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National Bank of Greece Sa (NYSE: NBG)
Company Website: http://www.nbg.gr
NBG is Greece’s #1 Bank. NBG is growing at a significant rate faster than any other bank right now that I am aware of. NBG is growing at an incredible 25% yearly rate compared to all other European banks which are only growing at an average of 10%!
NBG has a low P/E trading only 18 times earnings with a market cap of 26 Billion and pays a dividend ratio of 141%of $0.26 per share (2.3% yield)! Personally I think it’s great that NBG pays a dividend along promising substantial capital appreciation. Dividends tend to indicate financial health, and maintaining a dividend payment may require management to allocate capital more efficiently. Plus I think dividend stocks with solid growth rates should play an important part in our members’ portfolio. The dividends will reduce volatility and provide a steady stream of cash regardless of the direction of the overall market. And increasing earnings growth like NBG’s should translate into higher stock returns, which will boost the overall return of your portfolio.
For the three months to March 31, NBG said Net profit was Euro381 Million (US$511 Million), compared with Euro250Million (US$335 Million) in the same period a year earlier. NBG’s quarterly earnings growth rate is 52% (YoY)! NBG’s Quarterly Revenue growth rate is 47% (YoY)! These numbers are phenomenal! The bank recently said net interest income rose 65% to Euro 705 Million (US$946 Million) from Euro428 Million in the same period a year earlier, while total income rose to Euro1.03 Billion (US $1.4 Billion) from Euro682.7 Million!
NBG also has more assets then liabilities and more cash then debt which is extremely rare for the banking industry. NBG right now is sitting on $17.5 Billion in cash with only $11.3 Billion in debt!
Furthermore, NBG is Greece’s largest lender by assets. NBG's total outstanding loans account for only 75% of its deposit base. That means it gets all of its money to lend in house at cheap interest rates, which yields a nice spread on loan interest income.
NBG is capitalizing all over Europe right now in Bulgaria, Romania, Serbia, Albania, and Turkey, which have probusiness monetary and fiscal policies that keep inflation and interest rates low. As you know interest rates play a big part in the market right now and this is the perfect opportunity to capitalize on the international market.
Recently, NBG acquired a majority stake in Finansbank, Turkey’s Fifth-largest bank by assets, by outbidding Citigroup (C)! They now own 89.44% stake in Finansbank. I love the fact that they’re making these types of acquisitions to create more value and growth in the company! Not to mention they recently approved the continuation of a Share Buyback program up to 10% of the banks share capital!
In mid May, Finansbank reported that its first quarter non-consolidated net profit more than doubled on the year to 226.4 Million new Turkish Lira (US$170 Million; Euro127 Million)!
Finansbank in Turkey recently had 76% growth in retail loans, similar increases in small-business and corporate lending, and mortgage growth of 122%! Equally important, more than 100 new branches opened in 2006 for a total of 309 Finansbank branches now in operation!
NBG opened 95 new branches in the region, for a current total of 352 in Romania, Bulgaria, Serbia and Albania. First-quarter net profit for NBG rose 52% on strong loan growth and the consolidation of its recent Turkish acquisition!
As you can see, Turkey is starting to become a big target in the banking industry. After Turkey's financial crisis in 2001, the country has largely achieved macroeconomic stability, which plays a big role in the growth of the banking sector.
"Loan growth is showing encouraging signs of recovery this year, and that banks are gradually increasing the supply of credit as both external and domestic macroeconomic variables turn out to be more supportive," stated by William Mejia a Goldman Sachs analyst.
Southeast Europe lending also sparkled with 44% growth! Even domestic Greek lending grew 20%, up from 17% growth in the third quarter. The Greek economy altogether grew by 4.3% in the 4th quarter of 2006, compared with the same period in 2005, EuroStat said recently. The EU executive’s statistics agency, in a report, also said economic growth in the Eurozone was 3.3% and in the EU-25 3.5% over the same period, while GDP growth in the US and Japan was only 3.1% and 2.5%, respectively.
Did you know Greece is growing so significantly right now it is 3rd right behind China and India!
Also, check out who I found in NBG’s Insider transactions-
http://polhudson.lohudblogs.com/2007/06/15/clintons-keep-new-york-infrastructure-investments/
If you read this article you will see what I’m talking about. Since Hillary Clinton is a candidate for the Democratic Presidential election she and Bill Clinton’s investments had to be disclosed and guess what? NBG was one of their few holdings! If that doesn’t catch your attention than I don’t know what will!
John Maloney President of M&R Capital management also bought NBG recently.
Maloney sees earnings of $2 billion, or 83 cents an ADR, in 2007, up from $1.2 billion, or 60 cents, in 2006. In 2008, he expects earnings to jump 25%, to $1.04 per ADR. He thinks the stock, now at $12, will hit 21 in two years! In my opinion, this number is conservative and the stock can easily go much higher if not be bought out! Ronit Ghose of Citigroup (C ) in London, who rates NBG a buy, believes that by 2009 it will derive 45% of its profits outside Greece, with Turkey bringing in 30%. "NBG remains our top pick in Greece," says Ghose, with its "strong home market, exposure to rising deposit spreads, and a high-growth Southeastern European franchise."
Just recently, NBG was initiated by UBS (UBS-NYSE) as the top local banking sector pick with a Buy rating and a 55 Euro target price! At Current exchange rates, this makes for an approximately $15 US target price! Here’s the link: http://www.forbes.com/markets/feeds/afx/2007/07/05/-afx3885377.html
I think NBG is just starting to get the recognition it deserves and is still much undiscovered. In my opinion, anywhere around these price levels is a good buy. I plan to start accumulating heavily soon.
NBG has been given my highest rating with 5 stars. I am extremely confident in NBG and want to reiterate that it is a Long Term pick. Although the stock may fluctuate this is a stock I think should be invested in for at least 6 months to a year. In my honest opinion, I think NBG will either beat analysts targets of $21 or eventually be bought out. Either way this is a win-win situation, in my opinion. Strong growth at low prices is a good margin of safety for value investors.
Remember, I will be profiling a lot more stocks that also fit our fundamental and technical model with similar characteristics frequently along with small-cap stocks that we also believe are undervalued with big upside potential. This is one of the reasons why we strive to be one of the best stock picking websites on the web. Our members are our #1 priority. If you have any questions any of the companies we profile or our website please send me an email until we announce our Toll-Free number next week. Again I am extremely excited to speaking with all of you soon.
We will have a lot more updates and picks soon so stay tuned and thank you for all your support. Please help spread the word about Wall Street Grand.
ABOUT THE COMPANY:
National Bank of Greece S.A. (NBG Group) is engaged in diversified financial services activities, including retail and commercial banking, global investment management, investment banking, insurance, investment activities and securities trading. Its non-financial service activities include hotels, warehouse management, property management, real estate, and business and information technology consulting. The Company's focus outside Greece is in southeast Europe, where it operates in Bulgaria, Romania, Serbia, Albania and Former Yugoslav Republic of Macedonia. On February 15, 2006, its insurance subsidiary, Ethniki Hellenic General Insurance Company S.A. acquired Alpha Romania Insurance. In February 2006, it sold its subsidiary National Bank of Greece (Canada). In April 2006, NBG Group sold its subsidiary Atlantic Bank of New York. In January 2007, the Company acquired a 43.44% interest in Finansbank A.S. As a result, the Company's interest in Finansbank A.S. increased to 89.44%.
Disclaimer:
WSG has not been compensated for this profile of NBG.
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