DB: Strong BOCY - NBG earnings momentum

Bank of Cyprus and National Bank remain among the top picks of Deutsche Bank with a TP of €17 (BOCY) and €55 (NBG) and a buy recommendation. In its report dated February 6, 2008 under the title “South Eastern Europe: Hard lending or hard landing?”, Deutsche Bank said that BOCY and NBG offer strong earnings momentum and are defensive in terms of liquidity and exposure to South Eastern Europe.

Eurobank

DB decreased its TP on EFG to Euro 25 from Euro 26. “Our hold recommendation on EFG is justified by the increasing risks surrounding the stock (namely SEE and funding)”, the report said.

“Given the acceleration in the negative newsflow for South Eastern Europe, we have decided to be more cautious in terms of loan growth forecast and cost of risk for the companies exposed to SEE (and more specifically to Romania)”, it noted.

“Since the publication of our report on South Eastern Europe (“South Eastern Europe: nice to SEE you”) on January 10th 2008, negative newsflow has accelerated in SEE. In Romania, the local currency has reached a three-year low last week, which has forced the central bank to increase its base rate by 100bps after already 50 bps increase earlier in January”, it added.

“Although this would help inflation and currency, it would have negative impacts for the banking system”, it concluded.