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JPM On Greek Banks: Volatility But Also Gains For Those Who Have Patience
Greek banks - near-term share prices are likely to remain volatile, JPMorgan says in a report dated 18th January, but it believes that more patient investors with 6-12 months time horizon could get the opportunity to benefit from cyclical recovery twice.
The first time was March - September 2009 (Greek banks recovered 200- 300% from February lows) and second time 2H2010 as the market prices in 2011 recovery and sees more concrete evidence on fiscal consolidation progress which could offer substantial upside >50% from present levels.
The firm says its preferred picks are NBG (50% non-Greek earnings, mostly Finansbank Turkey, NBG likely to remain one of the most profitable European bank with strong capital base- 11.1% 2009E core tier 1), Alpha (strong capital base, more conservative asset mix) and Bank of Cyprus (less exposure to Greece and strong Russian business potential).
JPM also notes it has met with top 5 largest Hellenic banks (NBG, Alpha, EFG, Piraeus, Bank of Cyprus) in Athens last week and managements are now more cautious on the short-term outlook and Greek asset quality, which is likely to recover later than previous expectations (1H10) despite all banks reporting generally stable performance in the final quarter of 2010.
Greek banks - near-term share prices are likely to remain volatile, JPMorgan says in a report dated 18th January, but it believes that more patient investors with 6-12 months time horizon could get the opportunity to benefit from cyclical recovery twice.
The first time was March - September 2009 (Greek banks recovered 200- 300% from February lows) and second time 2H2010 as the market prices in 2011 recovery and sees more concrete evidence on fiscal consolidation progress which could offer substantial upside >50% from present levels.
The firm says its preferred picks are NBG (50% non-Greek earnings, mostly Finansbank Turkey, NBG likely to remain one of the most profitable European bank with strong capital base- 11.1% 2009E core tier 1), Alpha (strong capital base, more conservative asset mix) and Bank of Cyprus (less exposure to Greece and strong Russian business potential).
JPM also notes it has met with top 5 largest Hellenic banks (NBG, Alpha, EFG, Piraeus, Bank of Cyprus) in Athens last week and managements are now more cautious on the short-term outlook and Greek asset quality, which is likely to recover later than previous expectations (1H10) despite all banks reporting generally stable performance in the final quarter of 2010.
