Banks prepare a ‘bag’ for shareholders

By | May 10, 2023

By Apostolos Manthos

The increase in interest rates by 375 basis points by the European Central Bank has created a domino of profitability for Greek banks offering, through Net Income Margin, another strong boost to their sizes. Announcements of financial results from Piraeus and Alpha Bank for the first quarter of 2023 suggest high performance and continued improvement for the funds not only through the end of the year but also over the next two years.

Starting since piraeus (PEIR), since it has now passed in terms of capitalization ahead of Alpha Bank, with 2,945 million euros against 2,806 million euros, we observe the upward trend of its net profit with the first quarter of 2023 showing profits of 180 million euros from 170 million euros that was in the last quarter of 2022.

The main objective of the management is to achieve a profit of 688 million euros or 0.55 euros per share for the full year 2023, while there is also a future estimate of 813 million euros or 0.65 euros per share for 2025. Group asset deposits stood at €57.2bn, up 4% from the previous year, with NPLs up by €2bn or 8% year-on-year to €28.3bn, while Customers under management grew by 9% in a quarter to 7,600 million euros due to entries into mutual funds.

And the ratio of non-performing exposures (NPE) has sunk to 6.6%, from 12.7% a year ago. There has also been a significant annual reduction of 643 people in the group’s workforce, reaching 8,741 employees at the end of March, of which 8,236 were employed in Greece.

However, the most pleasant event for shareholders, apart from the very good performance of the economic figures, is the creation of a “pocket” for the distribution of dividends charged to the profits of 2023 after too many years of shortage of dividends. . Thus, Piraeus has included a provision of 10% since the first quarter for the distribution of dividends, indicating the direction that this percentage is expected to increase to 15% and 20% respectively in the coming years.

Graphically, the share price is almost a breath away from the resistance of the previous March highs, at 2.45 euros. The possible bullish breakout with a significant increase in trading volume will pave the way for the next resistance zone between €2.80 and €3. On the flip side though, capturing a double top around €2.45-2.40 will offer sellers the opportunity for a further pullback to the downside towards €2.20-2. However, if all goes well on the political scene, with the 688 million profit by 2023, the 3 euros are a visible goal.

We proceed to alpha bank (ALPHA) which showed for the first quarter of 2023 that adjusted earnings after tax increased by 23.6% compared to the same period of the previous year, closing at 162 million euros. Deposits fell slightly qoq by €0.5 billion due to seasonality and commercial loan repayments, totaling €50.23 billion, while assets under management increased by €0.4 billion qoq.

Likewise, the loan portfolio with services decreased in the quarter by 400 million euros, approaching 31,100 million euros, but in annual terms it registered an increase of 5%. Here, too, the non-performing exposure ratio (NPE) has fallen to 7.6%, from 12.2% in the corresponding quarter of 2022, with the aim of falling below 7% by the end of 2023, although management is expected even more ambitious. aiming for next month.

Here the desired result for 2023 is that profitability reaches 540 million euros, with management stating that it is ready, SSM willing, to return to paying dividends, applying a pay-out ratio of 20% on annual profits from now.

Positive for the group’s recurring operating expenses is the successful completion of the voluntary departure programme, which involved approximately 500 employees with the expected annual benefit of €20 million creating further growth potential in Alpha Bank’s previously anticipated revenue.

In the fortnightly schematic analysis of the stock, we identified “barca” resistance at 1.20 to 1.23 euros. This is a level that for several weeks has cut the upward momentum of the stock, subjecting it to an immediate return to the buyer base at 1.10 euros. Therefore, in the event that the bullish bypass of the area in question is achieved, then we should expect a violent expansion towards the €1.40 to €1.50 resistance level.

* Apostolos Manthos is responsible for technical analysis and investment strategy

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