Domestic bank stocks continue to trade far lower than their European peers, in spite of the major gains they have reaped in the last seven weeks. Based on the price-to-book (P/B) ratio, Greek lenders find themselves considerably lower than most European banks, which means their valuations are particularly attractive.
Since February 11 the banks index of the Athens Exchange has advanced 109 percent, against 31 percent growth for the benchmark. Piraeus Bank has outperformed, advancing 182.7 percent in that period, while Eurobank has risen 175.5 percent, National has grown 107 percent and Alpha has increased 69.8 percent. Therefore bank stocks have covered a large part of the losses they recorded after their share capital increases.
However, the lenders’ P/B ratio remains particularly low, making them very attractive assets to invest in: The index for Piraeus comes to 0.22, National has a 0.27 reading, Alpha is on 0.31 and Eurobank 0.32. Only one other eurozone bank, Italy’s Banca Monte dei Paschi Siena, has a lower P/B reading than its Greek counterparts, while Italian Banco Popolare and Germany’s Commerzbank and Deutsche Bank are on a similar level with the Greeks.