Deutsche Bank has reaffirmed its positive outlook on Greek and Cypriot banks, maintaining a “buy” recommendation across the sector and pointing to significant upside potential despite heightened geopolitical tensions in the Middle East.
The German lender issued updated price targets, setting €4.35 for Eurobank, €4.45 for Alpha Bank, €8.95 for Piraeus Bank and €15.95 for National Bank of Greece. For Bank of Cyprus, it set a target of €10.40 per share.
Strong performance in a resilient economy
According to Deutsche Bank, Greek and Cypriot banks continue to deliver strong performance within a macroeconomic environment that is proving more resilient than many other European economies.
This comes even as global concerns mount over artificial intelligence, the conflict involving Iran, and risks tied to private debt markets.
Loan growth remains among the highest in Europe, driven largely by robust corporate lending. The bank expects this momentum to continue in the coming years, supporting net interest income as pressure on interest margins stabilizes.
Profitability also remains strong, with cost-to-income ratios hovering around 35%, indicating high operational efficiency.
Valuations remain low despite improved fundamentals
Despite the sector’s improved financial position, Deutsche Bank noted that Greek and Cypriot banks are still trading at a discount compared to their European peers.
This gap is partly attributed to lingering market misperceptions. Greece and Cyprus are still relatively underfollowed by international investors and, in some cases, remain associated with the legacy of the past financial crisis. Their classification as emerging markets can also weigh on investor sentiment.
However, Deutsche Bank expects these factors to gradually fade. Strong capital positions are likely to support higher dividend payouts without undermining growth prospects.
Even after recent market corrections, Greek bank stocks remain attractively valued, trading at a price-to-earnings ratio of about 6.5 times projected 2027 earnings, compared to roughly 8 times for European banks.
Limited exposure to global risks
The recent pullback in bank stocks has been linked to broader global concerns, including geopolitical tensions and technological disruption. Still, Deutsche Bank argues that Greek banks are less exposed to these risks.
Their exposure to sectors such as technology and private debt is relatively limited, while the domestic economy continues to outperform the European average.
Geopolitics and external factors
At the macro level, Greece is increasingly showing characteristics of a developed market while maintaining credit growth rates closer to those seen in emerging economies.
Deutsche Bank forecasts loan growth to remain in the high single digits in the coming years, further supporting bank revenues. Interest margin pressures are expected to ease and potentially reverse slightly after 2027.
Regarding geopolitical developments, the bank acknowledges that tensions in the Middle East could pose risks, mainly through higher energy costs. However, it believes the Greek economy is more resilient than markets currently assume.
Tourism — a key pillar of Greece’s economy — may face pressure from inflation but could also benefit from a redirection of travel flows toward safer destinations. By contrast, sectors such as shipping and agriculture may come under strain due to rising costs and operational risks.
Source: ot.gr
