National Bank of Greece Is Among JPM Top Picks

NBG story updated from 10:52 a.m. with new information in third paragraph.

NEW YORK ( TheStreet) -- National Bank of Greece ( NBG) was added to the "model portfolio" of JPMorgan's European banking analysts Monday, who also added Banco Popular to the list following last week's moves by the European Central Bank to improve funding to the banking sector.

The analysts led by Kian Abouhossein also upgraded Banco Popular to overweight from neutral. National Bank of Greece was already rated "overweight."

U.S.-listed shares of National Bank of Greece were up 2.99% to $4.14 in midday trades in New York. Shares of Banco Popular were  higher by 4.62% to $5.45.

The ECB on Thursday announced "a series of targeted longer-term refinancing operations (TLTROs) aimed at improving bank lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a window of two years."

These loans "were significantly better than expected and could lead to a strong take-up by banks," Abouhossein wrote.

JPMorgan is overweight all three Greek banks it covers on the view that the Greek banking system is "highly concentrated," with the top four institutions controlling 90% of the market. They also see improved profitability at the institutions, which are increasingly well capitalized.

Still, NBG gets top marks since, unlike Alpha and Piraeus, it is already profitable due to its exposure to the high growth Turkish market.

As for Banco Popular, Abouhossein calls it "a good asset quality recovery play on Spain." Its book of non-performing loans shrank to 19.5% in the first quarter from 20.5% a year earlier. It should also see earnings improvement driven by lower funding costs and high interest loans to small and mid-sized companies, Abouhossein predicted.

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