Nicosia, Cyprus. Bank of Cyprus is expected to report another strong quarter, with analysts forecasting robust profitability and possible shareholder distributions as Greek and Cypriot banks benefit from credit expansion, resilient interest income and rising fee revenue.
Alpha Finance-AXIA maintained its buy recommendation for Bank of Cyprus, setting a target price of €11.60 per share.
Investor focus shifts to guidance and distributions
According to an Alpha Finance-AXIA report shared by Newmoney, investor attention has moved beyond second-quarter results towards the possibility of banks upgrading full-year guidance and announcing interim shareholder distributions.
The brokerage also reiterated buy recommendations for Eurobank, with a target price of €5.30, National Bank of Greece, with a target price of €17.50, and Piraeus Bank, with a target price of €10.60.
For Optima Bank, it maintained a hold recommendation and a target price of €8.50.
No recommendation or target price was issued for Alpha Bank, whose stock remains under research restrictions. The report used market consensus forecasts for the bank.
Sector profit and income forecasts
Normalised net profit across the sector is forecast to reach €1.43 billion, up 4.7 per cent year on year and 5 per cent from the first quarter.
The report forecasts normalised return on tangible equity of 15.4 per cent, indicating that banking profitability is expected to remain at elevated levels.
Net interest income is projected to rise by 6.5 per cent to €2.42 billion, supported by stronger lending activity and interbank interest rates remaining above levels initially assumed by bank management teams.
Higher rates expected to have greater effect
The report said the full effect of higher market interest rates is expected to become more evident in the second half of the year, reflecting the time needed to reprice bank balance sheets.
