Greece
Banking & Financial Services

Greek Banks: Rising returns, re-rating to continue

Request This Report
25
July
2024


We Initiate Coverage on the Big Four Greek bank stocks – Piraeus, Eurobank and Alpha with Buy ratings, and NBG with a Hold. Fundamentally, the Four have delivered a dramatic recovery: with a tailwind from interest rates, margins, profits and capital adequacy have surged, with above-forecast earnings accompanied by a relief re-rating. However, with policy rates now on the decline, and costs and provisioning normalised, the potential to beat expectations has diminished, requiring a selective approach. Yet, we doubt the re-rating has finished. We expect multiples to continue to rise toward the level of European peers on a longer-term horizon, as Greek banks should benefit from better asset growth, fattening capital buffers and sharp and sustainable increases in distributions via dividends and buybacks. Our top pick in the sector is Piraeus, owing to the best risk-adjusted valuation, a benign risk profile and the lowest multiples.