Investors are particularly optimistic about Greek banks thanks to the strong performance and prospects of the Greek economy, while for Turkish banks, on the contrary, they are “lukewarm”, as noted HSBCafter the meetings he held as part of a road show in Stockholm.

The British bank emphasizes that investors agree with the positive image of Greek banks, although they are disappointed with the performance of their shares this year. However, they remain optimistic and look forward to the next catalyst thanks to the strong economic outlook that Greece has in relation to the rest of Europe. Investors attending the conference in Sweden positioned themselves on Alpha Bank, Eurobank and National Bank, all of which HSBC maintains a Buy recommendation, while noting that it sees positive net interest income (NII) trends from higher rates will offset the potential increase in costs due to higher forecasts next year.

Another key topic of discussion among investors in Stockholm was the reasons for the poor performance of Greek systemic bank stocks this year and potential catalysts for the future. HSBC notes that the higher interest rates have yet to be reflected in the banks’ financial statements, and the strong results in the second half of 2022 are expected to provide strong “leverage” to their valuations.

“Warmish” for Turkish, based on an image from an HSBC roadshow in Stockholm.

It should be noted that HSBC, in its recent report on Greek banks, raised its share price targets for all four systemically important banks, seeing upside margins from 34% to 139%, on the Athens Stock Exchange and highlighted the strong improvement that marked the sector on the operating performance front, despite difficult macroeconomic conditions in Europe.

On the other hand, investors were not very enthusiastic about Turkish banks, HSBC notes, as the macroeconomic situation in Turkey and the upcoming elections take center stage. Russia’s withdrawal from benchmarking increased the weight and importance of Turkey for the investors HSBC met, but their positions in Turkish banks remained very weak, aside from the recent rally.

Thus, investors are trying to understand whether the rally is continuing and are wondering: 1) the sustainability of the current loose monetary policy, 2) the position of Turkish investors, as they appear to be the driving force behind the domestic market, and 3) whether strong quarterly earnings will force Turkish banks of domestic investors to increase their positions, despite the looming macroeconomic risks. Also in the center of discussions were the upcoming elections in Turkey and their impact on the market, according to the British bank.