CITI’S TAKE
Valuation
We use a Warranted Equity Valuation (WEV) approach adjusted for excess equity to value NBG. Our model assumes a terminal excess equity adjusted RoTE of 17.7%, a CoE of 10%, and a 3% growth rate and arrives at a target price of €20 including the NPV of distribution of excess equity above a 14% CET1 in our terminal year of €0.77 but excluding forecast 12-month forward DPS of €0.78.
Risks
A number of risks could prevent NBG’s share price from achieving our target price. These include:
(1) Better or worse than expected revenue development trends, driven by margins, volume trends, interest rates and ability to extract fees from clients.
(2) Better or worse than expected cost savings from internal efficiency measures.
(3) Better or worse than expected inflation impact on costs.
(4) Higher or lower provisioning or other costs as a result of macro uncertainty and/or new regulatory requirements.
(5) Inability to deploy excess capital via organic or inorganic growth.
(6) Better/worse execution of M&A.
