Eurobank Equities, Eurobank’s investment services branch, revised its target price for Greek stocks in the banking sector, noting they offered a good prospect for investors due to recent underperformance.

Eurobank Equities raised the target price for Alpha Bank to 2.41 euros from 2.23 previously, for National Bank of Greece to 10.37 euros from 8.25, and for Piraeus Bank to 5.40 euros from 4.66 previously.

In its report, the investment services branch highlights the strong performance of Greek bank stocks at the start of the year, narrowing the valuation gap against the respective banking services in the EU region by February

As Eurobank Equities notes, recently the Greek bank stocks somewhat responded to the upward trend of their EU counterparts but still trade at a discount of over 20%, therefore offering investors a very compelling case for positioning.

The bank stressed that its assessment should be considered in conjunction with the following:

  • forecasted RoTEs of 14%-12% for 2024-26 (above 12% for EU regional banks),
  • superior loan growth prospects compared to EU peers,
  • careful cost management,
  • improved provisioning (funds set aside for specific probable future expenses or other financial impacts such as losses in value),
  • deposit repricing mitigating the negative impact of rate cuts, and
  • decreasing provisions ready to offset the normalization of interest income (NII).

Regarding dividends, Eurobank Equities expects the accumulation of surplus capital, exceeding 4 billion euros in 2023, to allow dividend payments of 10%-20% in 2024 and up to 50% by 2025, alongside the prospect of share buybacks.

Looking ahead to the first quarter, Greek banks’ results announcements begin tomorrow with Piraeus Bank, followed by National Bank on May 1st and Alpha Bank/Eurobank on May 16th. Eurobank Equities anticipates a strong quarter, with a total Basic PPI of around 1.29 billion euros, just -1% compared to the record of Q4 2023.