Attica is the fifth-largest bank in Greece, with assets of €3.4bn and 55 branches centred around Athens. It has a 3% market share of business banking and around 1% market share of most retail banking products.
Through the Artemis and Metexelixis securitisations, Attica’s exposure to impaired loans has reduced significantly and now compares favourably with the larger Greek banks. Management forecasts common equity Tier 1 to increase from 12.2% to 13.2% at year end, representing significant headroom over regulatory requirements. Management will now move to the next stage of recovery, right-sizing the cost base and shifting the group’s focus to the small and medium-sized enterprise market. Q3 results provide evidence of tight cost control and declining impairments. With Attica trading at 0.18x tangible book value, investors are taking nothing on trust.
Attica intends to focus on its business banking activity to exploit attractive margins and an existing 3% 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, and an economy anticipated to grow 2% pa with declining unemployment. We expect that, by 2020, Attica will be close to achieving a 5% return on tangible equity.