Upcoming elections in Greece and Turkey and, later this year, Poland, the regulatory framework and global liquidity and funding issues preoccupied JP Morgan ‘s recent meetings with US investors.
The foreign house estimates that the electoral risk is favorable in Greece and positive in Turkey.
“We feel that investors are comfortable with the investment case of Greek banks , with questions focused on the dynamics of the yield ratio but on interest rates and in the medium term on issues such as profitability gains and capital returns. We feel that investors are comfortable with the political landscape and electoral risk and the top-down outlook more broadly,” JP Morgan underlines.
JP Morgan for banks
Greek banks are considered attractive in the context of the region and Eurobank is also JP Morgan’s top pick from the Central Europe, Middle East and Africa (CEEMEA) region.
“We see value across all CEEMEA banks, trading at 1.3x P/TBV in 2024 and 7.8x earnings for a yield of 17%. We continue to be under-invested in emerging Europe, where we prefer Greek banks (vs. neutral South African banks) because we think they look more resilient on a relative basis. We are over-invested in MENA, particularly Saudi Arabia, and across our coverage our top picks are Absa, Alinma, Al Rajhi, Eurobank, Nedbank and NLB (all rated overweight),” JP Morgan emphasizes.
For Saudi banks, the discussions were much more balanced around valuations than the outlook. A key theme dominating discussions about Saudi banks over the past two years has been the need for training given the size of the market. Investors appear to be much more informed about the investment case, with discussions centering around risks such as liquidity, a potential slowdown in mortgage lending and high valuations.
However, valuations are still seen as more attractive with Al Rajhi and Alinma seen as preferred stocks.
For Polish banks, investors appeared willing to reconsider the investment case, but short-term risks are at the center of attention.