Citi maintains its "Buy" rating on Piraeus Bank, but lowers its target price to €11.35 from €11.85, following an update to its model based on the first-quarter 2026 results.
The new target price still indicates significant upside potential, as based on the share price of €7.95 on April 30, the expected return from the price reaches 42.8%, while together with the 5% dividend yield, the total expected return stands at 47.8%.
The reduction in the target price does not stem from a material deterioration in the bank’s forecasts. On the contrary, Citi is raising its estimate for underlying earnings per share in 2026 by 2% and the corresponding estimate for 2027 by 1%. For 2028, forecasts remain virtually unchanged, while for 2029 and 2030, they decline marginally by 1%. The main reason for the lower valuation is the increase in the cost of equity to 11% from 10.6%, due to the rise in Greek government bond yields.
On the operating side, Citi sees a better picture this year from commission income(excluding Ethniki Insurance), a higher contribution from Ethniki Insurance, and slightly lower provisions for credit losses. For 2027, higher fees and lower provisions offset the increase in operating expenses. In 2029 and 2030, however, higher expenses lead to a slight reduction in estimates.
Citi’s valuation model is based on a sustainable return on tangible equity of 16%, a cost of equity of 11%, and a growth rate of 3% in 2030. Under these assumptions, Piraeus is valued at 1.62 times its estimated tangible book value per share in 2030, discounted over a 12-month horizon, along with expected dividends.
The three scenarios are critical for interpreting the report.
In the base case scenario, the target price is set at €11.35, implying a 43% upside.
In the positive scenario, the valuation rises to €14.35, with a potential upside of 81%, provided that the sustainable return on tangible equity is one percentage point higher and the cost of equity is 100 basis points lower.
In the adverse scenario, the price falls to €6.15, with a potential decline of 23%, assuming the return on tangible equity is three percentage points lower and the cost of equity is 300 basis points higher.
Citi’s forecasts project net profits of €1.145 billion in 2026, €1.223 billion in 2027, and €1.343 billion in 2028. Earnings per share are estimated at €0.93, €0.99, and €1.09, respectively, while the price-to-earnings ratio declines from 8.5 times in 2026 to 7.3 times in 2028.