BOC is top pick for UBS

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UBS, the Swiss banking giant has named Bank of Cyprus, a mid-cap bank as its top pick for 2006 with a general bullish bias for Greek banks where it expects banking sector growth to be in excess of 25% in 2006 and 20%-plus per year during 2006-2008.

UBS says BOC offers the highest potential for earnings upgrades and the most attractive valuation among Greek banks.

The Swiss banking giant with a combined 5.4 mln stake in BOC shares according to Financial Mirror estimates upped its price target on BOC from CYP 3.43 to CYP 4.62 or EUR 7.27 maintaining its Buy1 recommendation. The new improved price target gives a 47% upside potential from the CYP 3.3 price prevailing before the investment bank made its recommendation.

UBS says BOC remains undervalued adding that an improved environment in Cyprus coupled with a dynamic expansion plan in Greece were the two main factors leading to the upgrade in the target price.

UBS also expects the BOC to continue on improving its Return on Equity targets. Earlier BOC announced that its ROE target by 2008 is 16%, which was lower than UBS’ target of 16.4% by 2007 made in December 2005.

According to UBS estimates, BOC is trading at 16.8x price to earnings based on 2006 forecasted profits of the Bank, 12.4x of 2007 earnings compared to 13.8x of 2006 profits for NBG and 12.5x of 2007 earnings, and respective p/e ratios of 14x and 11.7x for Alpha Bank.