Hellenic Big Picture

- Deposit Trends — "9% of Greek deposits have been withdrawn since the start of 2010. The absolute outflow worsened to €10.7bn in 2Q from €10.6bn in 1Q. Time and savings deposit outflows accelerated and were partially offset by sight deposit inflows. Cypriot banks, however, have seen 15% deposit inflow since the beginning of the year, driven by resident (+10% YTD) and non-resident (+28% YTD) inflows."
- Loan Growth — "Greek lending growth picked up to +5% YoY in June from +2% YoY in May driven by an increase in corporate lending (+9% YoY). Household lending remains subdued. Cypriot lending is buoyant at +8% YoY due to a double-digit growth in mortgages (+26% YoY) and partly offset by weak corporate lending (-1% YoY)."
- Less Bearish on Fundamentals — "We review our forecasts for the Greek and Cypriot banks under our coverage and raise the 2010 EPS estimates for most of them. Our less pessimistic stance is driven by a stabilizing macro environment as the Greek Government budget deficit is shrinking to plan (albeit with revenues coming in softer than projected)."
- TP Changes — "Together with our new EPS estimates, we adjust our cost of equity assumptions. We differentiate banks with higher leverage (Eurobank EFG, Piraeus) from those with lower leverage (Alpha, NBG). All target prices except Marfin’s, increase or remain flat. Marfin’s TP goes from €1.85 to €1.70 and we downgrade the shares from Buy (1H) to Hold (2H) on the back of a better stock price and mixed outlook. For Agricultural Bank we increase our TP to €0.95 from €0.75 and raise the risk rating on the shares to High (3H) from Medium (3M)."
- M&A Speculation — "We expect M&A activity and speculation to pick up in the autumn. Stocks will likely be volatile as investors speculate on who will be buying and who will be selling. Investors should be prepared for valuations which do not necessarily reflect fundamentals."


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