Market Comment - In the Spotlight by Manos Chatzidakis ~ Naked Monk

Market Comment

General Index ended lower on Thursday, as investors took profits after a seven-day rally in the market which pushed the composite index 8.37 pct up. Heightened geopolitical worries because of developments in Ukraine hit European stock markets affecting also ASE. As August ends investors may track H1 results and restructure their portfolio’s while a positive open may be excused as foreign markets seem to stabilize after yesterday’s drop.

In today’s agenda Bank of Piraeus, Eurobank, Aegean Air, Ellaktor and MIG will post their results after market hours while Producer Price index and June retail sales data will come out at 12:00. Last but not least MSCI rebalancing will take place today with market consensus expecting €20m inflows affecting more or less the ten stocks that participate in the index.

Two days left before the expiration of the deadline for Q2/H1 2014 announcements. So far 90 ASE listed companies (c39%) improved their financial position as restructuring efforts start bringing results primarily on EBITDA. Despite a small decrease in turnover (-0.6%) EBITDA has increased by 6% while Net profits (excl. banks) is down by 15% affected by a number of positive one offs in 2013 (Hel Exchanges, HTO and FF Group). Profitable vs loss making companies ratio improved to as 14 companies returned to positive bottom line while in the same period only 4 companies reversed their profits to losses.

¢ In the Spotlight

Banking Sector: Deposits grew slightly in July to 163.2 billion euros, from 163.1 billion in June, the Bank of Greece said on Thursday. It was the fifth successive month of increase for bank deposits. Lending to households, businesses fell annual 3.7% in July, compared with annual 3.5% fall in June.

Bank of Cyprus: Shareholders of Bank of Cyprus on Thursday approved plans for a 1 billion euro capital issue ahead of EU-wide stress tests later this year. The European Bank for Reconstruction and Development, partly owned by the European Union, and investors represented by US-based billionaire Wilbur Ross, were among those signing up for the equity issue pricing Bank of Cyprus at 0.24 euro per share. Just over 87 percent of shareholders present approved the motion at an extraordinary meeting in Nicosia on Thursday. The issue will take the bank's core Tier 1 capital to 15.1 percent from 11.3 percent.

Bank of Piraeus (Results Q2/H1 2014 results): Bank of Piraeus will announce its Q2/H1 results today after market hours and hold a conference call to review results. Apart from the key sector trends (deposit cost improvement, deleveraging, lower NPL formation but higher coverage) there are two key points to focus on Q2 results of Piraeus Bank. 1- Trading income north of EUR100m expected mainly owing to restructuring deal with Marfin Investment Group, 2- on the opex, the

staff costs are improving, but there is a seasonal pick up in administrative costs – promotion and third parties fees.

A conference call is scheduled today at 19:00 GR time. Focus will be on ECB stress test, NPL’s and Geniki bank merge schedule.

The following table summarizes market estimates for H1:

Eur (mn)	2014	2013	Δ(%)
Eur (mn)	H1 Est.	H1	Δ(%)
NII	969.0	734.0	32%
Provisions	964.3	1,055.0	-9%
Net Earnings	-383.9	3,530.0	-111%

Conference call details (19:00 GR time):

¡ GR + 30 211 180 2000,

¡ UK + 44 (0) 800 368 1063

¡ USA + 1 866 288 9315

Eurobank (Results Q2/H1 2014 results): Eurobank: Eurobank will publish today its H1/Q2 group results today at 18:00 Athens Time (16:00 London). Consensus sees Eurobank’s H1 2014 net interest income and provisions at EUR744m (vs EUR564m in H1 2013) and EUR935m (vs EUR836m a year earlier), respectively. In addition, market expects Eurobank to report a net loss of EUR418m H1 2014, compared with a net income of EUR44.5m over the same period a year ago.

Other key results highlights:

¡ Eurobank’s revenues to show a single-digit q-o-q growth, mirroring better deposit pricing (NIM improvements) but also higher commissions income.

¡ Efficiency gains thanks to lower operating expenses (again low single-digit cuts on q-o-q basis)

¡ Q2 2014 visible drop in NPL formation

¡ Provisioning expenses declines to the tune of 5-6% q-o-q, on the back of higher coverage ahead of comprehensive assessment..

A conference call is scheduled today at 18:00 GR time. Focus will be on ECB stress test, NPL’s and deleveraging.

The following table summarizes market estimates for H1:

Eur (mn)	2014	2013	Δ(%)
Eur (mn)	H1 Est.	H1	Δ(%)
NII	744.1	563.9	32%
Provisions	934.9	836.4	12%
Net Earnings	-418.3	44.5	-1040%