Resuming coverage post-results - AXIA Ventures · Resuming coverage post-results We resume coverage of Greek banks with Buy ratings across the board, with upsides of 35-58%. Although

Greek Banks

AXIA Research Page 1

Resuming coverage

Equity / Greece / Banks

05 May 2017

Resuming coverage post-results

We resume coverage of Greek banks with Buy ratings across the board, with upsides of 35-58%. Although we believe that the Greek market will enjoy a positive momentum in the short to medium-term, as the long-standing agreement with creditors gets to an end, we still see fundamental differences between the banks. We would favour NBG (58% upside) and Alpha (35% upside) over Eurobank (40% upside) and Piraeus (41% upside). The investment case for Alpha and NBG is based on higher capital positions with absence of state aid (in the case of Piraeus), above average return on tangible equity and a more advanced state of restructuring. We see Alpha’s management being more conservative on guidance and the tone set for the next two years whilst NBG enjoys a somewhat clean CET1 ratio following the disposal of businesses and an aggressive start to the reduction of the non-performing stock. Regarding Eurobank, we expect the bank to generate profits of EUR 974mn until 2019, which will add to a CET1 ratio of 14.6% in 2019, the lowest amongst the Greek banks but delivering one of the highest RoTBV of 7.5% in 2019. For Piraeus, we believe that the situation is more delicate, partly due to the higher number of non-performing small-business loans that the bank has to deal with (without having all regulatory support in place yet) and partly because, according to our estimates, the bank will deliver the lowest RoTBV amongst the Greek banks, given a higher cost/income ratio, on top of still carrying EUR 2bn of contingent convertible instruments in the balance sheet at a cost of c.20bps of capital per year. As we have seen earlier this week, positive news regarding the agreement with creditors, and also a possible inclusion of Greek bonds on ECB’s quantitative easing programme, have the potential to drive share prices significantly higher. We highlight the valuation differential amongst banks with Piraeus and Eurobank trading on P/TBV (trailing) of 0.26x and 0.33x, respectively whilst NBG and Alpha trade on 0.41x and 0.37x, respectively.

Profitability to improve and SSM targets likely to be met, conditions allowing We expect the banks to reach return on tangible book value of 5-8% in 2019 with NPL and NPE stock reduced by 47% and 44%. Given the slow start of the year and the perceived change to borrower behaviour, we believe that the 2017 reduction of the stock is likely to happen later in 2017 with the second review already approved by the Greek government and measures for the post-programme period (2018 and 2019) in place.

Banking Sector looks well capitalized, but is it enough? Given the expected profitability profile in the coming years and the banks’ strategy on the reduction of the non-performing stock, on top of a better macro environment, we expect capital ratios to improve leading the banks to a more comfortable position (15-19% in 2019) which will trigger the start of the discussion on further reduction post 2019. In our view, the path to 2019 is just the first leg of the reduction of the non-performing stock. Regarding generic trends, we expect timid organic loan growth (3%) in the period of 2016-19 – with the book affected by write-offs –, deposits to increase by 6% and the changes in the funding mix to result in slow, but positive, progression in the banks’ top line. In a nutshell, we forecast sector pre-provision profits in 2017-19 to be driven by 8% growth in NII (reflecting better cost of funding), 20% growth in fees as banking activity in general picks up and cards/credit cards transactions increase whilst expenses are expected to decline by 11% resulting in aggregate cost/income ratio lower by 8pp. We expect provisions to average 105bps in 2019.

Valuation and risks Our 2019 based ROE/COE valuation points to a 2017 avg. upside of 43% for the banks, considering a CoE of 14% (and 15% for Piraeus given higher SREP requirement). The banks trade on 0.34x trailing P/TBV vs. 0.58x on our target prices and 2019 estimates. Although capital levels in 2019 are expected to reach 15-19% we do not believe that the excess capital over SREP, or management level, would be distributed to shareholders but potentially used for balance sheet clean up. As sources of risk we see negative macro and political developments affecting the pace of the asset quality improvement, delays in improving the cost of funding and reducing Eurosystem financing, slowdown in restructuring and disposal of international businesses. On the other hand, positive news coming from the talks between the Greek government and the institutions is likely to support a re-rating of Greek stocks, which not necessarily will be linked to specific fundamentals.

Bank Rating PT

Upside

Alpha Bank Buy 3.00 35%

Eurobank Buy 1.20 40%

NBG Buy 0.49 58%

Piraeus Bank Buy 0.31 41%

Price/Tangible Book

FY16 FY17e FY18e

Alpha Bank 0.37x 0.35x 0.33x

Eurobank 0.33x 0.32x 0.30x

NBG 0.41x 0.40x 0.38x

Piraeus Bank 0.26x 0.25x 0.24x

EU Peers 1.06x 1.04x 0.98x

EM Peers 1.39x 1.50x 1.35x

Prices: As of 3 May 2017.

Jonas Floriani, Analyst [email protected] +44 20 8068 3516 Argyrios Gkonis, Analyst [email protected] Damiani Papatheodotou, Analyst [email protected]

Please see important disclosures at the end of this report

30

40

50

60

70

80

90

100

110

31

-De

c1

5-Jan

30

-Jan1

4-Fe

b2

9-Fe

b1

5-M

ar3

0-M

ar1

4-A

pr

29

-Ap

r1

4-M

ay2

9-M

ay1

3-Ju

n2

8-Ju

n1

3-Ju

l2

8-Ju

l1

2-A

ug

27

-Au

g1

1-Se

p2

6-Se

p1

1-O

ct2

6-O

ct1

0-N

ov

25

-No

v1

0-D

ec

25

-De

c9

-Jan2

4-Jan

8-Fe

b2

3-Fe

b1

0-M

ar2

5-M

ar9

-Ap

r2

4-A

pr

Relative Performance (Y-t-D): Greek Banks versus SX7P

ASE Bank Index SX7E Index

2030405060708090

100110120130

31

-De

c1

5-Jan

30

-Jan1

4-Fe

b2

9-Fe

b1

5-M

ar3

0-M

ar1

4-A

pr

29

-Ap

r1

4-M

ay2

9-M

ay1

3-Ju

n2

8-Ju

n1

3-Ju

l2

8-Ju

l1

2-A

ug

27

-Au

g1

1-Se

p2

6-Se

p1

1-O

ct2

6-O

ct1

0-N

ov

25

-No

v1

0-D

ec

25

-De

c9

-Jan2

4-Jan

8-Fe

b2

3-Fe

b1

0-M

ar2

5-M

ar9

-Ap

r2

4-A

pr

Relative Performance (Y-t-D): Greek Banks versus Peers

ASE Bank Index SX7E Index ES Index IT Index PT Index

Greek Banks


Programme implementation to drive recovery

2016 - a year in review: better-than-expected economic performance albeit a substantial drop of

the economic activity in Q4

The Greek economy faced another challenging year in 2016, impacted by the negotiations between the

government and the institutions over the first review of the country’s third economic adjustment

programme. Review negotiations were finally concluded in two stages (June and October), allowing the

government to receive EUR 10.3bn that was used to pay expiring maturities and State arrears. Albeit the

additional austerity measures imposed to the country by the institutions, the Greek economy performed

better than initially anticipated over the year, with the real GDP in 2016 marginally declining by 0.05% y-o-

y (provisional data). The economy accelerated in the first three quarters of the year, mainly supported by:

(i) public investments (EU support package); (ii) a stronger-than-expected tourism year; (iii) increased

liquidity (reduction of State Arrears); and (iv) private consumption. Still in 4Q:16 the GDP growth rate

experienced a drop of 1.4% y-o-y as a result of lower public investments and also due to the introduction

of a new round of uncertainty, deriving from both the final round of the negotiations related to the first

review as well as the initiation of the second review of negotiations.

Expectations for 2017 are that the economy will pick up speed, with GDP growth rates forecasts ranging

between 1.5%-2.2%. These expectations are adjusted lower vs. few months ago (expectations for GDP

growth of 2.7%-2.8%) due to the delay in an agreement over the second review. The current estimates are

conditional to the staff level agreement (on track) that should accelerate developments on the debt side,

paving the way for an overall political agreement to be finally concluded by the next Eurogroup on May

22. A comprehensive agreement should allow the ECB to include Greece to its QE program, further down

the line, which is expected to boost confidence on the economy. At the same time, 2017 is expected to be

another record year for the country’s tourism sector with estimates calling for an 8% y-o-y grow in tourist

arrivals (i.e. c.27mn of tourists).

Regarding the budget, budget execution in 2016 performed much better than anticipated, driven by

higher revenues and to a lesser extent by lower expenses. Programme’s targets called for a general

goverment primary surplus of 0.5% in 2016, but the actual surplus settled at 3.9% of GDP (ESA 2010

standards) or reportedly at 4.2% of GDP based on the adjustment program definition. For 2017,

programme target calls for a primary surplus of 1.75%, which is expected to be easily reached, given the

size of the fiscal adjustment measures already voted by the Greek Parlaiment. Note that in case this target

is not met the contigency adjustment mechanism will kick in, leading to further expense cuts.

Agreement with creditors

According to press reports, the preliminary agreement reached with creditors will trigger, amongst others,

changes to the Greek financial sector which will include:

Measures to enable an active NPL secondary market (including legislation allowing the

implementation of electronic auctions);

Legal protection of creditors for corporate restructuring actions;

Strengthening of the capital base of non-systemic banks;

Roadmap aiming at the end of capital controls.

Latest developments on NPE legislation

Total system non-performing exposures (NPEs) reached EUR 104.8bn at end-December 2016, representing

50% of the total gross loans of the system and the second highest ratio in the Eurozone. To this end, the

Greek authorities have moved forward with the introduction of two additional legislative tools (regarding

the DTAs treatment and the out-of-court settlements) that could facilitate the reduction of the NPEs stock

in the country. Moreover, Bank of Greece introduced in November 2016 its first report on Operational

Targets for NPEs with the scope of effectively monitoring on a quarterly basis the progress in mitigating

the NPE issue.

The DTA bill

In March 2017, a bill that allows the Greek banks to amortize losses from NPLs/write offs over a

20-year horizon and its was part of the banking reforms that were disussed in respect of the

second review was approved by the Parliament. The legislation would make it easier/incentivize

banks to book losses, thus accelerating NPE reduction, while removing the concern of investors

of getting diluted if banks book losses (issue shares in favor of the State);

Greek Banks


The out-of-court-settlement bill

In late April 2017, the Greek government submitted a draft legislation which will enable the

establishment of an out-of-court settlement mechanism (part of the second review) to

Parliament. The new legislation will, for the first time, create a process that allows businesses to

reach a debt settlement with all its creditors (including banks, tax authorities, social insurance

funds and suppliers), without going through the courts. To this end, the bill is expected to give

banks additional tools to proceed with the restructurings of NPEs and therefore is key to the

system efforts to reduce its NPE stock.

Greek Banks


Alpha Bank Banks / Greece

Reuters / Bloomberg: ACB.AT / ALPHA GA

The conservative approach of the corporate bank

Rating BUY

vs. previous rating Under Review

We resume coverage of Alpha Bank with a Buy rating and price target of EUR 3.00 per share, implying an upside potential of 35% from current levels. The Greek ‘corporate’ bank normally takes a conservative approach in terms of guidance and outlook, which was reflected during 4Q16 results’ conference call. Management believes that given the delay in the agreement of the review between the Greek government and the Institutions are taking its toll on the economy and the prospects for the reduction of the non-performing stock. Consequently, the message for 2017 consists in top line at similar level of 2016, lower expenses and lower provisions leading to a higher bottom line vs. the previous year. We expect Alpha to deliver a return on tangible equity of 3.6% in 2017 and achieve a CET1 ratio of 17.1%.

The corporate bank going forward

Alpha is normally referred to as Greece’s bank of the corporates given its higher exposure to the segment (EUR 26bn out of EUR 82bn for the whole system being 43% of the bank’s gross loans). In times of high non-performing exposures, this acts as a double-edged sword: banks’ management have fewer cases to deal with but on the other hand, these cases may take longer than the average exposure given its size and/or complexity. Nevertheless, we believe that management understands the urgency to reduce the non-performing stock and we expect this reduction to happen according to the targets agreed with the SSM. In our view, provisions will be the key item to follow throughout 2017, as top line should be expected at the same level as in 2016 with potential benefits coming from lower expenses. We forecast a return on tangible equity of 3.6% in 2017.

Highest capital ratio in Greece Alpha certain flexibility

According to our estimates, Alpha will hold the highest CET1 ratio amongst peers throughout 2019 as a function of a higher starting point (16.7%) and above average profitability going forward. We forecast 18.7% CET1 ratio in 2019, which we acknowledge it gives management some flexibility when reducing the non-performing stock.

Balance sheet and income statement trends to consolidate

We agree with the fact that the conclusion of the review of the programme may trigger significant changes to the Greek economy, and therefore the banking sector, going forward. In our view, the main changes to the banks’ financial statements would be an acceleration of the return of the deposit base (improving the banks’ funding) and confidence from consumers and businesses resulting in credit demand. We expect a minor pickup in deposits in 2017 of 1%, increasing to 3% in 2018 and 5% in 2019, but at the same time acknowledge that these estimates may be understated if consumer confidence returns for good, given the 50% decline in the system’s deposit base since the peak in 2009 and 26% since Dec-2014.

Conservative outlook for 2017

Management gave a conservative guidance for 2017 during 4Q16’s conference call pointing to flat NII and pre-provision profits to be in line with 2016 given the absence of one-offs (growth in credit card and wealth management fees and income related to large disbursements which are on track (i.e. Fraport and airports) are expected to offset the absence of one-offs). On the other hand, lower operating expenses and provisions (the aggressive drop in provisions from 2016 to 2017 relates to the higher amount (190bps on gross loans) of provisions booked by Alpha in 2016 vs. 154bps for the other banks, on average) are expected to boost the bottom line. We forecast profits of EUR 318mn.

Valuation

We value Alpha on a ROE/COE model, which points to a target price of EUR 3.00 based on 2019 estimates at the end of 2017. We assume a cost of equity of 14% with zero growth. Alpha currently trades at 0.37x 2016 tangible book and 0.57x on our target price and estimates.

Target Price (EUR) 3.00

vs. previous target price (EUR) N/A -

Current Share Price* (EUR) 2.23

*03/May/ 2017

Stock Data

Market Cap (EUR m) 3,196

Free Float 89%

Outstanding Shares (m) 1,544

Shareholders HFSF, Vanguard Group

Stock Performance

1m 3m 12m

Absolute (%) 32.7 22.5 16.8

ASE Gen. (Abs) 12.2 19.0 28.3

ADTV 12M (m) 6.2

Price high – 12 months (EUR) 2.75

Price low – 12 months (EUR) 1.32

Company Description: Alpha Bank founded in 1879 and is one of the leading Groups of the financial sector in Greece, with a strong presence in the Greek and international banking market. The Group offers a wide range of high-quality financial products and services, including retail banking, SMEs and corporate banking, asset management and private banking, the distribution of insurance products, investment banking, brokerage and real estate management.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

ALPHA BANK A.E. ATHEX Composite Index (Rebased)

Greek Banks


Alpha Bank: Yearly Forecasts

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E

PROFIT & LOSS (EUR mn) Net interest income 1,799 1,763 1,819 1,784 1,397 1,658 1,919 1,897 1,924 1,966 2,066 2,234 Net commission income 464 379 333 294 273 370 334 309 318 330 353 379 Trading income -7 172 35 142 -232 257 40 -47 85 20 21 22 Other operating income 80 67 60 60 67 75 55 52 57 60 63 66 Total revenues 2,339 2,383 2,249 2,283 1,506 2,360 2,349 2,211 2,384 2,376 2,503 2,701 Costs -1,178 -1,202 -1,148 -1,096 -1,179 -1,426 -1,554 -1,267 -1,225 -1,141 -1,109 -1,109

o/w Personnel costs -589 -565 -549 -536 -547 -662 -642 -519 -501 -476 -466 -466

o/w General and administrative -496 -540 -497 -462 -463 -585 -512 -513 -510 -505 -495 -495 Pre-provision income 1,160 1,181 1,101 1,187 327 935 795 944 1,158 1,235 1,394 1,592 Loan loss charge -542 -676 -885 -1,130 -1,669 -1,923 -1,847 -2,988 -1,168 -816 -596 -534 Other 7 (3) 0 (4,789) (3) 3,267 40 0 0 0 0 0 Pre-tax profit 626 502 216 -4,732 -1,345 2,278 -1,011 -2,043 -10 419 798 1,058 Tax (112) (153) (130) 922 259 701 696 807 29 (101) (191) (254) Minorities (1) 1 (0) (0) (0) (0) 0 0 0 0 0 0 Other (59) (54) (86) (108) 0 (3,818) (15) (135) 23 0 0 0 Net profit 453 296 0 -3,919 -1,086 -839 -330 -1,371 42 318 606 804

BALANCE SHEET (EUR mn) ASSETS Interbank 2,830 6,408 2,398 1,807 3,383 2,566 2,772 1,976 1,969 2,087 2,140 2,140 Net customer loans 50,705 51,400 49,305 44,876 40,579 51,678 49,557 46,186 44,409 45,989 47,542 51,037 Securities 5,241 6,287 7,658 5,826 7,573 10,645 10,298 10,164 7,945 8,342 9,174 10,879 Intangibles 160 178 193 182 142 243 331 345 371 375 375 375 Other assets 6,334 5,323 7,244 6,458 6,577 8,565 9,977 10,626 10,178 10,472 10,909 11,459 Total assets 65,270 69,596 66,798 59,148 58,253 73,697 72,935 69,298 64,872 67,265 70,140 75,889 LIABILITIES Interbank 8,964 13,235 16,461 22,521 25,215 19,083 17,667 25,115 19,106 20,854 22,184 25,313 Customer deposits 42,547 42,916 38,293 29,399 28,464 42,485 42,533 31,434 32,946 33,276 34,107 35,813 Securities 7,241 5,149 3,561 2,189 732 783 1,524 401 617 629 629 629 Other liabilities 2,577 2,323 2,699 3,073 3,094 2,979 3,505 3,294 3,090 3,072 3,178 3,289 Total liabilities 61,329 63,623 61,014 57,182 57,506 65,330 65,229 60,244 55,759 57,830 60,099 65,044 Shareholders' Equity 3,021 4,432 4,271 477 -352 7,372 7,652 9,014 9,077 9,399 10,005 10,809 Minorities 33 17 13 12 12 24 23 24 21 21 21 21 Total liabilities and equity 65,270 69,596 66,798 59,148 58,253 73,697 72,935 69,298 64,872 67,265 70,140 75,889 Tangible Equity 2,780 4,090 3,491 296 -494 7,129 7,320 8,669 8,706 9,024 9,666 10,470 Interest earning assets 58,776 64,095 59,361 52,509 51,534 64,890 62,627 58,326 54,323 56,418 58,856 64,056 Gross loans 51,981 53,043 51,525 49,747 45,185 62,783 62,337 62,014 60,316 60,415 59,385 59,904

Capital (EUR mn; %) CET1 6,864 8,384 8,460 8,860 9,454 10,242 CET1 ratio 13.1% 16.0% 16.7% 17.1% 18.2% 18.7% Risk-weighted assets 52,400 52,400 50,659 51,925 52,035 54,778

Profitablity ratios (%)

Return on assets 0.8% 0.4% 0.0% -6.2% -1.9% -1.3% -0.4% -1.9% 0.1% 0.5% 0.9% 1.1%

Return on risk-weighted assets -10.5% 0.3% 2.5% 4.7%

Return on equity 14.2% 7.9% 0.0% -165.1% -1734.0% -23.9% -4.4% -16.5% 0.5% 3.4% 6.2% 7.7%

Return on tangible equity 15.1% 8.6% 0.0% -207.0% 1097.4% -25.3% -4.6% -17.2% 0.5% 3.6% 6.5% 8.0%

Cost-to-income 50.4% 50.4% 51.1% 48.0% 78.3% 60.4% 66.1% 57.3% 51.4% 48.0% 44.3% 41.1%

Cost-to-assets -2.0% -1.8% -1.7% -1.7% -2.0% -2.1% -1.8% -1.8% -1.7% -1.6% -1.5% 0.0%

NII/Interest earning assets 3.1% 2.9% 2.9% 3.2% 2.7% 2.8% 3.0% 3.1% 3.4% 3.6% 3.6% 3.6%

NII/Total revenues 76.9% 74.0% 80.8% 78.1% 92.8% 70.2% 81.7% 85.8% 80.7% 82.7% 82.5% 82.7%

Balance sheet (%)

Equity-to-Total assets 4.6% 6.4% 6.4% 0.8% -0.6% 10.0% 10.5% 13.0% 14.0% 14.0% 14.3% 14.2%

Net loans/total assets 77.7% 73.9% 73.8% 75.9% 69.7% 70.1% 67.9% 66.6% 68.5% 68.4% 67.8% 67.3%

Net loans-to-deposits 119.2% 119.8% 128.8% 152.6% 142.6% 121.6% 116.5% 146.9% 134.8% 138.2% 139.4% 142.5%

Asset quality (%)

LLC/Gross Loans 1.0% 1.3% 1.7% 2.2% 3.5% 3.6% 3.0% 4.8% 1.9% 1.4% 1.0% 0.9% LLC/Risk-weighted assets 3.5% 5.7% 2.3% 1.6% 1.1% 1.0% Loan loss reserve 1,276 1,643 2,220 2,863 4,606 11,105 12,780 15,829 15,907 14,426 11,843 8,867 NPLs 2,044 3,004 4,357 6,433 10,302 20,501 20,569 22,847 23,007 20,117 16,377 12,247 NPL ratio 3.9% 5.7% 8.5% 12.9% 22.8% 32.7% 33.0% 36.8% 38.1% 33.3% 27.6% 20.4% NPL coverage 61.0% 54.7% 51.0% 75.7% 44.7% 54.2% 52.9% 69.3% 69.1% 71.7% 72.3% 72.4% NPEs 28,669 31,847 32,307 28,249 22,997 17,198 NPE ratio 46.0% 51.4% 53.6% 46.8% 38.7% 28.7% NPE coverage 50.0% 49.0% 50.0% 50.0% 50.0%

Per share data (EUR)

Number of shares (year-end) 411 534 534 534 534 10,923 12,235 1,537 1,537 1,537 1,537 1,537 EPS 1.12 0.66 -0.00 -7.33 -2.03 -0.13 -0.03 -0.20 0.03 0.21 0.39 0.52 Book value 7.45 8.30 7.99 0.89 -0.66 0.67 0.63 5.87 5.91 6.12 6.51 7.03 Tangible Book Value 6.86 7.65 6.53 0.55 -0.92 0.65 0.60 5.64 5.66 5.87 6.29 6.81 Source: Company Financials, AXIA Research

Greek Banks


Eurobank Banks / Greece

Reuters / Bloomberg: EURBr.AT / EUROB GA

Making progress

Rating BUY


We resume coverage of Eurobank with a Buy rating and price target of EUR 1.20 per share, implying an upside potential of 40% from current levels. The first thing that comes to investors’ mind when looking at Eurobank is the lower capital vs. peers and also its ‘quality’ as on a comparable basis as c.80% of its CET1 relates to DTCs. Additionally, Eurobank carries EUR 950mn in preference shares in the balance sheet which loses the CET1 status from Jan-18 on a fully-loaded basis. Eurobank would need to start paying a coupon of 14% on the pref shares before paying out any dividend to investors. On the other hand we see Eurobank as a bank with a lean business structure and management has showed good progress in the reduction of non-performing stock throughout 2016. Going forward we expect Eurobank to capitalize on the back of a clean investment case with profitability improving from the 4% return on tangible book value in 2016 (7% in 4Q16) to 7.5% in 2019 whilst increasing its capital ratio to 14.6% and bringing the stock of non-performing exposures down according to the plan agreed with SSM.

Turning the bank around In 2016, Eurobank posted its first positive bottom line since 2010 as a result of strong pre-provision profits and lower provisions. At EUR 220mn, and an annual return on tangible book value of 4.2%, it was the strongest result amongst Greek banks. The bank’s income statement was boosted by one-offs such as the sale of VISA Europe and trading gains on EFSF bonds as well as the absence of cost related to Pillar 2 bonds. Additionally, the operating expenses came in lower when compared to the previous year. We expect these trends to continue in 2017 but challenges to remain on the asset quality front. Finally, we add that investors, and ourselves, value Eurobank’s management team and the committed shareholder base led by Fairfax (17%), Capital (9%) and Vanguard (2.6%).

Capital quality differ from peers but we expect Eurobank to build it organically

The main concern from investors on Eurobank is the lower capital ratio vs. peers and the highest relative amount of DTCs as part of CET1 (76% vs. peers at 40-60%). The 2016 fully-loaded ratio of 13.8% already excludes the EUR 950mn in preference shares from capital. Given Eurobank’s clean investment case, we expect the bank to generate profits of EUR 974mn in the next three years, which will support the increase in CET1 ratio to 14.6%. Additionally, we would expect Eurobank to announce some kind of partnership (which may involve selling part of the stake) on its Romanian operation (EUR 3bn assets), which could strengthen the capital position even further, whilst the Bulgarian and Cypriot operations (combined 2016 PPI of EUR 190m) will remain as part of the core business. As a reminder, Eurobank disclosed its 2017 CET1 SREP ratio of 8.75% and total capital requirement (OCR) of 12.25% vs. 17.9% reported.

It always goes back to asset quality

It should be not a surprise for investors that the performance of the Greek banks in 2017 is directly linked to how the banks will manage the reduction of the non-performing stock. Eurobank plans to reduce its NPE stock by 10% in 2017, which translates into c.EUR2bn. Given the environment in the first months of the year, management confirmed during 4Q16 conference call that whilst the targets remain on track the bank might experience positive NPL formation in 1Q17. We highlight that Eurobank met the provisioning target for 2016, of 200bps on net loans, despite the challenging environment.

Valuation

We value Eurobank on a ROE/COE model, which points to a target price of EUR 1.20 based on 2019 estimates at the end of 2017. We assume a cost of equity of 14% with zero growth. Eurobank currently trades on 0.33x 2016 tangible book and 0.52x on our target price and estimates.



Current Share Price* (EUR) 0.86 *3/May/2017

Stock Data


Free Float 98%

Outstanding Shares (m) 2,185 Shareholders HWIS, Capital Research Stock Performance

1m 3m 12m

Absolute (%) 53.0 46.5 16.2

ASE Gen. (Abs) 12.2 19.0 28.3

ADTV – 12M (m) 7.8



Company Description: The Eurobank group is a dynamic banking group active in seven countries and over 15,000 employees. Established in 1990, the Group expanded through organic growth and acquisitions to become a leading force in the Greek banking sector. With businesses in Greece and abroad, the Group offers a comprehensive range of financial products and services to its retail and corporate customers. In Greece, Eurobank is one of the four pillars of the banking system. The Group also holds a strategic position in retail and business banking in Bulgaria, Romania and Serbia and offers distinguished Wealth Management services in Cyprus, Luxembourg and London.

0.0

0.5

1.0

1.5

EUROBANK ERGASIAS S.A. ATHEX Composite Index (Rebased)

Greek Banks


Eurobank: Yearly Forecasts

2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E

PROFIT & LOSS (EUR mn) Net interest income 2,103 2,039 1,461 1,270 1,470 1,463 1,548 1,564 1,608 1,700 Net commission income 363 292 200 199 202 191 244 255 274 295 Trading gains 78 -51 51 -16 1 38 17 20 15 15 Other revenues 186 46 43 105 83 68 253 82 72 74 Total revenues 2,730 2,326 1,755 1,558 1,757 1,760 2,062 1,921 1,969 2,084 Costs -1,280 -1,198 -1,058 -1,037 -1,035 -1,016 -992 -922 -896 -917 Pre-provision income 1,450 1,128 697 521 722 744 1,070 999 1,073 1,167 Loan loss charge -1,273 -7,581 -2,391 -2,420 -2,264 -2,666 -775 -742 -608 -506 Associate income / other 0 -502 0 -2 -204 -133 -135 0 0 0 Pre-tax profit 177 -6,955 -1,694 -1,901 -1,746 -2,055 160 257 466 661 Tax -60 1316 335 783 501 593 49 -69 -126 -178 Minorities / other -49 131 -99 -36 -8 281 21 -12 -12 -12 Net profit 68 -5,508 -1,458 -1,154 -1,253 -1,181 230 176 328 470

BALANCE SHEET (EUR mn) ASSETS Interbank 3,606 3,286 2,065 1,986 1,948 1,798 1,477 1,653 1,686 1,720 Net customer loans 56,268 48,094 43,171 45,610 42,133 39,893 39,058 39,601 40,753 43,589 Securities 16,563 11,383 9,469 18,716 17,849 16,291 12,463 12,808 13,609 15,309 Intangible assets 734 465 406 266 150 127 145 145 150 150 Other assets 10,017 13,594 12,542 11,008 13,438 15,444 13,250 13,729 13,909 13,835 Total assets 87,188 76,822 67,653 77,586 75,518 73,553 66,393 67,936 70,107 74,602 LIABILITIES Interbank 26,624 35,931 31,819 27,099 22,866 29,783 21,686 22,611 24,475 26,667 Customer deposits 44,435 32,459 30,752 41,535 40,878 31,446 34,031 34,376 35,177 36,877 Other liabilities 10,035 7,557 5,737 4,429 5,470 5,192 3,321 3,419 3,546 3,679 Total liabilities 81,094 75,947 68,308 73,063 69,214 66,421 59,038 60,405 63,198 67,223 Shareholders' Equity 4,981 -148 -1,299 4,165 5,559 6,420 6,672 6,848 6,226 6,696 Minorities 322 278 277 281 668 669 640 640 640 640 Total liabilities and equity 87,188 76,822 67,653 77,586 75,518 73,553 66,393 67,936 70,107 74,602 Tangible Equity 3,297 -1,563 -2,655 2,949 4,459 5,343 5,577 5,753 6,076 6,546 Interest earning assets 76,437 62,763 54,705 66,312 61,930 57,982 52,998 54,062 56,048 60,617 Gross loans 49,900 47,800 52,900 51,881 51,700 50,700 50,955 50,343 50,861

Regulatory capital (EUR mn; %) CET1 3,663 3,605 2,953 2,863 4,269 5,091 5,268 5,371 5,837 6,274 CET1 ratio 7.7% 8.3% 7.9% 7.6% 11.1% 13.1% 13.8% 13.7% 14.5% 14.6% Risk-weighted assets 47,488 43,211 37,619 37,754 38,499 38,888 38,190 39,077 40,326 42,912

Profitablity ratios (%) Return on assets 0.1% -6.7% -2.0% -1.6% -1.6% -1.6% 0.3% 0.3% 0.5% 0.7% Return on risk-weighted assets 0.1% -12.1% -3.6% -3.1% -3.3% -3.1% 0.6% 0.5% 0.8% 1.1% Return on equity 1.4% -227.9% 201.5% -80.5% -25.8% -19.7% 3.5% 2.6% 5.0% 7.3% Return on tangible equity 2.1% -635.3% 69.1% -785.0% -33.8% -24.1% 4.2% 3.1% 5.5% 7.5% Cost-to-income 46.9% 51.5% 60.3% 66.6% 58.9% 57.7% 48.1% 48.0% 45.5% 44.0% Cost-to-assets 1.47% 1.46% 1.46% 1.43% 1.35% 1.36% 1.42% 1.37% 1.30% 1.27% NII/Interest earning assets 2.75% 2.93% 2.49% 2.10% 2.29% 2.44% 2.79% 2.92% 2.92% 2.91% NII/Total revenues 77.0% 87.7% 83.2% 81.5% 83.7% 83.1% 75.1% 81.4% 81.7% 81.6%

Balance sheet (%) Equity-to-Total assets 5.7% -0.2% -1.9% 5.4% 7.4% 8.7% 10.0% 10.1% 8.9% 9.0% Net loans/total assets 64.5% 62.6% 63.8% 58.8% 55.8% 54.2% 58.8% 58.3% 58.1% 58.4% Net loans-to-deposits 126.6% 148.2% 140.4% 109.8% 103.1% 126.9% 114.8% 115.2% 115.9% 118.2%

Asset quality (%) LLC/Gross Loans 15.19% 4.89% 4.81% 4.32% 5.15% 1.51% 1.46% 1.20% 1.00% LLC/Risk-weighted assets 2.68% 16.72% 5.92% 6.42% 5.94% 6.89% 2.01% 1.92% 1.53% 1.22%

Loan loss reserves

1,806

4,629

7,290

9,748

11,807

11,642

11,354

9,590

7,273

NPLs

7,635

10,898

15,553

17,300

18,198

17,593

16,305

13,341

10,020 NPL ratio 15.3% 22.8% 29.4% 33.3% 35.2% 34.7% 32.0% 26.5% 19.7% NPL coverage 42.8% 49.9% 56.3% 64.9% 66.2% 69.6% 71.9% 72.6%

NPEs

20,400

22,700

22,993

21,840

18,146

13,869 NPE ratio 39.3% 44.2% 45.4% 42.9% 36.0% 27.3% NPE coverage 47.8% 50.7% 50.7% 51.0% 51.0% 51.0%

Per share data (EUR) Number of shares (year-end) 538 546 552 2,872 11,518 2,186 2,185 2,185 2,185 2,185 EPS 0.19 -10.35 -2.49 -0.39 -0.11 -0.48 0.10 0.08 0.15 0.22 Book value 11.33 1.60 -1.19 1.58 0.55 3.26 3.37 3.45 3.16 3.38 Tangible Book Value 6.13 -2.86 -4.81 1.03 0.39 2.44 2.55 2.63 2.78 3.00

Source: Company Financials, AXIA Research

Greek Banks


National Bank of Greece Banks / Greece

Reuters / Bloomberg: NBG.AT / ETE GA

The rebirth of the national champion

Rating BUY


We resume coverage of National Bank of Greece with a Buy rating and price target of EUR 0.49 per share, implying an upside potential of 58% from current levels. From a bank which took longer than expected to be recapitalized and had to count with State aid in the form of CoCos, to a bank with a solid capital position, with restructured international exposure as well as lower headcount and branch network achieved according to, or beyond, the initial plan. As it stands, we see NBG as the best-positioned bank in Greece to capitalize from an economic recovery. Even with challenging market conditions the bank, given its solid capital position, the absence of major capital actions in the short-term, a low loan/deposit ratio (86% in Greece and around 100% for the group), and the repayment of the CoCo behind, should be able to absorb macro and asset quality driven shocks. On top of this, NBG delivered a solid 2016 in terms of the reduction in the stock of non-performing exposures, averaging c.EUR1bn per quarter since April-16, with 2017 targets already on track.

Changes – turned and faced the strange

We welcome National Bank of Greece’s recent achievements. Since the last recapitalization in 2015 the bank has sold businesses as agreed with regulators (Finansbank, Astir Palace, NBG Private Equity and UBB), has optimized its cost structure via VRS when 1,300 people have left the group (vs. initial target of 1,000) and repaid the EUR 2bn of CoCos. Additionally, NBG delivered a solid reduction of the NPE stock of close to EUR 1bn per quarter, in the last three quarters, with negative NPE flow in 2017 according to management during 4Q16’s conference call. Management works with the assumption that more than half of the remaining reduction is expected to come from write-offs. Funding wise, NBG is the Greek bank with the lowest amount of ELA on the balance sheet at 8% of the assets (EUR5.8bn ELA in Mar-17) which puts the bank in a relative better position. Total Eurosystem funding (EUR 10.4bn as of Mar-17) is expected to be reduced even further in 2017 as the interbank market opens up for the Greek bank at much lower cost (zero to negative in some cases vs. 150bps for ELA).

Capital sustained by EUR 1.2bn of organic profits in the next three years

According to our estimates, NBG will accumulate profits of EUR 1.1bn in the next three years, which will support a CET1 of 17.6% in 2019. Further capital actions, such as the sale of at least 75% of its stake in the insurance business is expected to add to the capital position even if sold below book value, given the RWA relief of c.EUR 1.5bn out of EUR 41bn for the group. The bank disclosed its 2017 CET1 SREP ratio of 8.75% and total capital requirement (OCR) of 12.25% vs. 16.3% (phased) and 15.8% reported in Dec-16.

Valuation

We value National Bank of Greece on a ROE/COE model, which points to a target price of EUR 0.49 based on 2019 estimates at the end of 2017. We assume a cost of equity of 14% with zero growth. NBG currently trades on 0.41x 2016 tangible book, the highest amongst the Greek banks, and 0.77x on our target price and estimates.




*3/May/2017

Stock Data


Free Float 60%


Shareholders HFSF, BlackRock

Stock Performance

1m 3m 12m

Absolute (%) 25.8 34.6 18.1

ASE Gen. (Abs) 12.2 19.0 28.3

ADTV – 12M (m) 29.8



Company Description: NBG was founded in 1841 and has historically been one of Greece’s largest commercial banks. The bank offers wide banking services to consumers, corporates and the government. More specifically, services include commercial and retail banking, mortgage lending, brokerage, investment banking, etc. Note that the bank, apart from being a key player in the domestic market, also has operations in South Eastern Europe.

0.0

0.1

0.2

0.3

0.4

NATIONAL BANK OF GREECE S.A.

ATHEX Composite Index (Rebased)

Greek Banks


National Bank of Greece: Yearly Forecasts

2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E

PROFIT & LOSS (EUR mn) Net interest income 3,580 3,940 4,148 3,843 3,365 3,157 3,129 1,871 1,782 1,808 1,842 1,882 Net commission income 772 686 610 494 495 529 531 80 192 241 259 275 Trading gains 427 191 -213 -28 -431 -95 -187 0 0 0 0 0 Other revenues 147 -3 9 63 98 180 91 -16 91 84 90 90 Total revenues 4,926 4,814 4,554 4,372 3,527 3,771 3,564 1,935 2,065 2,133 2,191 2,247 Costs -2,422 -2,530 -2,553 -2,571 -2,362 -2,572 -2,122 -1,279 -1,169 -1,116 -1,075 -1,072 Pre-provision income 2,504 2,284 2,001 1,801 1,165 1,199 1,442 656 896 1,016 1,116 1,175 Loan loss charge -538 -1,032 -1,365 -3,439 -2,966 -1,632 -2,441 -3,871 -748 -667 -588 -460 Other impairment charges 0 0 0 -11,783 -186 259 -424 -360 -95 -40 0 0 Operating profit 1,966 1,252 636 -13,422 -1,988 -174 -1,423 -3,575 53 310 528 715 Associate income -29 0 2 1 2 -5 1 0 0 0 0 0 Pre-tax profit 1,937 1,252 638 -13,420 -1,986 -179 -1,422 -3,575 53 310 528 715 Tax -352 -289 -197 1095 158 986 1,528 998 -38 -97 -147 -202 Minorities -39 -41 -35 -19 4 2 -85 -1,641 -2,970 -80 -63 -63 Net profit 1,546 923 406 -12,344 -1,824 809 21 -4,218 -2,885 133 318 450

BALANCE SHEET (EUR mn) ASSETS Interbank 2,490 3,708 3,321 4,636 4,318 2,847 3,324 2,799 2,227 2,316 2,316 2,316 Net customer loans 64,447 68,989 71,315 64,886 69,736 67,250 68,109 45,375 41,643 42,979 43,273 45,480 Securities 18,360 22,079 26,315 17,299 14,712 23,440 23,262 16,117 12,882 13,397 13,397 13,397 Goodwill and intangibles 2,474 2,487 2,560 2,137 2,138 1,709 1,756 147 137 137 137 137 Other assets 14,068 16,132 17,234 17,775 20,892 21,651 25,641 46,737 21,642 22,557 22,557 22,557 Total assets 101,839 113,394 120,745 106,732 111,795 116,897 122,092 111,175 78,531 81,387 81,681 83,888 LIABILITIES Interbank 14,840 21,643 29,899 34,108 40,969 33,864 28,854 25,166 18,188 19,669 18,620 18,370 Customer deposits 67,657 71,194 68,039 59,544 58,722 62,876 64,929 40,300 40,459 40,864 41,889 43,896 Securities 1,814 1,860 2,370 1,728 2,385 2,199 3,940 1,106 536 536 536 536 Other liabilities 9,261 8,869 9,531 11,605 11,607 10,084 13,903 32,120 11,761 12,597 12,597 12,597 Total liabilities 93,572 103,567 109,839 106,985 113,683 109,023 111,626 98,692 70,944 73,666 73,642 75,399 Shareholders' Equity 8,267 9,827 10,905 -253 -1,888 7,874 10,466 9,824 7,587 7,721 8,039 8,489 Minorities 842 857 835 84 70 683 772 725 680 680 680 680 Total liabilities and equity 101,839 113,394 120,745 106,732 111,795 116,897 122,092 111,175 78,531 81,387 81,681 83,888 Tangible book value 2,847 5,183 4,987 -4,600 -6,008 3,854 7,856 6,923 6,770 6,904 7,222 7,672 Interest earning assets 85,297 94,776 100,951 86,821 88,765 93,537 94,695 64,291 56,752 58,693 58,987 61,194 Gross loans 74,697 77,212 80,823 78,616 76,905 76,103 78,683 58,218 53,100 53,744 53,406 54,013

Regulatory capital (EUR mn; %) CET1 6,700 6,498 6,623 6,923 7,348 CET1 ratio (fully-loaded) 16.8% 15.8% 16.0% 16.8% 17.6% Risk-weighted assets 62,696 67,407 68,198 64,248 64,521 55,600 59,700 40,000 41,000 41,497 41,236 41,705

Profitablity ratios (%) Return on assets 1.61% 0.86% 0.35% -10.85% -1.67% 0.71% 0.02% -3.62% -3.04% 0.17% 0.39% 0.54% Return on risk-weighted assets 2.67% 1.42% 0.60% -18.64% -2.83% 1.35% 0.04% -8.46% -7.12% 0.32% 0.77% 1.09% Return on equity 21.0% 10.2% 3.9% -231.8% 170.4% 27.0% 0.2% -41.6% -33.1% 1.7% 4.0% 5.4% Return on tangible equity 54.3% 23.0% 8.0% -6375.5% 34.4% -75.1% 0.4% -57.1% -42.1% 1.9% 4.5% 6.0% Cost-to-income 49.2% 52.5% 56.1% 58.8% 67.0% 68.2% 59.5% 66.1% 56.6% 52.3% 49.1% 47.7% Cost-to-assets 2.38% 2.23% 2.11% 2.41% 2.11% 2.20% 1.74% 1.15% 1.49% 1.37% 1.32% 1.28% NII/Interest earning assets 4.2% 4.4% 4.2% 4.1% 3.8% 3.5% 3.3% 2.4% 2.9% 3.1% 3.1% 3.1% NII/Total revenues 72.7% 81.8% 91.1% 87.9% 95.4% 83.7% 87.8% 96.7% 86.3% 84.8% 84.1% 83.7%

Balance sheet (%) Equity-to-Total assets 8.1% 8.7% 9.0% -0.2% -1.7% 6.7% 8.6% 8.8% 9.7% 9.5% 9.8% 10.1% Net loans/total assets 63.3% 60.8% 59.1% 60.8% 62.4% 57.5% 55.8% 40.8% 53.0% 52.8% 53.0% 54.2% Net loans-to-deposits 95.3% 96.9% 104.8% 109.0% 118.8% 107.0% 104.9% 112.6% 102.9% 105.2% 103.3% 103.6%

Asset quality (%) LLC/Gross Loans 0.72% 1.36% 1.73% 4.31% 3.81% 2.13% 3.15% 5.66% 1.34% 1.25% 1.10% 0.86% LLC/Risk-weighted assets 0.93% 1.59% 2.01% 5.19% 4.61% 2.72% 4.23% 7.77% 1.85% 1.62% 1.42% 1.11% Loan loss reserve 1,620 2,459 3,562 5,048 7,170 8,853 10,574 12,843 11,457 10,765 10,133 8,533 NPLs 2,643 4,573 6,364 8,785 13,397 15,782 18,400 18,429 18,205 16,145 13,325 11,190 NPL ratio

20.7% 23.4% 31.7% 34.3% 30.0% 24.9% 20.7%

NPL coverage

56.1% 57.5% 74.6% 74.3% 74.7% 76.0% 76.2% NPEs (Greece)

22,050 19,199 18,191 16,000 12,600

NPE ratio (Greece)

49.2% 45.1% 42.1% 37.2% 28.8%

NPE coverage 56.5% 55.0% 54.0% 54.0%

Per share data (EUR) Number of shares (year-end) 496.7 607.0 956.1 956.1 956.1 2,396.8 3,533.1 9,147.2 9,145.9 9,145.9 9,145.9 9,145.9 EPS 2.94 1.38 0.33 -12.93 -1.91 0.34 0.01 -0.46 -0.32 0.01 0.03 0.05 Book value 11.35 12.71 9.33 -2.58 -4.05 2.32 2.72 0.99 0.76 0.77 0.80 0.85 Tangible Book Value 5.79 8.54 5.22 -4.81 -6.28 1.61 2.22 0.76 0.74 0.75 0.79 0.84


Greek Banks


Piraeus Bank Banks / Greece

Reuters / Bloomberg: BOPr.AT / TPEIR GA

The challenges remain

Rating BUY


We resume coverage of Piraeus Bank with a Buy rating and price target of EUR 0.31 per share, implying an upside potential of 41% from current levels. Despite seeing progress on the asset quality front and operational results, we believe that Piraeus faces the highest amount of issues to be tackled, including the reduction of the non-performing stock in the small business loans category. Piraeus has EUR 25bn of loans under the category out of EUR 42bn for the whole system, of which c.50% is non-performing. In our view, the higher number of cases (over twenty thousand) in a environment which is not fully supportive (legislation still pending) may slow down Piraeus’ pace of reduction. On the other hand, the capital position looks sufficient for the time being, at 16.2% fully-loaded CET1. We need to bear in mind that the EUR 2bn in coco instruments, from 2015’s recapitalization, still sits on the bank’s balance sheet and the repayment is not expected for the short term. The instruments carry a net cost of 5.8%, which gets deducted straight from equity. On the other hand, with the most depressed valuation amongst peers (P/TBV of 0.26x), Piraeus’ share price carries the potential to increase significantly in case of a re-rating of the Greek market.

The Atlas stone Our main worry about Piraeus is the bank’s substantial small business loans non-performing book. As of the end of 2016, the bank reported small-business loan book of EUR 25bn out of EUR 42bn for the whole system. The non-performing part amounted to 50% with over twenty thousand cases to be addressed. Although the bank’s well-run Recovery Business Unit (RBU) has been showing good progress in the reduction of problem loans the task may end up being more labour intensive than the bank can handle in a timely manner. Important legislation such as the one related to out-of-court settlements (recently voted) and electronic auctions (still pending) will need time to be implemented. As it stands, the future reductions of the non-performing stock count on EUR 7bn of write-offs and EUR 1.5bn of sales to happen until the end of 2019. As a result, the positive bottom line, as expected by management, will be driven, in part, by lower provisions, expected at around 114bps on net loans (already considering the impacts of write-offs), which amounts to EUR 760m in 2017. On a positive note, the bank’s capital ratio (fully-loaded CET1 of 16.2%) looks adequate but includes the EUR 2bn in cocos from the last recapitalization.

New CEO to present strategic plan

Piraeus new CEO Mr. Christos Megalou assumed office on April 18th and will present his strategy for the bank alongside 1Q17 results in mid-May. The market welcomed the appointment of Mr Megalou after a year without a CEO. We believe that there is little room for significant changes to the bank’s strategy going forward as the main issues, reduction of the non-performing stock and the restructuring of the business (reduction of staff and branches and sale of international operations) have already been agreed with the regulators. According to our estimates, Piraeus will deliver the lowest return on tangible book value vs. peers (4.8% vs. 7.4% average in 2019) mainly due to a cost/income ratio of 48% which is above the Greek average of 44%. Management expects a EUR 50m benefit on the cost base to materialize in 2017 (2016 total expenses of EUR 1.3bn) as a result of the latest voluntary retirement scheme.

Valuation

We value Piraeus Bank on a ROE/COE model, which points to a target price of EUR 0.31 based on 2019 estimates at the end of 2017. We assume a cost of equity of 15% with zero growth and exclude the international operations from the second half of 2018. Piraeus currently trades on 0.26x 2016 tangible book, the lowest amongst the Greek banks, and 0.45x on our target price and estimates. It is worth mentioning that Piraeus disclosed the highest SREP ratio amongst Greek banks, at 13% (OCR) vs. 12.25% for the other banks.




*3/May/2017

Stock Data


Free Float 74%


Shareholders HFSF, Vanguard Group

Stock Performance

1m 3m 12m

Absolute (%) 31.0 18.3 -15.4

ASE General (Abs) 12.2 19.0 28.3

ADTV – 12M (m) 22.1



Company Description: Piraeus Bank was first founded in 1916 and was privatized fully in 1991 after a period of state ownership (1975-1991). The bank has grown at a very rapid pace, both organically and through acquisitions. Piraeus Bank today leads a group of companies covering all financial activities in the Greek market (universal bank). Piraeus Bank possesses particular know-how in the areas of medium-sized and small enterprises, in agricultural banking, in consumer and mortgage credit and green banking, capital markets and investment banking, as well as leasing and factoring. These services are offered through nation-wide network of 660 branches and 1,880 ATMs, and also through its innovative electronic banking network of winbank. Piraeus Bank Group possesses an international presence consisting of 261 branches focused on Southeastern Europe and Eastern Mediterranean. In particular, the Group operates in Romania through Piraeus Bank Romania with 101 branches, in Bulgaria through Piraeus Bank Bulgaria with 75 branches, in Albania through Tirana Bank with 39 branches, in Serbia with 26 branches of Piraeus Bank Beograd, in Ukraine with 18 branches of Piraeus Bank ICB, in London and Frankfurt with a branch of Piraeus Bank each.

0.0

0.1

0.2

0.3

0.4

PIRAEUS BANK S.A. ATHEX Composite Index (Rebased)

Greek Banks


Piraeus Bank: Yearly Forecasts

2011 2012 2013 2014 2015 2016 2017E 2018E 2019E

PROFIT & LOSS (EUR mn) Net interest income 1,173 1,028 1,662 1,953 1,877 1,811 1,830 1,807 1,784 Net commission income 198 218 287 314 306 326 337 343 349 Trading gains -109 635 147 -32 109 120 83 77 71 Other revenues -39 -14 40 178 101 110 76 71 66 Total revenues 1,222 1,866 2,135 2,413 2,393 2,366 2,325 2,299 2,270 Operating costs -823 -909 -1,637 -1,443 -1,473 -1,322 -1,274 -1,166 -1,092 Other -31 15 -29 5 -13 -18 -2 0 0 Pre-provision income 368 972 469 974 908 1,026 1,050 1,132 1,178 Loan loss charge -1,555 -2,043 -2,218 -3,670 -3,487 -1,015 -760 -664 -549 Other impairment charges -6,329 -465 -314 -319 -351 -179 -134 -117 -97 Operating profit -7,516 -1,185 1,748 -3,014 -2,930 -168 156 351 532 Other items 0 351 3,810 0 0 0 0 0 0 Pre-tax profit -7,516 -1,185 1,748 -3,014 -2,930 -168 156 351 532 Tax -894 -663 -769 1,069 1,069 159 -30 -106 -154 Minorities 0 0 0 -7 -3 -5 0 0 0 Net profit -6,622 -522 2,516 -1,938 -1,858 -4 125 245 378

BALANCE SHEET (EUR mn) ASSETS Interbank 2,489 3,308 2,875 3,838 3,645 3,072 3,195 3,227 3,259 Net customer loans 34,520 44,613 62,366 57,143 50,591 49,708 51,899 51,657 56,430 Securities 5,880 13,297 17,278 17,261 19,966 16,187 16,562 16,728 16,895 Goodwill 145 215 53 53 15 15 15 15 15 Other assets 6,319 8,976 9,438 10,996 13,312 12,519 12,622 12,683 12,746 Total assets 49,352 70,408 92,010 89,290 87,528 81,501 84,292 84,309 89,345 LIABILITIES Interbank 25,461 32,561 26,275 23,592 34,491 27,021 26,662 28,826 26,919 Customer deposits 22,377 36,971 54,279 54,831 38,952 42,365 42,724 40,560 42,467 Securities 1,522 858 561 894 102 70 70 70 70 Other liabilities 1,932 2,342 2,351 2,651 3,963 2,222 4,891 4,665 9,324 Total liabilities 51,292 72,733 83,467 81,967 77,508 71,677 74,346 74,121 78,779 Shareholders' Equity -2,819 -3,197 7,680 7,210 7,868 7,624 7,746 7,989 8,366 Minorities 135 129 119 112 113 160 160 160 160 Total liabilities and equity 49,352 70,408 92,010 89,290 87,528 81,501 84,292 84,309 89,345 Tangible book value -4,027 -3,606 7,380 6,897 7,593 7,342 7,464 7,707 8,084

Interest earning assets 42,889 61,217 82,519 78,241 74,202 68,966 71,656 71,611 76,585 Gross loans

37,211 50,573 76,114 72,983 68,071 66,648 66,828 61,766 62,892

Regulatory capital (EUR mn; %) CET1 6,962 6,450 8,836 8,750 8,754 8,614 8,992 CET1 ratio 11.8% 11.2% 16.6% 16.2% 16.0% 16.5% 17.1% Risk-weighted assets 59,000 57,600 53,226 53,976 54,625 52,064 52,571

Profitablity ratios (%) Return on assets -26.8% -0.9% 3.1% -2.1% -2.1% 0.0% 0.2% 0.3% 0.4% Return on risk-weighted assets 4.3% -3.3% -3.4% 0.0% 0.2% 0.5% 0.7% Return on equity 469.8% 17.4% 112.2% -26.0% -24.6% 0.0% 1.6% 3.1% 4.6% Return on tangible equity 328.9% 13.7% 133.4% -27.2% -25.6% 0.0% 1.7% 3.2% 4.8% Cost-to-income 67.4% 48.7% 76.7% 59.8% 61.5% 55.9% 54.8% 50.7% 48.1% Cost-to-assets 1.67% 1.29% 1.78% 1.62% 1.68% 1.62% 1.51% 1.38% 1.22% NII/Interest earning assets 5.47% 1.97% 2.31% 2.43% 2.46% 2.53% 2.60% 2.52% 2.41% NII/Total revenues 95.9% 55.1% 77.8% 80.9% 78.4% 76.5% 78.7% 78.6% 78.6%

Balance sheet (%) Equity-to-Total assets -5.7% -4.5% 8.3% 8.1% 9.0% 9.4% 9.2% 9.5% 9.4% Net loans/total assets 69.9% 63.4% 67.8% 64.0% 57.8% 61.0% 61.6% 61.3% 63.2% Net loans-to-deposits 154.3% 120.7% 114.9% 104.2% 129.9% 117.3% 121.5% 127.4% 132.9%

Asset quality (%) LLC/Gross Loans 8.36% 4.66% 3.50% 4.92% 4.94% 1.51% 1.14% 1.03% 0.88% LLC/Risk-weighted assets 3.76% 6.29% 6.29% 1.89% 1.40% 1.25% 1.05% Loan loss reserves 5,961 13,748 15,840 17,480 16,941 15,551 12,630 8,483 NPLs 5,113 11,760 27,166 27,586 26,878 24,382 22,004 18,021 12,150 NPL ratio 24.2% 36.6% 38.8% 39.5% 36.6% 32.6% 28.0% 18.7% NPL coverage 50.7% 50.6% 57.4% 65.0% 69.5% 70.7% 70.1% 69.8% NPEs 36,800 36,900 36,200 32,011 24,408 20,400 NPE ratio 48.0% 50.7% 52.0% 49.8% 39.9% 33.0% NPE coverage 43.0% 47.0% 47.0% 50.0% 49.0% 49.0%

Per share data (EUR) Number of shares (year-end) 1,082 1,143 2,756 5,851 2,220 8,732 8,732 8,732 8,732 EPS -6.12 -0.46 0.91 -0.33 -0.84 0.00 0.01 0.03 0.04 Book value -1.79 -2.03 3.10 1.25 4.51 1.12 1.14 1.17 1.21 Tangible book value -3.72 -3.16 2.68 1.18 3.42 0.84 0.85 0.88 0.93


Greek Banks


Key Banking Sector Data

Figure 1: European banks 2018 RoNAV vs. P/TBV

Source: Capital IQ.

Figure 2: Net interest income (EUR/mn) Figure 3: Net interest income estimates (EUR/mn)

Source: Company data and AXIA Research.

Figure 4: Total revenues (EUR/mn) Figure 5: Total revenues estimates (EUR/mn)


RBS

LB

UCG

ISP

MB

BMPS UBI

BNPGLE

ACA

KN

SG

SANBBVA

POP

SAB

BKT

CABK

DBK

CBK

KBC

SHBSEB

SWED

EBS

RBI

DANSKE

JYSK

SYDB

BCP

DNB

AKBNK

YKBNK

GARAN

HALKB

VAKBNISCTR

ALPHA

ETETPEIR

EUROB

y = 0.0503x + 0.05R² = 0.4876

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

20

18

Ro

NA

V

2018 P/TBV

0

100

200

300

400

500

Alpha Eurobank NBG Piraeus

EUR

m

4Q15 1Q16 2Q16 3Q16 4Q16

0

500

1,000

1,500

2,000

2,500


EUR

m

2015 2016 2017E 2018E 2019E

0

100

200

300

400

500

600

700


EUR

m

4Q15 1Q16 2Q16 3Q16 4Q16

0

500

1,000

1,500

2,000

2,500

3,000


EUR

m

2015 2016 2017E 2018E 2019E

Greek Banks


Figure 6: Total expenses (EUR/mn) Figure 7: Total expenses estimates (EUR/mn)


Figure 8: Provisions (EUR/mn) Figure 9: Provisions estimates (EUR/mn)


Figure 10: Provisions on gross loans (bps) Figure 11: Provisions on gross loans estimates (bps)


(600)

(500)

(400)

(300)

(200)

(100)

0


EUR

m

4Q15 1Q16 2Q16 3Q16 4Q16

(2,000)

(1,500)

(1,000)

(500)

0


EUR

m

2015 2016 2017E 2018E 2019E

(1,600)

(1,400)

(1,200)

(1,000)

(800)

(600)

(400)

(200)

0


EUR

m

4Q15 1Q16 2Q16 3Q16 4Q16

(5,000)

(4,000)

(3,000)

(2,000)

(1,000)

0


EUR

m

2015 2016 2017E 2018E 2019E

0

200

400

600

800

1,000

1,200


bp

s

4Q15 1Q16 2Q16 3Q16 4Q16

0

100

200

300

400

500

600


bp

s

2015 2016 2017E 2018E 2019E

Greek Banks


Figure 12: Return on tangible book value Figure 13: Return on tangible book value estimates


Figure 14: Tangible book value (EUR/mn) Figure 15: Tangible book value estimates (EUR/mn)


Figure 16: CET1 Ratios Figure 17: CET1 Ratios estimates


-0.1

%

3.8

%

0.7

%

-1.9

%

-0.8

%

2.6

%

-1.3

%

1.1

%

1.9

%

2.2

%

1.3

%

1.6

%

0.9

%

7.7

%

4.3

%

-1.0

%

-4%

-2%

0%

2%

4%

6%

8%

10%


1Q16 2Q16 3Q16 4Q16

0.5%

4.1%

1.2%

-0.1%

3.6% 3.1% 3.1%

1.6%

6.5% 5.5% 5.4%

3.2%

8.0% 7.5% 6.9%

4.8%

-2%

0%

2%

4%

6%

8%

10%


2016 2017E 2018E 2019E

0

2,000

4,000

6,000

8,000

10,000

12,000


EUR

m

4Q15 1Q16 2Q16 3Q16 4Q16E

0

2,000

4,000

6,000

8,000

10,000

12,000


EUR

m

2015 2016 2017E 2018E 2019E

16

.0%

13

.1%

16

.8%

16

.6%

15

.9%

13

.1%

16

.7%

16

.4%

16

.2%

13

.5%

16

.2%

16

.6%

16

.4%

13

.8%

16

.3%

16

.7%

16

.7%

13

.8%

15

.8%

16

.2%

0%

5%

10%

15%

20%


4Q15 1Q16 2Q16 3Q16 4Q16E

16

.0%

13

.1%

16

.8%

16

.6%

16

.7%

13

.8%

15

.8%

16

.2%

17

.1%

13

.7%

16

.0%

16

.0%

18

.2%

14

.5%

16

.8%

16

.5%

18

.7%

14

.6%

17

.6%

17

.1%

0%

5%

10%

15%

20%


2015 2016 2017E 2018E 2019E

Greek Banks


Figure 18: NPL ratios Figure 19: NPL ratios estimates

Source: Company data and AXIA Research

Figure 20: NPE ratios Figure 21: NPE ratios estimates


36

.8%

35

.2%

31

.7%

39

.5%

37

.4%

34

.8%

32

.1%

39

.8%

37

.8%

34

.7%

31

.9%

39

.2%

38

.3%

34

.8%

32

.9%

38

.8%

38

.1%

34

.7%

34

.3%

36

.6%

0%

10%

20%

30%

40%

50%


4Q15 1Q16 2Q16 3Q16 4Q16E

36

.8%

35

.2%

31

.7%

39

.5%

38

.1%

34

.7%

34

.3%

36

.6%

33

.3%

32

.0%

30

.0%

32

.6%

27

.6%

26

.5%

24

.9%

28

.0%

20

.4%

19

.7%

20

.7%

18

.7%

0%

10%

20%

30%

40%

50%


2015 2016 2017E 2018E 2019E

51

.4%

43

.8%

50

.7%

52

.1%

44

.2%

52

.1%

52

.5%

45

.1%

52

.1%

53

.3%

45

.7%

44

.8%

52

.3%

53

.6%

45

.4%

43

.6%

52

.0%

0%

10%

20%

30%

40%

50%

60%


4Q15 1Q16 2Q16 3Q16 4Q16E

51

.4%

44

.2%

47

.5%

50

.7%

53

.6%

45

.4%

43

.6%

52

.0%

46

.8%

42

.9%

39

.8%

49

.8%

38

.7%

36

.0%

35

.7%

39

.9%

28

.7%

27

.3%

28

.7%

33

.0%

0%

10%

20%

30%

40%

50%

60%


2015 2016 2017E 2018E 2019E

Greek Banks


-15%

-10%

-5%

0%

5%

10%

15%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Au

g-0

9

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

Dec

-12

May

-13

Oct

-13

Mar

-14

Au

g-1

4

Jan

-15

Jun

-15

No

v-1

5

Ap

r-1

6

Sep

-16

Feb

-17

Corporates % y-o-y Households % y-o-y Total System % y-o-y (rhs)

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

-40%

-30%

-20%

-10%

0%

10%

20%

Au

g-0

9

Jan

-10

Jun

-10

No

v-1

0

Ap

r-1

1

Sep

-11

Feb

-12

Jul-

12

Dec

-12

May

-13

Oct

-13

Mar

-14

Au

g-1

4

Jan

-15

Jun

-15

No

v-1

5

Ap

r-1

6

Sep

-16

Feb

-17

Corporates % y-o-y Households % y-o-y Total System % y-o-y (rhs)

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Oct

-11

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17

Households < 2 years Blended (rhs)

4.00

4.50

5.00

5.50

6.00

6.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00 O

ct-1

1

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17

Households Blended Corporates (rhs)

200

250

300

350

400

450

500

Feb

-12

May

-12

Au

g-1

2

No

v-1

2

Feb

-13

May

-13

Au

g-1

3

No

v-1

3

Feb

-14

May

-14

Au

g-1

4

No

v-1

4

Feb

-15

May

-15

Au

g-1

5

No

v-1

5

Feb

-16

May

-16

Au

g-1

6

No

v-1

6

Feb

-17

Front Book Back Book

400

600

800

1,000

1,200

1,400

1,600

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17


Key System Data – Sector Volumes and Spreads

Figure 22: Loan Volumes (% y-o-y | Feb’17) Figure 23: Deposit Volumes (% y-o-y | Feb’17)

Source: Bank of Greece, AXIA Research.

Figure 24: Back Book Deposit Rates (% | Feb’17) Figure 25: Back Book Loan Rates (% | Feb’17)

Source: Bank of Greece, AXIA Research.

Figure 26: Mortgage loan spread¹ (bps | Feb’17) Figure 27: Consumer loan spread¹ (bps | Feb’17)

Note 1: 3M Euribor benchmark; Source: Bank of Greece, AXIA Research.

Greek Banks


-500

-400

-300

-200

-100

0

Jan

-12

M

ar-1

2

May

-12

Ju

l-1

2

Sep

-12

N

ov-

12

Ja

n-1

3

Mar

-13

M

ay-1

3

Jul-

13

Se

p-1

3

No

v-1

3

Jan

-14

M

ar-1

4

May

-14

Ju

l-1

4

Sep

-14

N

ov-

14

Ja

n-1

5

Mar

-15

M

ay-1

5

Jul-

15

Se

p-1

5

No

v-1

5

Jan

-16

M

ar-1

6

May

-16

Term (Front) Term (Back)

400

500

600

700

800

900

1,000

1,100

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17


-300

-250

-200

-150

-100

-50

0

50

100

Feb

-12

Jun

-12

Oct

-12

Feb

-13

Jun

-13

Oct

-13

Feb

-14

Jun

-14

Oct

-14

Feb

-15

Jun

-15

Oct

-15

Feb

-16

Jun

-16

Oct

-16

Feb

-17


-500

-450

-400

-350

-300

-250

-200

-150

-100

-50

0 Fe

b-1

2

May

-12

Au

g-1

2

No

v-1

2

Feb

-13

May

-13

Au

g-1

3

No

v-1

3

Feb

-14

May

-14

Au

g-1

4

No

v-1

4

Feb

-15

May

-15

Au

g-1

5

No

v-1

5

Feb

-16

May

-16

Au

g-1

6

No

v-1

6

Feb

-17

Term (Front) Term (Back)

5.2

2.4

9.0

4.6

13.2 12.2 11.9

5.8

0

2

4

6

8

10

12

14

Alpha Bank Eurobank Piraeus Bank NBG

ECB Funding ELA Funding

0

20

40

60

80

100

120

140

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

Sep

-15

Mar

-16

Sep

-16

Mar

-17

ELA Funding ECB Funding

Key System Data – Quarterly Trends

Figure 28: Corporate loan spread¹ (bps | Feb’17) Figure 29: HHs Core Deposit spread¹ (bps | Feb’17)


Figure 30: HHs Term Deposit spread¹ (bps | Feb’17) Figure 31: Customer Spread¹ (bps | Feb’17)


Figure 32: Greek Bank Eurosystem Funding (€bn | Dec’16-Mar’17) Figure 33: System Eurosystem Funding (€bn | Mar’17)

Source: Bank of Greece, Presentations, AXIA Research.

Greek Banks


360

380

400

420

440

460

480

1

Q:1

4

2

Q:1

4

3

Q:1

4

4

Q:1

4

1

Q:1

5

2

Q:1

5

3

Q:1

5

4

Q:1

5

1Q

:16

2Q

:16

3Q

:16

4Q

:16


-250

-200

-150

-100

-50

0

1

Q:1

4

2

Q:1

4

3

Q:1

4

4

Q:1

4

1

Q:1

5

2

Q:1

5

3

Q:1

5

4

Q:1

5

1Q

:16

2Q

:16

3Q

:16

4Q

:16


Figure 34: Domestic loan spreads (bps | Dec’16) Figure 35: Domestic deposit spreads (bps | Dec’16)


Figure 36: Greek Banks P/TBV – May’17

Source: Capital IQ, AXIA Research.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Dec

-09

Feb

-10

Ap

r-10

Jun

-10

Au

g-10

Oct

-10

Dec

-10

Feb

-11

Ap

r-11

Jun

-11

Au

g-11

Oct

-11

Dec

-11

Feb

-12

Ap

r-12

Jun

-12

Au

g-12

Oct

-12

Dec

-12

Feb

-13

Ap

r-13

Jun

-13

Au

g-13

Oct

-13

Dec

-13

Feb

-14

Ap

r-14

Jun

-14

Au

g-14

Oct

-14

Dec

-14

Feb

-15

Ap

r-15

Jun

-15

Au

g-15

Oct

-15

Dec

-15

Feb

-16

Ap

r-16

Jun

-16

Au

g-16

Oct

-16

Dec

-16

Feb

-17

Ap

r-17

EUR

Alpha Bank Eurobank NBG Piraeus Bank

Greek Banks


Disclosures

General information This research report was prepared by AXIA Ventures Group Limited, a company incorporated under the laws of Cyprus (referred to herein, together with its subsidiary companies and affiliates, collectively, as “AXIA”) which is authorised and regulated by the Cyprus Securities and Exchange Commission (authorisation number 086/07). AXIA is authorized to provide investment services in the United Kingdom, Cyprus, Greece and in Portugal pursuant to its permissions under the Markets in Financial Instruments Directive and may also provide similar services in other countries, inside or outside of the European Union, subject to the applicable provisions. AXIA Ventures Group Limited is not a registered broker-dealer in the United States (U.S.), and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. In the U.S., this research report is intended solely for persons who meet the definition of “major U.S. institutional investors” in Rule 15a-6 under the U.S. Securities and Exchange Act, as amended, or persons listed under Rule 15a-6(4)) and is meant to be disseminated only through “Axia Capital Markets LLC”, a wholly owned subsidiary of AXIA Ventures Group Limited and associated US registered broker-dealer in accordance with Rule 15a-6 of the US Securities and Exchange Act. Content of the report The persons in charge of the preparation of this report, the names of whom are disclosed below, certify that the views and opinions expressed on the subject security, issuer, companies or businesses covered by this research report (each a “Subject Company” and, collectively, the “Subject Companies”) are their personal opinions and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendations or views contained in this research report. Whilst all substantial sources of information for the research are indicated in this report, including, without limitation, bases of valuation applied to any security or derivative security, such information has not been disclosed to the Subject Companies for their comments and no such information is hereby certified. All information contained herein is subject to change at any time without notice. No member of AXIA has an obligation to update, modify or amend this research report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the Subject Company is withdrawn. Further, past performance is not indicative of future results. Persons responsible for this report: (Analyst) Argyrios Gkonis, (Director) Jonas Floriani, (Analyst) Damiani Papatheodotou, (Head of Research) Constantinos Zouzoulas Key Definitions

AXIA Research 12-month rating*

Buy The stock to generate total return** of and above 10% within the next 12-months

Neutral The stock to generate total return**between -10% and 10% within the next 12-months

Sell The stock to generate total return** of and below -10% within the next 12 months

Under Review Stock’s target price or rating is subject to possible change

Restricted Applicable Laws / Regulation and AXIA Ventures Group Limited policies might restrict certain types of communication and investment recommendations

Not Rated There is no rating for the company by AXIA Ventures Group Limited

* Exceptions to the bands may be granted by the Investment Review Committee of AXIA taking into account specific characteristics of the Subject Company **Total return: % price appreciation equals percentage change in share price from current price to projected target price plus projected dividend yield.

Rating history for Alpha Bank S.A.

Date Rating Share Price (€) Target Price (€) 07/10/2013 Buy 0.59 0.65

27/06/2014 Buy 0.68 0.95

27/02/2015 Hold 0.397 0.60

06/07/2015 Under Review n/a n/a

21/12/2015 Buy 2.55 3.10

22/03/2016 Buy 1.74 3.10

01/06/2016 Buy 2.44 3.10

22/03/2017 Under Review 1.64 n/a


05/05/2017 Buy 2.23 3.00

Rating history for Eurobank Ergasias S.A.

Date Rating Share Price (€) Target Price (€)

27/06/2014 Buy 0.34 0.50

27/02/2015 Hold 0.152 0.30


21/12/2015 Buy 1.05 1.65

22/03/2016 Buy 0.752 1.65

14/05/2016 Buy 1.06 1.65



05/05/2017 Buy 0.86 1.20

Greek Banks


Rating history for NBG S.A.


07/10/2013 Hold 3.28 3.70

27/06/2014 Buy 2.64 3.25

27/02/2015 Hold 1.46 1.95


21/12/2015 Hold 0.30 0.35

22/03/2016 Hold 0.212 0.35

27/05/2016 Hold 0.299 0.35



05/05/2017 Buy 0.31 0.49

Rating history for Piraeus Bank S.A.


31/10/2013 Buy 1.33 1.55

27/06/2014 Buy 1.59 2.10

27/02/2015 Hold 0.62 1.00


21/12/2015 Buy 0.296 0.40

22/03/2016 Buy 0.164 0.40

26/05/2016 Buy 0.29 0.40



05/05/2017 Buy 0.22 0.31

AXIA Ventures Group Limited Rating Distribution as of today

Coverage Universe Count Percent Of which Investment

Banking Relationships Count Percent

Buy 11 61% 1 1 6%

Neutral 2 11%

Sell

Restricted

Not Rated

Under Review 5 28%

Independence and objectivity, conflicts of interest management None of the analysts in charge of this report are involved in activities within AXIA where such involvement is inconsistent with the maintenance of that analyst’s independence or objectivity. None of them has received or purchased shares in any Subject Company prior to any private or public offering of those shares. However, the analysts responsible for the preparation of this report may interact with trading desks or sales personnel for the purpose of gathering and interpreting market information with regard to the Subject Companies. As an investment services provider engaging in a wide range of businesses, AXIA is active in the field of activities which may include the provision of services to issuers of securities, with respect to underwriting or placing of financial instruments or with respect to advice on capital structure, industrial strategy and related matters (“investment banking services”). The nature of such activities, in conjunction with the activity of production and issuance of research reports, may be considered as leading to situations of conflict of interests when the research reports cover an issuer with whom AXIA has an ongoing or has recently had a business relationship for the provision of investment banking services. AXIA has all the necessary internal structures and arrangements in order to identify and avoid or, should avoidance be impossible, to manage such situations in a manner consistent with the highest standards, in accordance with its internal conflicts of interest policy. In compliance with such arrangements, analysts and other staff who are involved in the preparation and dissemination of research (including, without limitation, this report) operate independently of management and the reporting line is separate from AXIA’s investment banking business. “Chinese Wall” procedures (procedures separating the availability of information of any Subject Company) are in place between the investment banking and research businesses to ensure that any confidential and/or price sensitive information is handled appropriately. In all cases when, at the time of preparation or issuance of a report, an issuer covered by such report is in a business relationship with AXIA for the provision of investment banking services, AXIA includes a note in the report, drawing the attention of the recipients to such fact. The same note is included when such business relationship has been terminated less than 12 months before the issuance of the report. However, it cannot be fully precluded that issuers covered by a report may be in discussions with AXIA’s investment banking department for a potential future cooperation in investment banking matters, even though a business relationship does not already exist. In such cases AXIA may not be able to announce the fact of such discussions in the reports even if such reports cover the specific issuer. Therefore, even if this research report does not mention any existing or recent business relationship with an issuer whose securities are covered by the report, such issuer may be a potential future customer of AXIA in the field of investment banking services. It is noted that, even in such case, the persons in charge of this report do not participate in any such discussion and their remuneration is not determined based on the proceeds of the department providing investment banking services and that such situation is not reasonably expected to impair the independence or objectivity of AXIA’s reports. Investment decisions Investors should make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives when investing. Investors should consult their independent advisors if they have any doubts as to the applicability to their business or investment objectives of the information and the strategies discussed herein. Investments involve risks and recipients should exercise prudence and their own independent judgment in making their investment decisions. Therefore, this research report should not be

Greek Banks


regarded by recipients as a substitute for the exercise of their own judgment. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. It is published solely for information purposes. This research report is being furnished to certain persons as permitted by applicable law, and accordingly may not be reproduced or circulated to any other person without the prior written consent of a member of AXIA. This research report may not be relied upon by any retail customers or persons to whom this research report may not be provided by law. It does not constitute a factual representation, a financial promotion or other advertisement, is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction and may not be relied on in any manner by any recipient. Unauthorized use or disclosure of this research report is strictly prohibited. Investing in any non-U.S. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-U.S. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-U.S. securities or related financial instruments may be limited. Non-U.S. companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States. No liability Neither AXIA nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report’s preparation or publication, or any losses or damages which may arise from the use of this research report. AXIA does not represent or warrant that any investments will increase in value or generate profits. Any responsibility or liability for any information contained herein is expressly disclaimed. Any opinions or information contained herein is subject to change at any time without notice and may differ from other opinions expressed professionally by persons within AXIA. This material should not be construed as a solicitation or recommendation to use AXIA to effect transactions in any security mentioned herein or as an attempt to induce securities transactions by such recipients in any manner whatsoever. AXIA is not providing this research report pursuant to any express or implied understanding that the recipients will direct commission income to AXIA. Recipients In the countries of the European Union, this report is communicated by AXIA to persons who are classified as eligible counterparties or professional clients and is only available to such persons. In any other country outside the European Union, this report is addressed exclusively to persons entitled to receive research reports from foreign Investment Firms according to the applicable legal and regulatory provisions. The information contained in this research report is not addressed to and does not apply to any other categories of investors than those specified above. AXIA in relation to its research complies with the applicable requirements and laws concerning disclosures and these are indicated on this legend or in the research report where applicable. By accepting this research report, you agree to be bound by the foregoing limitations. This material is not intended for the use of private investors.

Greek Banks


AXIA Ventures Group

10 G. Kranidiotis, Suite 102

4, Vas. Sofias Ave., 3rd Floor

645 Fifth Avenue, Suite 903

Berkeley Sq. House, Berkeley Sq.

Avenida da Liberdade 240, 4th floor

1065 Nicosia, Cyprus

10674 Athens, Greece New York, NY 10022, US London, W1J 6BD, UK 1250-096 Lisbon, Portugal

Tel: +357 22 742000 Tel: +30 210 7414400 Tel: +1 212 7920255 Tel: +44 20 78876080 Tel: +351 219364444 Fax: +357 22 742001 Fax: +30 210 7414449 Fax: +1 212 7920256 Fax: +44 20 78876001 Fax: +351 966049598

www.axiavg.com

Research

Constantinos Zouzoulas [email protected] +30 210 7414460

Jonas Floriani [email protected] +44 208 068 3516

Argyrios Gkonis [email protected] +30 210 7414462

Maria Almaça [email protected] +351 21 936 44 47

Damiani Papatheodotou [email protected] +357 22 742013

Malene Krogh-Fladmark [email protected] +30 210 7414463

Equity Capital Markets

Thanos Adamantopoulos [email protected] +44 207 9876033

Equity Sales / Trading

Stavros Agrotis [email protected] +357 22 742000

Constantinos Koufopoulos [email protected] +30 210 7414422

Harry Smyrnopoulos [email protected] +30 210 7414425

Maria Mitsouli [email protected] +30 210 7414424

Elias Calfoglou [email protected] +30 210 7414429

Athanasia Markidi [email protected] +30 210 7414428

Ioanna Georgiou [email protected] +30 210 7414427

George Baroumis [email protected] +30 210 7414426

http://www.axiavg.com/

mailto:[email protected]









Documents

Resuming coverage post-results - AXIA Ventures · Resuming coverage post-results We resume coverage of Greek banks with Buy ratings across the board, with upsides of 35-58%. Although