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DB: BOCY – NBG are top picks

10/01/2008 11:06
Deutsche Bank’s top picks are Bank of Cyprus (Buy, TP of Euro 17) and National Bank of Greece (Buy, TP of Euro 55). According to DB, these two stocks offer strong earnings momentum and are defensive in terms of liquidity and exposure to South Eastern Europe.

In a report released today, DB refers to the course of the Greek banks, stressing that “in our Pan-European bank strategy, we remain overweight Greece and Cyprus in 2008 as we see top line growth and earnings revision potential”.

“However, we think that it is time for stock picking as we believe the Greek banks have to face two main threats this year: liquidity issues and exposure to South Eastern Europe”, it added.

“Regarding liquidity, we think that NBG, Marfin, BOC and ATE are well placed to face the current liquidity crunch with loan to deposit ratios below 100%. Piraeus and Alpha have loan to deposit ratios above 100% but do not have strong liquidity needs for 2008”, the report said.

“However, we estimate EFG Eurobank needs to raise about Euro 7bn in the market to finance its loan growth and could face liquidity issues given market circumstances”, DB supports. DB downgraded Eurobank to Hold from Buy and cut its TP to Euro 26 from Euro 33.