Why investors are avoiding bank stocks

The particularly low prices of bank stocks on the Athens bourse, the outlook for the loan payment suspension program and the Bank of Greece’s plan to create a “bad bank” are the main issues regarding the local credit system that are worrying investors.

The online meetings that senior bank officials had with foreign fund managers in the context of the ATHEX Group’s Annual Greek Roadshow, which started on Thursday and concludes on Monday, showed that the poor visibility regarding the payment moratoriums of loans adding up to 20 billion euros, which may turn into new bad loans, and generally worries about how 2021 will develop for the sector, are the main reasons for investors’ wait-and-see stance.

“There is no negative attitude, thanks to the very low level of bank stock valuations, with the price-to-book ratio at 0.2; however, there are concerns about next year, so they remain reserved,” a senior official at a Greek systemic bank noted to Kathimerini.

Many of the fund managers’ questions concerned the BoG plan for a bad bank, and they are awaiting further details later this month with great interest.

The message local lenders gave investors was that although the repayment moratorium will expire within a few months, it should not lead to a significant volume of new nonperforming exposures as there are support means such as the Gefyra program for borrowers and liquidity is being provided by the government. There may also be some additional measures facilitating the payment of tranches, as well as new products.

This year’s ATHEX roadshow is not taking place in London but online, due to the coronavirus restrictions. It has attracted increased interest with 110 institutional investors and 150 analysts and fund managers participating. Over 650 meetings have been set up between the heads of the 34 listed companies participating and representatives of foreign investment firms.

Notably, bank stock prices have already priced in the tourism decline and the deep recession this year, but some positive aspects have yet to be factored in, Kathimerini understands: The considerable economic support measures the prime minister announced a week ago in Thessaloniki have not yet shown up on the radar of investors, as they have only focused on the course of tourism.