Hellenic Banks: Sector update and initiation of coverage

In this sector update note we initiate coverage on Bank of Cyprus (BOC) with a Buy rating, adding it to the “Hellenic Club,” which already includes the Big Four Greek banks. Our analysis of net interest margin outlook suggests significantly greater resilience than historical sensitivities would imply, prompting upgrades to our revenue estimates above consensus. We have also conducted a review of our Cost of Equity estimates with more detailed risk calibration—covering interest rate sensitivity, deferred tax credit (DTC) and share liquidity, to support a more granular approach to valuations for Hellenic banks.