Attica is the fifth-largest bank in Greece, with assets of €3.45bn and 55 branches centred around Athens. It has a 2% market share of business banking and around 2% market share of most retail banking products.
Attica’s Q419 showed good progress with revenue sharply up and costs lower than expected. Impairment charges were higher, but underlying PBT was better than forecast. Uncertainty around COVID-19 complicates forecasting at this stage. Our new numbers have higher impairments, mostly in 2020-21. However, Attica’s strategy of strong asset expansion and focus on the energy, infrastructure and green economy remains firm – just a time shift in achieving income targets. Successful execution would allow ROE to approach 6.8% (previously 7.4%) in 2022. This falls to 4.7–5.3% after factoring in needed rights issues and would provide upside to shares, now trading at a PBV of 0.23x. Attica is currently planning a third securitisation as it strives to cut legacy NPLs to zero by 2021.
Attica intends to focus on its SME business banking activity to exploit attractive margins and an existing 2% market share. Rebuilding profitability will be achieved through voluntary retirement schemes; pricing leverage as the major Greek banks review their product offerings; and normalisation of impairments facilitated by reduced exposure to the collateral underpinning impaired loans.