JPMorgan upgraded Piraeus Bank (BOPr.AT) to "overweight" and said it was positive on Greece's four big banks in a research report published on Tuesday.
Greek bank shares are down about 25% in the past three months and despite a strong improvement in operating performance remain unappreciated due to EU-wide recession fears.
"Piraeus has undergone a remarkable operational turnaround and cut 20 billion euros of NPEs (non-performing exposures) from its balance sheet since end-2020, while visibly improving its revenue and cost structure," the report said.
Piraeus Bank has outperformed its business plan and has raised its fully-loaded Core Equity Tier 1 target to 11% from 10%.
JPMorgan said Piraeus' share valuations at 3.1 times 2023 expected price-to-earnings and 0.2 times price-to-tangible book value looked very attractive, noting they remained at levels when the bank's NPE ratio was close to 50% and it had a 2 billion euro CoCo instrument on its balance sheet.
"We think this is unwarranted and see 100% upside potential, among the highest in our CEEMEA Banks coverage."
JPMorgan has an "overweight" rating on all four Greek banks, including Alpha (ACBr.AT), National (NBGr.AT) and Eurobank (EURBr.AT), consolidating its positive view on the sector to reflect cleaned up balance sheets and above-trend growth.
Citing valuations at 4.8x P/E and 0.4x P/TBV (price to tangible book value) JPMorgan said these stood at deep discounts to European and CEEMEA bank peers.
With bad loan securitisations largely complete, payment behaviour improved and new lending limited to a few select corporate sectors with tight criteria, potential asset quality deterioration should be limited, it added.
