bank with a target price of 4.10 euros from 3.95 euros before, a buy recommendation for Alpha Bank with a target price of 1.19 euros from 1.07 euros before, while for Eurobank and Piraeus maintains a Neutral recommendation with a target price of 1.04 euros (from 0.92 euros) and 0.96 euros (from 0.84 euros) respectively.

The largest loan expansion was recorded by Eurobank and Piraeus (+4.5%/+4.4% on a quarterly basis), the most important improvement in basic profits before taxes was noted by National Bank and Piraeus (+24%/+15%) , while the strongest CET1 improvement was recorded by Alpha (+80 bp). The administrations have upgraded the guidance for 2022 (mainly from the revenue side) leaving unchanged that of 2023-2024.

The US bank continues to differentiate Greek banks based on capital reserves, credit quality, cost optimization margins and ROTE return on equity generation. It raises its earnings-per-share guidance by 6% on average for the two years 2023-2024, reflecting one-off hedging and trading gains in the second quarter.